AVENG LIMITED — Proxy Solicitation & Information Statement 2016

Oct 11, 2016

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

The definitions and interpretations commencing on page 5 of this Circular apply, mutatis mutandis, to this cover.

ACTION REQUIRED BY AVENG SHAREHOLDERS

• Aveng Shareholders are referred to page 3 of this Circular, which sets out the action required of them with regard to matters set out in this Circular.
• If you are in any doubt as to what action you should take, you should consult your CSDP, broker, banker, legal advisor, accountant or other professional advisor immediately.
• If you have disposed of all of your Aveng shares, please forward this Circular together with the attached form of proxy, to the purchaser to whom, or the CSDP or broker or agent through whom the disposal was effected.

Aveng does not accept responsibility, and shall not be held liable, for any action of, or omission by, any CSDP or broker or agent including, without limitation, any failure on the part of CSDP or broker or agent of any beneficial owner of Aveng's Shares to notify such beneficial owner of the details set out in this Circular.

AVENG LIMITED

(Incorporated in the Republic of South Africa) (Registration number: 1944/018119/06) Share code on the JSE: AEG ISIN: ZAE000111829 ("Aveng" or the "Company")

CIRCULAR TO AVENG SHAREHOLDERS

Relating to

• the approval of the disposal by Aveng Africa and Steelmetals, both wholly owned subsidiaries of the Group, of their Equity Interests and the Aveng Africa Loans (as applicable) in terms of the Proposed Transaction, to Celanex, a wholly owned subsidiary of RBH. The Proposed Transaction constitutes a Category 1 transaction in terms of the JSE Listings Requirements;

and including:

• a Notice of General Meeting; and
• a form of proxy (yellow), only for use by Certificated Shareholders and Dematerialised Shareholders with "Ownname" registration.

Date of issue: Wednesday, 12 October 2016

Copies of this Circular are only available in English. Copies of this Circular and the Notice of General Meeting may be obtained from the registered office of Aveng, the Transaction Sponsor and the Transfer Secretaries whose addresses are set out in the "Corporate Information" section of this Circular between Wednesday, 12 October 2016 and Monday, 14 November 2016. A copy of this Circular will also be available on Aveng's website (www.aveng.co.za).

CORPORATE INFORMATION

The definitions and interpretations commencing on page 5 of this Circular apply, mutatis mutandis, to this Corporate Information section.

DIRECTORS OF AVENG

MI Seedat – Independent Non-Executive Chairman EK Diack – Independent Non-Executive PJ Erasmus – Independent Non-Executive SJ Flanagan – Independent Non-Executive MA Hermanus – Independent Non-Executive PA Hourquebie – Independent Non-Executive MJ Kilbride – Independent Non-Executive AH Macartney- Executive JJA Mashaba – Executive TM Mokgosi-Mwantembe – Non-Executive KW Mzondeki – Independent Non-Executive HJ Verster – Executive

TRANSACTIONAL LEGAL ADVISOR TO AVENG

Bowman Gilfillan Inc Registration number: 1998/021409/21 165 West Street Sandton, 2196 South Africa

TRANSACTION SPONSOR TO AVENG

KPMG Services Proprietary Limited Registration number: 1999/012876/07 85 Empire Road Parktown, Johannesburg, 2193 Private Bag X9 Parkview, 2122

REGISTERED OFFICE OF RBH

37 High Street Block C 2nd Floor Melrose Arch Johannesburg 2076 Telephone: +27 (0) 11 530 8000 Facsimile: +27 (0) 11 530 8039 Email: info@bafokengholdings.com

INDEPENDENT REPORTING ACCOUNTANT TO AVENG FOR IMVELO

PricewaterhouseCoopers Inc. Chartered Accountants (Registration number: 1988/012055/21) 2 Eglin Road Sunninghill, 2191 (Private Bag X36, Sunninghill, 2157)

TRANSACTION ADVISOR TO RBH

African Power Advisory Proprietary Limited (Registration number: 2015/297278/07) 2 19th Street Parkhurst 2193

FINANCIAL AND TRANSACTION ADVISOR TO AVENG

Aveng Capital Partners Registration number: 1931/003300/07 Block A Cullinan Place, 2 Cullinan Close Morningside, Sandton, 2146 South Africa

COMPANY SECRETARY AND REGISTERED OFFICE OF AVENG

Michelle Nana Block A, Aveng Park, 1 Jurgens Street Jet Park, Boksburg, 1459 PO Box 6062 Rivonia, 2128 South Africa Telephone: +27 11 779 2800 Email: Info@aveng.com Aveng date of incorporation: 22 November 1944

TRANSFER SECRETARIES

Computershare Investor Services Proprietary Limited Registration number: 2004/003647/07 70 Marshall Street, Johannesburg, 2001 PO Box 61051 Marshalltown, 2107 South Africa Telephone: +27 11 370 5000 Telefax: +27 11 688 5200

INDEPENDENT REPORTING ACCOUNTANT TO AVENG AND TO AVENG FOR N3TC

Ernst & Young Incorporated Registration number: 2005/002308/21 102 Rivonia Road Sandton Johannesburg, 2194 Private Bag X14 Northlands, 2116 South Africa Telephone +27 (0) 11 772 3000 Telefax +27 (0) 11 772 4000

INDEPENDENT REPORTING ACCOUNTANT TO AVENG FOR WINDFALL AND BLUE FALCON

Deloitte & Touche Practice number: 902276-0003 1st Floor, The Square Cape Quarter Extension 27 Somerset Road Greenpoint, 8005 PO Box 578 Cape Town, 8000 South Africa

LEGAL ADVISOR TO RBH AND CELANEX

Ledwaba Mazwai Attorneys Ledwaba Mazwai Building 141 Boshoff Street Nieuw Muckleneuk Pretoria

The definitions and interpretations commencing on page 5 of this circular apply, mutatis mutandis, to this table of contents.

	Circular to Aveng Shareholders
Corporate information		IFC
	Forward-looking statement disclaimer	2
	Action required by shareholders	3
Salient dates and times		4
	Definitions and interpretations	5
	Introduction and purpose of the circular	9
	Part I – the disposal by the sellers of the ACP Investment portfolio and Aveng Africa loans
1.	Rationale for the disposal	9
2.	The Proposed Transaction	10
Part II – general 1.	Overview of the business	13
2. Group prospects		13
3.	Financial information	14
4.	Historical financial information	14
5.	Material loans of Aveng	14
6.	Material contracts of Aveng	14
7.	Major shareholders	14
8. 9.	Directors and officer's interests Application of the sale proceeds	14 15
	10. Working capital statement	15
11. General meeting		15
	12. Voting at the general meeting	15
13. Expenses		15
	14. Directors' recommendation	15
15. Material changes		16
16. Litigation statement		16
17. Advisors' consents	18. Directors' responsibility statement	16 16
	19. Corporate governance	16
	20. Documents available for inspection	16
Annexure 1	Pro forma financial information of the Aveng Group	17
Annexure 2	Independent reporting accountant's report on the pro forma financial information of the Aveng Group	25
Annexure 3	Report of historical financial information of Blue Falcon for the three years ended 31 December 2015, 2014 and 2013	27
Annexure 4	Independent reporting accountant's report on the report of historical financial information of Blue Falcon for the three years ended 31 December 2015, 2014 and 2013	44
Annexure 5	Report of historical financial information of Windfall for the three years ended 31 December 2015, 2014 and 2013	46
Annexure 6	Independent Reporting Accountant's report on the report of historical financial information of Windfall for the three years ended 31 December 2015, 2014 and 2013	64
Annexure 7	Report of historical financial information of N3TC for the three years ended 31 December 2015, 2014 and 2013	66
Annexure 8	Independent Reporting Accountant's report on the report of historical financial information of N3TC for the three years
	ended 31 December 2015, 2014 and 2013	84
Annexure 9	Report of historical financial information of Imvelo for the three years ended 31 March 2016, 2015 and 2014	86
Annexure 10	Independent Reporting Accountant's report on the report of historical financial information of Imvelo for the three years ended 31 March 2016, 2015 and 2014	109
Annexure 11	Details of material loans	110
Annexure 12	Share trading history	113
Annexure 13	Details relating to Celanex and Futuregrowth	114
	Notice of General Meeting of Aveng Shareholders	115
Form of proxy		Attached

FORWARD-LOOKING STATEMENT DISCLAIMER

The definitions and interpretations set out on page 5 of this Circular apply to this forward-looking statement disclaimer.

This Circular contains statements about Aveng that are or may be forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. These forward-looking statements are not based on historical facts, but rather reflect current expectations concerning future results and events and may generally be identified by the use of forward-looking words or phrases such as "believe", "aim", "expect", "anticipate", "intend", "foresee", "forecast", "likely", "should", "planned", "may", "estimated", "potential" or similar words and phrases.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Aveng cautions that forward-looking statements are not guarantees of future performance. Actual results, financial and operating conditions, liquidity and the developments within the industry in which Aveng operates may differ materially from those made in, or suggested by, the forward-looking statements contained in this Circular.

All these forward-looking statements are based on estimates and assumptions made by Aveng, as communicated in publicly available documents by Aveng, all of which estimates and assumptions, although believed by Aveng to be reasonable, are inherently uncertain. Such estimates, assumptions or statements may not eventuate. Factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied in those statements or assumptions include other matters not yet known to Aveng or not currently considered material by Aveng.

Shareholders should keep in mind that any forward-looking statement made in this Circular or elsewhere is applicable only at the date on which such forward-looking statement is made. New factors that could cause the business of Aveng to not develop as expected may emerge from time to time and it is not possible to predict all of them. Further, the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statement is not known. Aveng has no duty to, and does not intend to, update or revise the forwardlooking statements contained in this Circular after the date of this Circular, except as may be required by law.

ACTION REQUIRED BY SHAREHOLDERS

The definitions and interpretations commencing on page 5 of this Circular apply, mutatis mutandis, to the following action required by Aveng Shareholders.

PLEASE TAKE CAREFUL NOTE OF THE FOLLOWING PROVISIONS REGARDING THE ACTION REQUIRED BY AVENG SHAREHOLDERS

• 1. If you are in any doubt as to what action to take, please consult your CSDP, broker, banker, attorney, accountant or other professional advisor immediately.
• 1. If you have disposed of all your Aveng Shares, please forward this Circular to the purchaser of such Aveng Shares or to the CSDP, broker, banker or other agent through whom the disposal was effected.
• 1. The General Meeting, convened in terms of the Notice of General Meeting, incorporated in this Circular, will be held in a boardroom of the Company, Block A, Aveng Park, 1 Jurgens Street, Jet Park, 1459 Boksburg on Monday, 14 November 2016, commencing at 10:15.

4. GENERAL MEETING

4.1 If you hold Dematerialised Shares:

4.1.1 Own-name registration

You are entitled to attend, or be represented by proxy, and may vote at the General Meeting of Aveng. If you are unable to attend the General Meeting, but wish to be represented, you must complete and return the attached form of proxy (yellow), in accordance with the instructions contained therein, to be received by the Transfer Secretaries, Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg 2001 (PO Box 61051, Marshalltown, 2107) by no later than 10:00 on Thursday, 10 November 2016. Alternatively, such forms of proxy may be handed to the Company Secretary of Aveng at the General Meeting.

4.1.2 Other than own-name registration

If your CSDP or broker does not contact you, you are advised to contact your CSDP or broker and provide them with your voting instructions. If your CSDP or broker does not obtain instructions from you, they will be obliged to vote in accordance with the instructions contained in the custody agreement concluded between you and your CSDP or broker. You must not complete the attached form of proxy (yellow) in accordance with the custody agreement between you and your CSDP or broker, you must advise your CSDP or broker timeously if you wish to attend or be represented at the General Meeting. Your CSDP or broker will be required to issue the necessary letter of representation to you to enable you to attend, or to be represented at the General Meeting.

4.2 If you hold Certificated Shares:

You are entitled to attend, or be represented by proxy, and may vote at the General Meeting. If you are unable to attend the General Meeting, but wish to be represented, you must complete and return the attached form of proxy (yellow), in accordance with the instructions contained therein, to be received by the Transfer Secretaries, Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg 2001 (PO Box 61051, Marshalltown, 2107) by no later than 10:00 on Thursday, 10 November 2016. Alternatively, such forms of proxy may be handed to the Company Secretary of Aveng at the General Meeting.

SALIENT DATES AND TIMES

The definitions and interpretations commencing on page 5 of this Circular apply, mutatis mutandis, to this salient dates and times section.

	2016
Record date to receive the notice of General Meeting	Friday, 7 October
Circular and notice of General Meeting posted to Shareholders and announced on SENS	Wednesday, 12 October
Last date to trade in order to be eligible to vote at the General Meeting	Tuesday, 1 November
Record date in order to participate in the vote at the General Meeting	Friday, 4 November
Form of proxy to be lodged by no later than 10:00	Thursday, 10 November
General Meeting to be held at 10:15	Monday, 14 November
Results of the General Meeting to be released on SENS	Monday, 14 November

Note

The above dates and times are subject to amendment. Any such amendment will be released on SENS.

All times indicated above are given in South African time.

To be valid, the completed form of proxy must be lodged with the Transfer Secretary of the Company, Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107), South Africa, to reach the Transfer Secretaries on or before 10:00 on Thursday, 10 November 2016, being at least 48 hours (excluding Saturdays and Sundays and public holidays in South Africa) before the time appointed for the holding of the General Meeting. Alternatively, such forms of proxy may be handed to the Company Secretary of Aveng at the commencement of the General Meeting.

DEFINITIONS AND INTERPRETATIONS

In this Circular, unless the context indicates otherwise, reference to the singular shall include the plural and vice versa, words denoting one gender include the others, words and expressions denoting natural persons include juristic persons and associations of persons and the words and expressions in the first column have the meanings stated opposite them in the second column.

"ACP"	shall bear the meaning ascribed thereto in 1 of Part I of this Circular.
"ACP Investment Portfolio"	the ACP investment portfolio, consisting of the Equity Interests in the Project Companies, as more fully details in paragraph 1.1 entitled Equity Interests, of Part I of this Circular;
"Aveng Africa"	Aveng Africa Proprietary Limited, a private company duly incorporated in accordance with the laws of the RSA, registration number 1931/003300/07;
"Aveng Group" or "Group"	collectively, the Company, its subsidiaries and its associate companies;
"Aveng Africa Loans"	the Soul City Loan and the Community Trust Loan;
"Blue Falcon"	Blue Falcon 140 Trading (RF) Proprietary Limited, a private company with limited liability duly incorporated in accordance with the laws of South Africa under registration number 2011/010684/07;
"Blue Falcon Equity Interest"	the Blue Falcon Sale Shares and the Blue Falcon Shareholder Loan, which Aveng is selling to Celanex, as the existing Blue Falcon shareholders have waived or failed to exercise their Pre-emptive Rights, on the terms and subject to the conditions contained in the Share Sale Agreement;
"Blue Falcon Sale Shares"	62 902 Class A ordinary shares in the share capital of Blue Falcon, comprising 29% of the issued share capital of Blue Falcon which Aveng is selling to Celanex, as the existing Blue Falcon shareholders have waived or failed to exercise their Pre-emptive Rights, on the terms and subject to the conditions contained in the Share Sale Agreement;
"Blue Falcon Shareholders Agreement"	the shareholders agreement entered into between Blue Falcon; Aveng Africa; Acciona Energy South Africa Proprietary Limited; Soul City and Community Trust on or about 9 May 2013;
"Blue Falcon Shareholder Loan"	the shareholder loan advanced by Aveng to Blue Falcon, which as at 8 August 2016 was an amount of ZAR163 583 500.89;
"Business Day"	any day, other than a Saturday, Sunday or official public holiday in South Africa;
"Celanex"	Celanex Proprietary Limited, a private company duly incorporated in accordance with the laws of South Africa under registration number 2014/030675/7;
"Certificated Shareholders"	Aveng Shareholders who hold Certificated Shares;
"Certificated Shares"	Aveng Shares which have not been dematerialised, title to which is represented by a share certificate or other document of title;
"Circular"	this document distributed to Shareholders and dated Wednesday, 12 October 2016, containing the circular to Aveng Shareholders, annexures, the Notice of General Meeting and the form of proxy (yellow) thereto;
"Community Trust"	Main Street 845 (RF) Proprietary Limited, a private company with limited liability duly incorporated in accordance with the laws of South Africa under registration number 2010/024056/07;
"Community Trust Loan"	the loan advanced by Aveng Africa to Community Trust, which as at 8 August 2016 was an amount of ZAR422 656.52;
"Company" or "Aveng"	Aveng Limited, with registration number 1944/018119/06, a limited liability public company duly incorporated on 22 November 1944 in accordance with the laws of the RSA and listed on the main board of the JSE under equities code AEG, ISIN: ZAE000111829;
"Companies Act"	the Companies Act, 71 of 2008, as amended;
"Conditions Precedent"	conditions precedent as summarised in paragraph 2.7 entitled Conditions Precedent, of Part I of this Circular and as more fully set out in clause 3 of the Share Sale Agreement;
"CSDP"	a central securities depository participant registered in terms of the Financial Markets Act, with whom a beneficial holder of Aveng Shares holds a dematerialised share account;

"DEA"	the Department of Environmental Affairs, being a department of the government of the Republic of South Africa;
"Dematerialised Shares"	Aveng Shares which have been incorporated into the Strate system and which are no longer evidenced by certificates or other physical documents of title;
"Dematerialised Shareholders"	Aveng Shareholders who hold Dematerialised Shares;
"Dematerialised own-name Shareholders"	Aveng Shareholders who hold Dematerialised Shares and who have instructed their CSDP to hold their Aveng Shares in their own name on the sub-register;
"Directors" or "Board"	the Board of Directors of Aveng, details of whom are set out on the front cover page of this Circular;
"DoE"	the Department of Energy, being a department of the government of the Republic of South Africa;
"Effective Date"	the 5th (fifth) Business Day immediately following the date on which the Conditions Precedent are fulfilled in accordance with clause 3 of the Sale Share Agreement;
"Equity Interest"	collectively, the equity interest held by the Sellers in the Project Companies, being the Blue Falcon Equity Interest, the Windfall Equity Interest, the Imvelo Equity Interest and the N3TC Sale Shares which the Sellers are selling to Celanex and Futuregrowth on the terms and subject to the conditions contained in the Share Sale Agreement, and Equity Interest shall mean each one of them as the context may require. At the Last Practicable Date, the existing shareholders of Imvelo, Blue Falcon and Windfall had waived, or failed to pursue, their Pre-emptive Rights and Futuregrowth had exercised its Pre-emptive Rights for N3TC;
"Futuregrowth"	Old Mutual Life Assurance Company (South Africa) Proprietary Limited – Futuregrowth, a private company with limited liability duly incorporated in accordance with the laws of South Africa under registration number 1999/004643/06 and an existing shareholder of N3TC;
"General Meeting"	the General Meeting of Aveng Shareholders to be held at 10:15 on Monday, 14 November 2016 in a boardroom of the Company, Block A, Aveng Park, 1 Jurgens Street, Jet Park, Boksburg, convened in terms of the Notice of General Meeting enclosed and forming part of this Circular;
"IDC"	the Industrial Development Corporation of South Africa SOC Limited;
"Imvelo"	Imvelo Concession Company (RF) Proprietary Limited, a private company with limited liability duly incorporated in accordance with the laws of South Africa under registration number 2011/139131/07;
"Imvelo Equity Interest"	The Imvelo Sale Shares and the Imvelo Shareholder Loan which Aveng is selling to Celanex, as the existing Imvelo shareholders have waived their Pre-emptive Rights on the terms and subject to the conditions contained in the Share Sale Agreement;
"Imvelo Sale Shares"	303 ordinary shares in the share capital of Imvelo comprising of 30% of the issued share capital of Imvelo which Aveng is selling to Celanex, as the existing Imvelo shareholders have waived their Pre-emptive Rights on the terms and subject to the conditions contained in the Share Sale Agreement;
"Imvelo Shareholders Agreement"	the shareholders agreement entered into between Imvelo; Aveng Africa; Old Mutual Life Assurance Company (South Africa) Limited; Kagiso Tiso Holdings (RF) Proprietary Limited; WIP International Investments Proprietary Limited, Tiso Projects No 1 Proprietary Limited and Women Investments Portfolio Holdings Limited on or about 25 June 2012;
"Imvelo Shareholder Loan"	the shareholder loan advanced by Aveng to Imvelo, which as at 8 August 2016 was an amount of ZAR40 420 076.77;
"JSE"	the exchange operated by the Johannesburg Stock Exchange Limited, registration number 2005/022939/06, a public company incorporated and registered in accordance with the laws of the RSA and licensed as an exchange under the Financial Markets Act, 19 of 2012;
"JSE Listings Requirements"	the Listings Requirements of the JSE;
"King Report on Corporate Governance" or "King III"	a code of, and report on corporate governance principles for South Africa;
"Last Practicable Date"	Tuesday, 4 October 2016, the last practicable date prior to the finalisation of this Circular;
"NERSA"	the National Energy Regulator of South Africa, established in terms of the National Energy Regulator Act, Act 40 of 2004;

"Notice of General Meeting"	a notice of General Meeting and a form of proxy (yellow), which is enclosed and forms part of this Circular and which will convene the General Meeting of Aveng Shareholders for the purpose of considering and, if deemed fit, approving the resolutions set out in such Notice of General Meeting relating to the Proposed Transaction;
"N3TC"	N3 Toll Concession (RF) Proprietary Limited, a private company with limited liability duly incorporated in accordance with the laws of South Africa under registration number 1998/020534/07;
"N3TC Preference Share Subordination Agreement"	entered into between Steelmetals, Rand Merchant Bank Limited and Momentum Group Limited on or about 26 June 2008;
"N3TC Sale Shares"	1 153 301 039 ordinary shares in the share capital of N3TC comprising 10.92% of the issued share capital of N3TC which Steelmetals is selling to Futuregrowth which has exercised its Pre-emptive Rights on the terms and subject to the conditions contained in the Share Sale Agreement;
"N3TC Shareholders Agreement"	the shareholders agreement entered into between N3TC, Infra-Africa Investment Holdings Proprietary Limited, Fikile Projects Closed Corporation, Rangwato Freddie Projects Closed Corporation, P.N. Naidoo & Associates Consulting Engineers Proprietary Limited, J Molobela; Johan Muller en Vennote BK, Sankar, Govender & Associates Closed Corporation; Squinch Advisory Services Closed Corporation, The Trustees for the time being of the South Africa Infrastructure Fund, Steelmetals, The Trustees for the time being of the African Infrastructure Investment Fund, Old Mutual Life Assurance Company (South Africa) Limited in respect of the IDEAS linked-investment policy portfolios, Old Mutual life Assurance Company (South Africa) Limited in respect of the Futuregrowth linked-investment policy portfolios and Public Investment Corporation Limited on or about 10 September 2015;
"Own-name Registration"	the registration of Aveng Shareholders who hold Aveng Shares that have been dematerialised and are recorded by the CSDP on the sub-register kept by that CSDP in the name of such Aveng Shareholder;
"Parties"	collectively, Aveng Africa, Steelmetals, Celanex, Futuregrowth and RBH, and "Party" shall mean any one of the Parties as the context may indicate;
"Pre-emptive Rights"	the pre-emptive rights that the shareholders in each of Blue Falcon, Imvelo, Windfall and N3TC have in respect of a disposal of the respective Equity Interests;
"Project Companies"	Blue Falcon, Imvelo, Windfall and N3TC;
"Project Finance Conditions Precedent"	means the conditions precedent set out in paragraph 2.7;
"Proposed Transaction"	the proposed transaction, as contemplated in this Circular and as more fully detailed in Section 2 entitled The Proposed Transaction, of Part I of this Circular;
"Purchase Price"	the purchase price for the Equity Interest, as more fully detailed in paragraph 2.4 of this Circular;
"Rand Merchant Bank"	FirstRand Bank Limited (acting through its Rand Merchant Bank division), a limited liability public company duly incorporated in terms of the laws of the Republic of South Africa with registration number 1929/001225/06;
"RBH"	Royal Bafokeng Holdings Proprietary Limited, a private company duly incorporated in accordance with the laws of South Africa under registration number 2006/006906/07;
"Register"	the register of Certificated Shareholders maintained by the Transfer Secretaries and the sub-register of Dematerialised Shareholders maintained by the relevant CSDPs;
"RSA"	the Republic of South Africa;
"Sale Shares"	the Blue Falcon Sale Shares, the Windfall Sale Shares, the Imvelo Sale Shares and the N3TC Sale Shares;
"SANRAL"	South African National Roads Agency Limited;
"Sellers"	collectively, Aveng Africa and Steelmetals;
"SENS"	the Stock Exchange News Service of the JSE;
"Shares" or "Aveng Shares"	ordinary shares in Aveng;
	"Shareholders" or "Aveng Shareholders" holders of Aveng Shares, which includes Certificated Shareholders, Dematerialised Shareholders and Dematerialised own-name Shareholders;

"Shareholders Agreements"	the Blue Falcon Shareholders Agreement, Imvelo Shareholders Agreement, N3TC Shareholders Agreement and the Windfall Shareholders Agreement;
"Share Certificates"	Share Certificates evidencing the Shares held by Certificated Shareholders or any other Document of Title acceptable to the Board in its sole discretion;
"Share Sale Agreement" or "Agreement"	the share sale agreement entered into on 10 August 2016, between the Sellers and Celanex, in terms of which the Sellers, will dispose their Equity Interests (as applicable) to Celanex and Futuregrowth subject to the fulfilment of the Conditions Precedent, a copy of which is available for inspection by Shareholders as per paragraph 20, the salient terms of which are set out in paragraph 2 entitled The Proposed Transaction of Part 1 of this Circular;
"Soul City"	Main Street 801 (RF) Proprietary Limited, a private company with limited liability, duly incorporated in accordance with the laws of South Africa under registration number 2010/008335/07;
"Soul City Loan"	the loan advanced by Aveng Africa to Soul City, which at 8 August 2016 was an amount of ZAR3 491 624.15;
"Steeledale transaction"	transaction announced on 10 August 2016, in terms of which Aveng Africa will dispose of the Aveng Steeledale business to Steeledale (Pty) Ltd. The detail relating to the Steeledale Transaction is set out in a circular to Aveng Shareholders dated 12 October 2016;
"Steelmetals "	Steelmetals Proprietary Limited, a private company duly incorporated in accordance with the laws of South Africa under registration number 1952/001450/07;
"Strate"	Strate Proprietary Limited, registration number 1998/022242/07, a private company incorporated in accordance with the laws of the RSA and which is a registered central securities depository responsible for the electronic custody and settlement system used by the JSE;
"the Transfer Secretaries" or "Computershare"	Computershare Investor Services Proprietary Limited registration number 2004/003647/07, a private company incorporated in accordance with the laws of the RSA, being the transfer secretaries of Aveng;
"VAT"	Value Added Tax as levied in terms of the Value Added Tax Act, 89 of 1991;
"Windfall"	Windfall 59 Properties (RF) Proprietary Limited, a private company with limited liability duly incorporated in accordance with the laws of South Africa under registration number 2010/021774/07;
"Windfall Equity Interest"	the Windfall Sale Shares and the Windfall Shareholder Loan, which Aveng is selling to Celanex, as the existing Windfall shareholders have waived or failed to exercise their Pre-emptive Rights, on the terms and subject to the conditions contained in the Share Sale Agreement;
"Windfall Sale Shares"	29 Class A ordinary shares in the share capital of Windfall, comprising of 29% of the issued share capital of the Windfall which Aveng is selling to Celanex, as the existing Windfall shareholders have waived or failed to exercise their Pre-emptive Rights, on the terms and subject to the conditions contained in the Share Sale Agreement;
"Windfall Shareholders Agreement"	the shareholders agreement entered into between Windfall, Aveng Africa, Acciona Energy South Africa Proprietary Limited, Main Street 885 (RF) Proprietary Limited and Main Street 908 (RF) Proprietary Limited;
"Windfall Shareholder Loan"	the shareholder loan advanced by Aveng to Windfall, which as at 5 August 2016 was an amount of ZAR120 128 473.28; and
"ZAR"	South African Rand.

(Incorporated in the Republic of South Africa) (Registration number: 1944/018119/06) Share code on the JSE: AEG ISIN: ZAE000111829 ("Aveng" or the "Company")

CIRCULAR TO AVENG SHAREHOLDERS

1. INTRODUCTION AND PURPOSE OF THE CIRCULAR

• 1.1 On 10 August 2016, Aveng announced on SENS that a Share Sale Agreement had been concluded in terms of which Aveng, through its wholly owned subsidiaries Aveng Africa and Steelmetals, intended to dispose of the Equity Interest in the Project Companies and the Aveng Africa Loans for the Purchase Price to Celanex, a wholly owned subsidiary of RBH, subject to the fulfilment or waiver (as the case may be) of the Conditions Precedent summarised in paragraph 2.7 of this Circular. In the event that the Pre-emptive Rights for Blue Falcon, Windfall, Imvelo or N3TC are exercised by the existing shareholders the Equity Interest would not be disposed to Celanex but to such existing shareholders. At the Last Practicable Date, the existing shareholders of Imvelo had waived their Pre-emptive Rights and the shareholders of Blue Falcon and Windfall had failed to exercised their Pre-Emptive Rights within the pre-emptive period. Futuregrowth had exercised its Pre-emptive Rights in N3TC. As a result, the Equity Interests in the Project Companies and the Aveng Africa Loans will be disposed to Celanex with the exception of N3TC which will be disposed to Futuregrowth.
• 1.2 The disposal of the Equity Interest and the Aveng Africa Loans constitutes a Category 1 transaction which, in terms of the JSE Listings Requirements, is subject to Shareholders' approval by way of an ordinary resolution.
• 1.3 The purpose of this Circular is to provide Aveng Shareholders' with the requisite information in accordance with the JSE Listings Requirements, to enable Aveng Shareholders to make an informed decision in respect of the proposed resolution, as set out in the notice of the General Meeting enclosed with this Circular.

PART I – THE DISPOSAL BY THE SELLERS OF THE ACP INVESTMENT PORTFOLIO AND AVENG AFRICA LOANS

1. RATIONALE FOR THE DISPOSAL

1.1 Equity Interests

• 1.1.1 Aveng Capital Partners, is the investment and structured financing arm of Aveng (herein after referred to as "ACP"). ACP is a project sponsor, developer and investor in the private infrastructure and real estate sectors in South Africa and selective economies in sub-Saharan Africa. The ACP investment strategy considers divesting or monetising its portfolio when the underlying projects reach commercial operation and the investments transition into marketable securities.
• 1.1.2 During the past three years, ACP secured infrastructure projects in the power and infrastructure asset classes. These projects were secured in the early development phase and were advanced through construction and on to commercial operation.
• 1.1.3 Included in the ACP infrastructure portfolio is the Equity Interest which the Sellers have in the Project Companies, held as follows:
• 1.1.3.1 Aveng Africa:
• 1.1.3.1.1 the Equity Interest in Blue Falcon, which project company houses the Gouda wind facility project:
• Blue Falcon is the special purpose entity created for the Gouda wind project awarded under Round 2 of the Renewable Energy Independent Power Producer Programme. The project involved the construction and ongoing operation of the 138MW wind energy facility, in the Drakenstein municipality. Blue Falcon's business involves the sale of electrical energy to Eskom under a 20-year power purchase agreement;
• 1.1.3.1.2 the Windfall Equity Interest in Windfall, which project company houses the Sishen Solar facility project:
• Windfall is the special purpose entity created for the solar photovoltaic (PV) power project awarded under Round 2 of the renewable energy independent power producer programme. The project involved the construction and ongoing operation of the solar 74 MW PV facility, in Dibeng, Northern Cape. Windfall's business involves the sale of electrical energy to Eskom under a 20-year power purchase agreement; and
• 1.1.3.1.3 the Equity Interest in Imvelo, which project company houses the Environmental Affairs PPP Project:
• Imvelo designed, constructed and financed the Department of Environmental Affairs sustainable building in Centurion. Imvelo's business involves the maintenance and operation of this building as set out in the public private partnership agreement.
• 1.1.3.2 Steelmetals:

the N3TC Sale Shares, which project company houses the 30 year concession contract,

– N3TC has a 30-year toll road concession contract with SANRAL and is responsible for managing the road, financial asset, shareholder equity, revenue collection and commercial debt. N3TC designed, constructed, financed and operates and maintains the N3 between the Cedara interchange in KwaZulu-Natal and the Heidelberg South interchange in Gauteng.

(collectively, the ACP Investment Portfolio).

• 1.1.4 The aforementioned project investments held by the Project Companies are fully developed and are now operational.
• 1.1.5 Aveng has taken a decision to monetise the ACP Infrastructure Portfolio as a logical means to bring the assets to account in the short term.

1.2 Aveng Africa Loans

• 1.2.1 As part of the Proposed Transaction, Aveng Africa shall further dispose of the Aveng Africa Loans to Celanex.
• 1.2.2 The Aveng Africa Loans will be disposed of at a discount to their respective face values due to the conditional redemption terms in the respective loan agreements. The Aveng Africa Loans will be disposed of for an amount of ZAR1, compared to their face value of ZAR3 914 280.52, in line with their carrying value. The Soul City Loan is repayable when a specified internal rate of return is achieved which will not be in the foreseeable future. The Community Trust Loan is repayable when distributions are received which may be in approximately 1 years' time. Aveng will dispose of the Aveng Africa Loans to the Purchaser should the Purchaser elect to acquire the Aveng Africa Loans in line with the provisions of the Share Sale Agreement.

2. THE PROPOSED TRANSACTION

• 2.1 Aveng Africa and Steelmetals own the Equity Interest, and Aveng Africa owns the Aveng Africa Loans. In terms of the Agreement, the Sellers have agreed to sell the Equity Interest to Celanex, and/or an existing shareholder of Blue Falcon, Windfall, Imvelo or N3TC in the event the Pre-emptive Rights are exercised. In terms of the Share Sale Agreement, Celanex has agreed to purchase the Equity Interest and Aveng Africa Loans from the Sellers, on the terms and conditions set out in the Share Sale Agreement. Any existing shareholder of Blue Falcon, Windfall, Imvelo or N3TC may, in terms of the respective Shareholders' Agreements, exercise their Pre-emptive Rights in respect of the Equity Interests. As at the Last Practicable Date, the pre-emptive period relating to Imvelo, Blue Falcon and Windfall had expired and the existing shareholders in Imvelo, Blue Falcon and Windfall had either waived or failed to exercise their Pre-emptive Rights. The N3TC pre-emptive period had expired and Futuregrowth had exercised its Pre-emptive Rights to acquire the N3TC Shares prior to expiry of the pre-emptive period.
• 2.2 The relevant Seller may, upon five Business Days written notice to Celanex elect to complete the sale of the relevant Project Company's Equity Interest and/or the Aveng Africa Loans independent of the other Project Company's Equity Interest and/or the Aveng Africa Loans, provided that in respect of the relevant Project Company's Equity Interest and/or the Aveng Africa Loans, the Conditions Precedent are fulfilled. The resolutive condition detailed in paragraph 2.8 of this Circular applies to this provision of the Agreement.
• 2.3 Notwithstanding any other provision of the Share Sale Agreement, Celanex shall be entitled at any date prior to 30 November 2016 and the Effective Date, to notify the Sellers that it has elected not to acquire or to take transfer of the Aveng Africa Loans, in which instance all reference to the Aveng Africa Loans shall cease to be of any further force and effect.

2.4 Purchase Price

• 2.4.1 The Purchase Price payable by Celanex and Futuregrowth for the Equity Interest shall be paid as follows:
• 2.4.1.1 an amount of ZAR295000000, cum dividend, distribution or any payment accruing to shareholders after 10 August 2016, in respect of the Blue Falcon Equity Interest shall be paid to Aveng Africa;
• 2.4.1.2 an amount of ZAR331000000, cum dividend, distribution or any payment accruing to shareholders after 10 August 2016, in respect of the Windfall Equity Interest shall be paid to Aveng Africa;
• 2.4.1.3 an amount of ZAR39000000, cum dividend, distribution or any payment accruing to shareholders after 10 August 2016, in respect of the Imvelo Equity Interest shall be paid to Aveng Africa; and
• 2.4.1.4 an amount of ZAR195000000, cum dividend, distribution or any payment accruing to shareholders after 10 August 2016, in respect of the N3TC Sale Shares shall be paid to Steelmetals.
• 2.4.2 If Celanex elects to Purchase the Aveng Africa Loans, the Purchase Price payable by Celanex to Aveng Africa for the Aveng Africa Loans shall be ZAR1.
• 2.4.3 The Purchase Price shall, collectively, comprise of the purchase price payable for the Equity Interest as contemplated in 2.4.1 and the purchase price for the Aveng Africa Loans as contemplated in clause 2.4.2, provided that should Celanex purchase some, but not all of the Equity Interests and/or the Aveng Africa Loans, the Purchase Price shall be adjusted for those Equity Interests and/or the Aveng Africa Loans that are not purchased. As Futuregrowth has exercised its Pre-emptive Rights, the Purchase Price payable by Celanex will be reduced by ZAR195 000 000 and this amount will be payable by Futuregrowth.

• 2.4.4 The net asset value of the Equity Interest and the Aveng Africa Loans amounts to ZAR860000000, of which ZAR1 relates to the Aveng Africa Loans.

• 2.4.5 The earnings relating to the Equity Interests and the Aveng Africa Loans for the year ended 30 June 2016, amounted to ZAR171 000 000.

• 2.4.6 Details relating to Celanex and Futuregrowth are set out in Annexure 13 to this Circular.

2.5 Payment of the Purchase Price

On the Effective Date (or such later date as the Parties may agree in writing on or before the Effective Date), Celanex and Futuregrowth shall pay the Purchase Price to the Sellers in cash.

2.6 RBH Undertaking

2.6.1 With effect from the Effective Date, RBH irrevocably and unconditionally, undertakes:

• 2.6.1.1 to ensure that Celanex remains a subsidiary of RBH until the earlier of the Effective Date and 30 November 2016 (Longstop Date);
• 2.6.1.2 to procure that Celanex shall be capitalised (whether by subscription for equity (either ordinary or preference or a combination thereof), or loan, or combination thereof) with sufficient funds to:
• 2.6.1.2.1 discharge the Purchase Price in full as at the due date for payment of the Purchase Price as set out in paragraph 2.5 of this Circular;
• 2.6.1.2.2 discharge Celanex's obligations to contribute to the legal costs in terms of the Share Sale Agreement;
• 2.6.1.2.3 pay any other amount or amounts, which may become due and payable by Celanex to any one or more of the Sellers under the Share Sale Agreement; and
• 2.6.1.3 to ensure that Celanex, at all material times, has the requisite management and company secretarial resources to undertake and fulfil its obligations under the Share Sale Agreement.

2.7 Conditions Precedent

The Proposed Transaction shall be subject to the fulfilment of the following Conditions Precedent, by 24h00 on 30 November 2016 (or such later date agreed between the Parties):

General Conditions Precedent

• 2.7.1 To the extent required, the Sellers shall obtain all the relevant consents or approvals in terms of the Companies Act and the JSE Listings Requirements required for entering into and implementing the Share Sale Agreement;
• 2.7.2 the Sellers shall deliver to Celanex a copy of the waiver of the Pre-emptive Rights or shall confirm in writing that the Pre-emptive Rights process was followed but not exercised in terms of the relevant Shareholders Agreements. At the Last Practicable Date, this process had been fulfilled as it relates to Imvelo and N3TC as detailed in this Circular;
• 2.7.3 Celanex, shall enter into and sign a deed of adherence to the relevant Shareholders' Agreements of the respective companies pursuant to the Share Sale Agreement. This condition precedent shall apply to Futuregrowth in respect of its purchase of the N3TC Shares;
• 2.7.4 Celanex shall confirm in writing that it is satisfied with the results of its due diligence investigation;
• 2.7.5 the Project Finance Conditions Precedent shall have been fulfilled or waived (as the case may be). This condition precedent shall apply to Futuregrowth in respect of its purchase of the N3TC Sale Shares; and
• 2.7.6 as a Condition Precedent to the sale of the Aveng Africa Loans, the IDC consents to the cession of the Aveng Africa Loans from Aveng Africa to Celanex.

Project Finance Conditions Precedent

In respect of the disposal of the Blue Falcon and Windfall Equity Interest

• 2.7.7 RBH shall provide such sponsor support as may reasonably be required by the finance parties (in form and substance acceptable to the finance parties) and acceptable to RBH and the Seller;
• 2.7.8 any and all consents, approvals, waivers and/or notifications and the like that may be required by the finance parties and all other parties under, in terms of, pursuant to or arising from the relevant project documents, finance documents and/or documents related thereto have been provided or obtained (as the context requires);
• 2.7.9 any and all documents required to transfer all of Aveng Africa's rights, interest, title and obligations under, in terms of, pursuant to or arising from the relevant project documents, finance documents and/or documents related thereto to Celanex have been entered into, and Celanex has entered into a pledge and cession of its rights in respect of the Blue Falcon and Windfall Equity Interest (as the context requires) as required under the relevant finance documents;

• 2.7.10 the DoE has given its prior written approval in respect of the disposal or transfer of Aveng Africa's ownership of the Blue Falcon and Windfall Equity Interest (as the context requires) from Aveng Africa to Celanex;

• 2.7.11 to the extent necessary or applicable, NERSA has been notified in respect of the disposal or transfer of ownership of the Blue Falcon and Windfall Equity Interest (as the context requires) from Aveng Africa to Celanex within 14 days after the Effective Date; and

• 2.7.12 one or more documents have been entered into in terms of which Aveng Africa is released from all and any of its obligations and liabilities under, in terms of, pursuant to or arising from the relevant project documents, finance documents and/or documents related thereto with effect from (or arising after) the Effective Date, and each such document has become unconditional in accordance with its terms, save for any condition precedent that this Agreement is or becomes unconditional.

In respect of the disposal of the N3TC Sale Shares:

• 2.7.13 Futuregrowth shall provide such sponsor support as may reasonably be required by the finance parties (in form and substance acceptable to the finance parties) and acceptable to Futuregrowth and the Sellers;
• 2.7.14 any and all consents, approvals, waivers and/or notifications and the like that may be required by the finance parties and all other parties under, in terms of, pursuant to or arising from the relevant project documents, finance documents and/or documents related thereto have been provided or obtained (as the context requires);
• 2.7.15 any and all documents required to transfer all of Steelmetals' rights, interest, title and obligations under, in terms of, pursuant to or arising from the relevant project documents, finance documents and/or documents related thereto to Futuregrowth have been entered into, and Futuregrowth has entered into a pledge and cession of its rights in respect of the N3TC Sale Shares as required under the relevant finance documents;
• 2.7.16 SANRAL has been notified of the disposal or transfer of Steelmetals' ownership of the N3TC Sale Shares from Steelmetals to Futuregrowth;
• 2.7.17 one or more documents have been entered into in terms of which Steelmetals is released from all and any of its obligations and liabilities under, in terms of, pursuant to or arising from the relevant project documents, finance documents and/or documents related thereto with effect from (or arising after) the Effective Date;

and each such document has become unconditional in accordance with its terms, save for any condition precedent that this Agreement is or becomes unconditional.

In respect of the disposal of the Imvelo Equity Interest:

• 2.7.18 Celanex shall provide such sponsor support as may reasonably be required by the finance parties (in form and substance acceptable to the finance parties) and acceptable to Celanex and the Sellers;
• 2.7.19 any and all consents, approvals, waivers and/or notifications and the like that may be required by the finance parties and all other parties under, in terms of, pursuant to or arising from the relevant project documents, finance documents and/or documents related thereto have been provided or obtained (as the context requires);
• 2.7.20 any and all documents required to transfer all of Aveng Africa's rights, interest, title and obligations under, in terms of, pursuant to or arising from the relevant project documents, finance documents and/or documents related thereto to Celanex have been entered into, and Celanex has entered into a pledge and cession of its rights in respect of the Imvelo Equity Interest as required under the relevant finance documents;
• 2.7.21 the DEA has given its prior written approval in respect of the disposal or transfer of Aveng Africa's ownership of the Imvelo Equity Interest from Aveng Africa to Celanex;

one or more documents have been entered into in terms of which Aveng Africa is released from all and any of its obligations and liabilities under, in terms of, pursuant to or arising from the relevant project documents, finance documents and/or documents related thereto with effect.

2.8 Resolutive Condition

In the event that a relevant Seller has made an election to dispose of the relevant Project Company's Equity Interest and/or the Aveng Africa Loans (as applicable) as contemplated in paragraph 2.2, but, by 30 November 2016 (or such later date as may be agreed between Aveng Africa and Celanex) the sale of both the Blue Falcon Equity Interest and the Windfall Equity Interests have not been completed in terms of the provisions set out in paragraph 2.6 of this Circular, the Share Sale Agreement shall terminate immediately. Each Party to such individual proposed disposal shall take all reasonable steps required to restore the other Parties to the status quo ante within 10 Business Days of the termination of the Share Sale Agreement.

2.9 Warranties

The applicable warranties will be the customary terms and conditions as set out in Schedule 1 to the Share Sale Agreement.

PART II – GENERAL

1. OVERVIEW OF THE BUSINESS

Aveng owns and operates a portfolio of infrastructure, mining and manufacturing-related businesses, each of which targets top-quartile performance compared to its peers when measured against return on invested capital, earnings growth, and positive cash flow generation through the business cycle.

Over more than 125 years Aveng has evolved in character, capacity and reach. Its origins lie in modest construction projects but Aveng now boasts expertise in steel, engineering, manufacturing, mining, concessions, public infrastructure and water treatment. This South African consortium continues to make its mark across the globe. With a strong presence in Africa, Australia, New Zealand, Southeast Asia and the Middle East the company possesses diverse construction, infrastructure and engineering expertise through its various subsidiaries, which are outlined below:

Construction & Engineering: South Africa and rest of Africa

Aveng Grinaker-LTA is a multi- disciplinary construction and engineering group, anchored in South Africa and focused on selected infrastructure, energy, rail and mining opportunities in Africa offering a comprehensive range of standalone or integrated services that cover building, civil engineering, roads, earthworks, concrete, ground engineering, mechanical, piping, electrical and instrumentation contracting which is delivered through focused business units acting in synergy. The business also offers a range of water treatment solutions with expertise in design, construction, operations and maintenance of permanent and modular water plants.

Aveng Capital Partners is a project sponsor, developer and investor in the private infrastructure and real estate sectors in South Africa and selective economies in Sub-Saharan Africa. The ACP investment strategy considers divesting or monetising its portfolio when the underlying projects reach commercial operation and the investments transition into marketable securities.

Construction & Engineering: Australasia and Asia

McConnell Dowell, Australian based, operates predominantly in the Eastern Time Zone, and is a major engineering construction, building and maintenance contractor servicing the building infrastructure and resource markets with expertise in building, rail, civil, electrical, marine, mechanical pipelines, fabrication, tunnelling and underground services.

Aveng Mining is one of only four deep-level shaft sinking companies worldwide and is involved in all aspects across the mining value chain, ranging from shaft sinking, underground development and contract mining, opencast mining, mineral processing and acid mine drainage plants, to construction of mining related infrastructure and the supply of mining equipment and products.

Aveng Manufacturing manufactures and supplies construction products to the construction sector, services and engineered solutions to mining, water, oil & gas and construction clients, and rail construction and maintenance services to the transport sector.

Aveng Steel supplies a wide product range to the steel construction and automotive industries in domestic markets, from its extensive steel yards, modern and comprehensive processing centres and manufacturing plants.

2. PROSPECTS

Aveng

Challenging economic conditions are expected to continue in the short term, although with more positive medium term opportunities in Australia. Aveng is a more focused business and well positioned for improved performance. We expect the benefits of business optimisation to further contribute to this improved performance in the next financial year. This allows the business to position itself for profitable growth within the second phase of our strategy.

Aveng's investment strategy with regards to the ACP investment includes the monetisation assets once the underlying projects reach commercial operations, thereby enhancing their marketability and value upon exit. Blue Falcon, Windfall, Imvelo and N3TC are now fully operational and, therefore, in line with ACP's investment strategy, are being monetised through the Proposed Transaction.

Blue Falcon

Blue Falcon is expected to continue to produce wind energy and consequently supply electrical energy to Eskom under a 20-year power purchase agreement. As at 31 December 2015, Blue Falcon had a receivable of ZAR65 849 316 relating to the substation built by Blue Falcon that was transferred to Eskom. This substation was transferred to Eskom at commencement operation date and the receivable will be utilised over its useful life.

Windfall

Windfall is expected to continue to produce solar energy and consequently supply electrical energy to Eskom under a 20-year power purchase agreement. As at 31 December 2015, Windfall had a receivable of ZAR27 699 236 (2014: ZAR28 908 015; 2013; ZARnil) relating to the substation built by Windfall that was transferred to Eskom. The substation was transferred to Eskom at commencement operation date and the receivable will be utilised over its useful life.

N3TC

It is anticipated that N3TC will continue to derive revenue from toll revenues for the operation of the N3 toll highway and the construction of improvements to the highway. Toll revenues are expected to increase in accordance with the toll tariffs, which are adjusted annually in terms of the concession contract.

Imvelo

It is anticipated that Imvelo will continue to derive revenue from construction services, construction delay payments, gross unitary payments net of unitary payment deductions and operator pass-through revenue derived due to the Public Private Partnership Agreement (PPP Agreement) that Imvelo has entered into with the Government of the Republic of South Africa, acting through the Department of Environmental Affairs ("the Department"), to design, construct, operate, maintain and finance a suitable working environment for the Department.

3. FINANCIAL INFORMATION

• 3.1 In terms of the JSE Listings Requirements, a Category 1 transaction requires pro forma financial information showing the effects of the Proposed Transaction on the Group's statement of financial position and statement of comprehensive earnings. As the relevant Seller may elect to complete the sale of the relevant Project Company's Equity Interest and/or the Aveng Africa Loans independent of the other Project Companies Equity Interest and/or the Aveng Africa Loans, the pro forma financial effects for each of the Blue Falcon Equity Interest disposal, Imvelo Equity Interest disposal, Windfall Equity Interest disposal and N3TC Shares disposal and collectively the Proposed Transaction have been presented.
• 3.2 The pro forma financial information, including the assumptions on which it is based and the financial information from which it has been prepared, is the responsibility of the Board.
• 3.3 The pro forma financial information is set out in Annexure 1 of this Circular.
• 3.4 The Independent Reporting Accountant's limited assurance report on the pro forma financial information is set out in Annexure 2 of this Circular.

4. HISTORICAL FINANCIAL INFORMATION

The audited historical financial information of Blue Falcon, Windfall, N3TC and Imvelo has been presented in Annexures 3, 5, 7 and 9 of this Circular. The historical financial information of Blue Falcon, Windfall, N3TC and Imvelo is the responsibility of the Board. The Independent Reporting Accountant's assurance reports on the reports of historical financial information of Blue Falcon, Windfall, N3TC and Imvelo are set out in Annexures 4, 6, 8 and 10 of this Circular.

5. MATERIAL LOANS OF AVENG

5.1 Details relating to material loans made to Aveng and/or it subsidiaries are set out in Annexure 11 of this Circular.

6. MATERIAL CONTRACTS OF AVENG

• 6.1 Save for the agreements relating to the Proposed Transaction as described in this Circular and as set out below, neither Aveng nor any of its subsidiaries have entered into any material contract, other than in the ordinary course of business, within the two years prior to the Last Practicable Date or at any time containing an obligation or settlement that is material to Aveng at the Last Practicable Date.
• 6.1.1 On 10 August 2016, Aveng Africa announced that it has reached an agreement with Kutana Steel Proprietary Limited (Kutana Steel) whereby Kutana Steel will acquire a 70% interest in the Steeledale Business owned and operated by Aveng Africa. In terms of the Steeledale Transaction, Aveng Africa shall dispose of the Steeledale Business to Steeledale Proprietary Limited (Steeledale). The shares in Steeledale, will be held 30% by Aveng Africa and 70% by Kutana Steel. It is envisaged that the Steeledale Transaction shall be effective on 1 December 2016, subject to the fulfilment of certain conditions precedent, including the approval of the Steeledale Transaction by Aveng Shareholders. A circular in respect of the Steeledale Transaction will be posted to Aveng Shareholders on 12 October 2016.

On 7 April 2015, Aveng announced that it had entered into an agreement in terms of which 70% of Dimopoint Proprietary Limited, a wholly owned subsidiary of Aveng Africa, containing the majority of the Group's property portfolio was sold to the Collins Property Group. The transaction was a Category 2 transaction in terms of section 9 of the JSE Listings Requirements.

On 19 September 2014, Aveng announced that it had entered into an agreement in terms of which McConnell Dowell, a wholly owned subsidiary of the Company, disposed of Electrix, its utility resource and infrastructure contracting business in Australia and New Zealand to French based company Vinci Energies. This transaction was a Category 2 transaction in terms of section 9 of the JSE Listings Requirements.

7. MAJOR SHAREHOLDERS

The following Shareholders held, directly and indirectly, equal to or in excess of 5% of the issued share capital as at the Last Practicable Date:

Investment manager	Total Shares	%
Allan Gray Investment Council	100 203 043	24.05
Visio Capital Management	41 592 026	9.98
Coronation Fund Manager	25 370 832	6.09
Public Investment Corporation	22 290 489	5.35
Investec Asset Management	21 071 466	5.06
Total	210 527 856	50.53

No shareholder holds a controlling interest in Aveng.

The trading objects of Aveng and its major subsidiaries have not changed over the past five years.

8. DIRECTORS' AND OFFICERS' INTERESTS

8.1 Directors' interests in the Proposed Transaction

• 8.1.1 No Directors have a material beneficial interest, whether direct or indirect, in the Proposed Transaction.
• 8.1.2 No Directors, including Directors who resigned in the last 18 months, has or had any material beneficial interest, direct or indirect, in any transaction that was effected by the Company during the current or immediately preceding financial year or during any earlier financial year, and which remain in any respect outstanding or unperformed, save for:
• 8.1.2.1 in the Steeledale Transaction, Kutana is an indirect subsidiary of Kutana Capital Proprietary Limited of which T Mokgosi-Mwantembe is the ultimate majority shareholder;

8.2 Directors' interests in the Aveng Shares

Set out below are the interests of Directors in the Company at the Last Practical Date. This includes interests of persons who are no longer Directors, but resigned during the last 18 months. All of the securities held by Directors are held directly and beneficially.

Name	Total Shares held	Percentage Shareholding
MJ Kilbride JJA Mashaba	10 000 523 930	0% 0.13%
H J Verster	139 661	0.03%
PK Ward (retired 30/06/2016) AWB Band (retired 19/08/2016)	10 000 20 000	0% 0%
Total	703 591	0.16%

8.3 Directors' service contracts

Copies of the Directors' service contracts will available for inspection in accordance with the procedure set out in paragraph 20 of this Circular.

8.4 Directors' Remuneration and Benefits

The Directors' remuneration and benefits are set out in note 47 of the Audited consolidated annual financial statements which are available on the Company's website: www.aveng.co.za. There has been no change to the Directors' remuneration and benefits as a result of the Proposed Transaction.

9. APPLICATION OF THE SALE PROCEEDS

The proceeds from the Proposed Transaction will be used to primarily strengthen the statement of financial position of Aveng to support its move to the next phase of its strategy, namely, positioning for profitable growth.

10. WORKING CAPITAL STATEMENT

The Board is of the opinion that the working capital of Aveng and its subsidiaries is sufficient for the current requirements of Aveng and will be adequate for at least the next 12 months from the date of issue of this Circular.

11. GENERAL MEETING

A General Meeting of the Aveng Shareholders has been convened and will be held at 10:15 on Monday, 14 November 2016 at the boardroom of the Company, Block A, Aveng Park, 1 Jurgens Street, Jet Park, Boksburg, for the purpose of considering and, if deemed fit, passing, with or without modification, the necessary resolutions to give effect to the Proposed Transaction and the matters incidental thereto. The resolution to be put to the Shareholders for their approval is set out in the Notice of General Meeting in this Circular.

12. VOTING AT THE GENERAL MEETING

In terms of the JSE Listings Requirements, a 50% plus 1 majority of votes of all Aveng Shareholders, present or represented by proxy at the General Meeting must be obtained in respect of the ordinary resolutions to approve the Proposed Transaction.

13. EXPENSES

The estimated costs of preparing and distributing this Circular, and all other annexures, holding the General Meeting and Proposed Transaction, including the fees payable to professional advisors, are approximately ZAR3 825 622, excluding VAT, and include the following:

Expenses	ZAR'000
Bowmans – Legal Advisor	2 563 622
KPMG Services Proprietary Limited – Transaction Sponsor	150 000
EY – Auditors and Reporting Accountant's to Aveng and Reporting Accountant's for N3TC	500 000
Deloitte & Touche – Reporting Accountant's for Blue Falcon and Windfall	230 000
PricewaterhouseCoopers – Reporting Accountant's for Imvelo	140 000
Computershare Investor Services Proprietary Limited	50 000
JSE Limited	42 000
Printing	150 000
Estimated total	3 825 622

14. DIRECTORS' RECOMMENDATION

The Directors have considered the terms and conditions of the Proposed Transaction and are of the opinion that the terms of the Proposed Transaction are in the interests of Aveng's Shareholders.

The Directors entitled to vote at the General meeting recommend that Aveng Shareholders vote in favour of the resolutions to be proposed at the General Meeting.

15. MATERIAL CHANGES

The Board is not aware of any material changes in the financial or trading position of Aveng following the latest published results for the year ended 30 June 2016. The Group has not purchased any material assets during the three years prior to the Last Practicable Date. The share trading history of the Company on the JSE up to the Last Practicable Date is set out in Annexure 12.

16. LITIGATION STATEMENT

The Aveng Group is a party to the following material disputes:

• The Aveng Group has a claim against Kenmare Resources PLC for the payment of an entitlement, plus interest and costs. Kenmare Resources PLC has lodged a counterclaim against the Aveng Group linked to allegations of breach of contract and gross negligence. The Directors believe that the likelihood of any material portion of this counterclaim being successful is remote and the arbitration award is expected towards the end of 2016;
• a joint arrangement to which the Aveng Group is party has various contractual claims against QCLNG Pipeline Proprietary Limited, relating to the QCLNG pipeline constructed by the joint arrangement in Australia. The arbitration proceedings closed in June 2016 and the outcome is expected in the short term. The Directors consider the outcome of these claims to be a material risk to the Aveng Group; and
• in July 2015, the Aveng Group instituted action against Cardno and Arup in relation to the Gold Coast Rail Project in Australia. The principle claims have been made in terms of a legislative entitlement for loss caused to the Aveng Group. The Directors expect this matter to be resolved in the first half of 2018 and the outcome remains a material risk to the Aveng Group.

The total exposure to the Aveng Group relating to the above claims is approximately ZAR4,7 billion in amounts due from contract customers, as disclosed in the consolidated annual financial statements and ZAR1,4 billion of counterclaims that are considered to be remote and have not been disclosed in the annual financial statements.

The outcome of the relevant actions listed above remains uncertain and may have an impact on future earnings.

Save for the above, there are no legal proceedings, including any proceedings that are pending or threatened, relating to the Aveng Group, of which Aveng is aware, that may have or have has during the past 12 months, a material effect on the financial position of the Aveng Group.

There are no legal or arbitration proceedings, including any proceedings that are pending or threatened, relating to Blue Falcon, Imvelo, N3TC or Windfall, of which Aveng is aware, that may have or have had during the past 12 months, a material effect on the financial positions of any of Blue Falcon, Imvelo, N3TC or Windfall.

17. ADVISORS' CONSENTS

The parties referred to in the Corporate Information section on the inside front cover of this Circular have consented in writing to act in the capacities stated and to their names being stated in the Circular. The independent reporting accountant's, being EY, Deloitte & Touche and PwC, have consented to the reference to their reports in the form and context in which they appear, and have not withdrawn their consents prior to the publication of the Circular.

18. DIRECTORS' RESPONSIBILITY STATEMENT

The Directors, whose names are given on the Corporate Information section of this Circular collectively and individually accept full responsibility for the accuracy of the information furnished relating to the Group and the Project Companies, and certify that to the best of their knowledge and belief, there are no facts which have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made, and that this Circular contains all information required by law and the JSE Listings Requirements.

19. CORPORATE GOVERNANCE

Good corporate governance aligns Aveng's strategy and risk management with its performance to ensure that the Group is able to be sustainable in the long term and add value to its stakeholders. The Board unanimously embraces the principles of the King Code of Governance (King III) and benchmarks its compliance against this framework. Further, the Board subscribes to full compliance with applicable laws and regulations in jurisdictions in which Aveng operates. Aveng subscribes to the highest levels of professionalism and integrity. The Board and the Group's individual employees are committed to the Aveng Code of Business Conduct (the Code). This prescribes our approach to ethical business practices and our obligations to customers, shareholders, employees, representatives, suppliers and the authorities. Management is tasked to ensure compliance with the code, and all employees and representatives are expected to act in a manner that inspires the trust and confidence of the general public. Commitment to the Code is embedded at Board meetings. The Code is available on the Company's website at www.aveng.co.za.

20. DOCUMENTS AVAILABLE FOR INSPECTION

The following documents, or copies thereof, will be available for inspection by Aveng Shareholders during normal business hours at the registered office of Aveng and its subsidiaries and at the offices of KPMG Services Proprietary Limited from Wednesday, 12 October 2016 until Monday, 14 November 2016 (both days inclusive):

• 20.1 the Memorandum of Incorporation of the Company and its subsidiaries;
• 20.2 Share Sale Agreement;
• 20.3 Reporting Accountant's report on the pro forma financial information of the Group;
• 20.4 the annual financial statements of Blue Falcon, Windfall, N3TC and Imvelo for the most recent three financial years;
• 20.5 Reporting Accountant's reports on the reports of historical financial information of Blue Falcon, Windfall, N3TC and Imvelo;
• 20.6 the advisors consents as per paragraph 17 of this Circular;
• 20.7 service contracts with Directors, managers, underwriters, vendors and promoters of the Company entered into during the last three years; and
• 20.8 a signed copy of this Circular.

SIGNED AT JET PARK ON FRIDAY, 30 SEPTEMBER 2016 ON BEHALF OF ALL THE DIRECTORS OF AVENG LIMITED IN TERMS OF POWERS OF ATTORNEYS SIGNED BY SUCH DIRECTORS

MAHOMED SEEDAT AND KOBUS VERSTER

ANNEXURE 1

PRO FORMA FINANCIAL INFORMATION OF THE AVENG GROUP

The pro forma financial information for the Aveng Group has been prepared to provide details of how each of the Blue Falcon Equity Interest disposal, Imvelo Equity Interest disposal, the Windfall Equity Interest disposal and N3TC Shares disposal and collectively the Proposed Transaction, might have affected the financial position and results of operations of the Group for the year ended 30 June 2016, adjusted for the pro forma financial effects of the Steeledale Transaction, the details of which are included in the relevant Circular to Aveng Shareholders dated Wednesday, 12 October 2016; and is provided for illustrative purposes only. The Directors are responsible for the preparation of the pro forma financial information. The pro forma statement of financial position of the Group at 30 June 2016 has been prepared on the assumption that each of the Blue Falcon Equity Interest disposal, Imvelo Equity Interest disposal, Windfall Equity Interest disposal and N3TC Shares disposal and collectively the Proposed Transaction, was effected on 30 June 2016. The pro forma statement of comprehensive earnings has been prepared on the assumption that each of the Blue Falcon Equity Interest disposal, Imvelo Equity Interest disposal, Windfall Equity Interest disposal and N3TC Shares disposal and collectively the Proposed Transaction was effected on 1 July 2015. For the purposes of the pro forma financial information, it has been assumed that the Purchase Price of the ACP Investment Portfolio reduces with its fair value as at 1 July 2015. Because of its nature, the pro forma financial information may not fairly present the Group's statement of financial position and results of operations after each of the Blue Falcon Equity Interest disposal, Imvelo Equity Interest disposal, Windfall Equity Interest disposal and N3TC Shares disposal and collectively the Proposed Transaction. The pro forma financial information has been prepared in accordance with the Group's accounting policies and the revised SAICA Guide on Pro forma Financial Information.

The pro forma financial information, as set out below, should be read in conjunction with the Independent Reporting Accountant's Report, which is included as Annexure 2 to this Circular.

PRO FORMA STATEMENT OF COMPREHENSIVE EARNINGS OF THE AVENG GROUP
											Adjustments
		Steeledale									that cannot
	30 June	Transaction	Blue Falcon Equity Interest			Imvelo Equity Interest	Windfall Equity Interest				be
	2016	pro forma	disposal		disposal		disposal		N3TC Shares disposal		allocated	Proposed Transaction
		After Column 1	Adjustments Column 2	After Column 3	Adjustments Column 4	After Column 5	Adjustments Column 6	After Column 7	Adjustments Column 8	After Column 9	Adjustments Column 10	Adjustments Column 11	After Column 12
ZARm	Audited	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma
Revenue	33 755	32 660	–	32 660	–	32 660	–	32 660	–	32 660	–	–	32 660
Cost of sales	(31 260)	(30 187)	–	(30 187)	–	(30 187)	–	(30 187)	–	(30 187)	–	–	(30 187)
Gross earnings	2 495	2 473	–	2 473	–	2 473	–	2 473	–	2 473	–	–	2 473
Other earnings	591	548	(38)	510	12	560	(78)	470	(67)	481	–	(171)	377
Operating expenses	(2 808)	(2 750)	–	(2 750)	–	(2 750)	–	(2 750)	–	(2 750)	(4)	(4)	(2 754)
Loss from equity-accounted investments	(132)	(132)	–	(132)	–	(132)	–	(132)	–	(132)	–	–	(132)
Net operating earnings/(loss)	146	139	(38)	101	12	151	(78)	61	(67)	72	(4)	(175)	(36)
Impairment/loss on derecognition of property, plant and
equipment and intangible assets	(333)	(331)	–	(331)	–	(331)	–	(331)	–	(331)	–	–	(331)
Profit on sale of property, plant and equipment	592	592		592		592	–	592	–	592	–	–	592
Earnings/(loss) before financing transactions	405	400	(38)	362	12	412	(78)	322	(67)	333	(4)	(175)	225
Finance earnings	211	209	–	209	–	209	–	209	–	209	–	–	209
Interest on convertible bonds	(225)	(225)	–	(225)	–	–	–	–	–	–	–	–	(225)
Other finance expenses	(327)	(324)	–	(324)	–	(324)	–	(324)	–	(324)	–	–	(324)
Earnings/(loss) before taxation	64	60	(38)	22	12	72	(78)	(18)	(67)	(7)	(4)	(175)	(115)
Taxation	(129)	(131)	8	(123)	(3)	(134)	18	(113)	15	(116)		38	(93)
(Loss)/earnings for the period	(65)	(71)	(30)	(101)	9	(62)	(60)	(131)	(52)	(123)	(4)	(137)	(208)

PRO FORMA STATEMENT OF COMPREHENSIVE EARNINGS OF THE AVENG GROUP											Adjustments		Pro forma
		Steeledale									that cannot		results for
	30 June	Transaction	Blue Falcon Equity Interest			Imvelo Equity Interest	Windfall Equity Interest				be		30 June
	2016	pro forma	disposal		disposal		disposal		N3TC Shares disposal		allocated		2016
		After	Adjustments	After	Adjustments	After	Adjustments	After	Adjustments	After	Adjustments	Adjustments	After
ZARm	Audited	Pro forma Column 1	Pro forma Column 2	Pro forma Column 3	Pro forma Column 4	Pro forma Column 5	Pro forma Column 6	Pro forma Column 7	Pro forma Column 8	Pro forma Column 9	Pro forma Column 10	Pro forma Column 11	Pro forma Column 12
(Loss)/earnings for the period	(65)	(71)	(30)	(101)	9	(62)	(60)	(131)	(52)	(123)	(4)	(137)	(208)
Other comprehensive earnings to be reclassified to
earnings or loss in subsequent periods net of
taxation
Exchange differences on translating foreign operations	786	786	–	786	–	786	–	786	–	786	–	–	786
Other comprehensive earnings for the period, net of
taxation	786	786	–	786	–	786	–	786	–	786	–	–	786
Total comprehensive earnings for the period	721	715	(30)	685	9	724	(60)	655	(52)	663	(4)	(137)	578
Total comprehensive earnings for the period
attributable to:
Equity-holders of the parent	676	670	(30)	640	9	679	(60)	610	(52)	618	(4)	(137)	533
Non-controlling interest	45	45		45	–	45	–	45	–	45	–	–	45
	721	715	(30)	685	9	724	(60)	655	(52)	663	(4)	(137)	578
(Loss) for the period attributable to:
Equity-holders of the parent	(101)	(107)	(30)	(137)	9	(98)	(60)	(167)	(52)	(159)	(4)	(137)	(244)
Non-controlling interest	36	36	–	36	–	36	–	36	–	36	–	–	36
	(65)	(71)	(30)	(101)	9	(62)	(60)	(131)	(52)	(123)	(4)	(137)	(208)
Other comprehensive earnings for the period, net of
taxation
Equity-holders of the parent	777	777	–	777	–	777	–	777	–	777	–	–	777
Non-controlling interest	9	9	–	9	–	9	–	9	–	9	–	–	9
	786	786	–	786	–	786	–	786	–	786	–	–	786

		Steeledale									Adjustments that cannot
	30 June	Transaction		Blue Falcon Equity Interest		Imvelo Equity Interest	Windfall Equity Interest				be
	2016	pro forma		disposal	disposal		disposal			N3TC Shares disposal	allocated	Proposed Transaction
		After	Adjustments	After	Adjustments	After	Adjustments	After	Adjustments	After	Adjustments	Adjustments	After
		Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7	Column 8	Column 9	Column 10	Column 11	Column 12
	Audited	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma
Results per share (cents)
Headline earnings (ZARm)	(299)	(305)	(30)	(335)	9	(296))	(60)	(365)	(52)	(357)	(4)	(137)	(442)
Loss – basic per share	(25.4)	(27.0)		(34.5)		(24.7)		(42.1)		(40.1)			(61.5)
Loss – diluted per share	(25.1)	(26.6)		(34.1)		(24.4)		(41.5)		(39.5)			(60.7)
Headline loss – basic per share	(75.3)	(76.8)		(84.4)		(74.6)		(91.9)		(89.9)			(111.3)
Headline loss – diluted per share	(74.4)	(75.9)		(83.3)		(73.6)		(90.8)		(88.8)			(109.9)
Net asset value (NAV) (ZARm)	13 556	13 549		13 549		13 549		13 549		13 549			13 545
Tangible net asset value (TNAV) (ZARm)	11 031	11 024		11 024		11 024		11 024		11 024			11 020
NAV per share	34.1	34.1		34.1		34.1		34.1		34.1			34.1
TNAV per share	27.8	27.8		27.8		27.8		27.8		27.8			27.8
Number of shares (millions)
In issue	417	417		417		417		417		417			417
Weighted average	397	397		397		397		397		397			397
Diluted weighted average	402	402		402		402		402		402			402

Notes:

• 1. The "30 June 2016" column presents the financial information relating to the Aveng Group, which has been extracted from the published results of the Aveng Group for the year ended 30 June 2016;
• 1. Column 1 presents the pro forma results of Aveng subsequent to the proposed Steeledale transaction, the details of which are included in the relevant Circular to Aveng shareholders dated Wednesday, 12 October 2016;
• 1. Column 2 presents the following adjustments which relate to the Blue Falcon Equity Interest disposal: (a) The reversal of the earnings relating to the Blue Falcon Equity Interest amounting to ZAR38 million, and the related taxation effect. This adjustment will have an ongoing effect on Aveng's statement of comprehensive earnings;
• 1. Column 3 presents the pro forma results of Aveng subsequent to the Steeledale Transaction and the Blue Falcon Equity Interest disposal on a standalone basis;
• 1. Column 4 presents the following adjustments which relate to the Imvelo Equity Interest disposal:
• (a) The reversal of the earnings relating to the Imvelo Equity Interest amounting to ZAR12 million (loss), and the related taxation effect. This adjustment will have an ongoing effect on Aveng's statement of comprehensive earnings;
• 1. Column 5 presents the pro forma results of Aveng subsequent to the Steeledale Transaction and the Imvelo Equity Interest disposal on a standalone basis;
• 1. Column 6 presents the following adjustments which relate to the Windfall Equity Interest disposal:
• (a) The reversal of the earnings relating to the Windfall Equity Interest amounting to ZAR78 million, and the related taxation effect. This adjustment will have an ongoing effect on Aveng's statement of comprehensive earnings;
• 1. Column 7 presents the pro forma results of Aveng subsequent to the Steeledale Transaction and the Windfall Equity Interest on a standalone basis;
• 1. Column 8 presents the following adjustments which relate to the N3TC Share disposal:
• (a) The reversal of the earnings relating to the N3TC Share disposal amounting to ZAR67 million, and the related taxation effect. This adjustment will have an ongoing effect on Aveng's statement of comprehensive earnings;
• 1. Column 9 presents the pro forma results of Aveng subsequent to the Steeledale Transaction and the N3TC Share on a standalone basis
• 1. Column 10 presents the estimated transaction costs of ZAR4 million, as detailed in paragraph 13 of this Circular, which will be expensed. This adjustment will not have an ongoing effect on Aveng's statement of comprehensive earnings.
• 1. Column 11 presents the following adjustments which relate to the Proposed Transaction on a collective basis after the Steeledale transaction:
• (a) The reversal of the earnings relating to the Equity Interests amounting to ZAR171 million, and the related taxation effect. This adjustment will have an ongoing effect on Aveng's statement of comprehensive earnings;
• (b) No impact relating to the disposal of the interest in the Aveng Africa Loans,
• (c) The estimated transaction costs of ZAR4 million, as detailed in paragraph 13 of this Circular, which will be expensed. This adjustment will not have an ongoing effect on Aveng's statement of comprehensive earnings;
• 1. Column 12 presents the pro forma statement of comprehensive earnings subsequent to the Steeledale Transaction and the Proposed Transaction on a collective basis.

											Adjustments
		Steeledale									that cannot
	30 June	Transaction		Blue Falcon Equity Interest		Imvelo Equity Interest	Windfall Equity Interest				be
	2016	pro forma	disposal			disposal	disposal		N3TC Shares disposal		allocated	Proposed Transaction
		After	Adjustments	After	Adjustments	After	Adjustments	After	Adjustments	After	Adjustments	Adjustments	After
		Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7	Column 8	Column 9	Column 10	Column 11	Column 12
ZARm	Audited	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma	Pro forma
ASSETS
Non-current assets
Goodwill arising on consolidation	342	342	–	342	–	342	–	342	–	342	–	–	342
Intangible assets	325	325	–	325	–	325	–	325	–	325	–	–	325
Property, plant and equipment	4 843	4 843	–	4 843	–	4 843	–	4 843	–	4 843	–	–	4 843
Equity-accounted investments	100	150	–	150	–	150	–	150	–	150	–	–	150
Infrastructure investments	177	177	–	177	–	177	–	177	–	177	–	–	177
Deferred taxation	1 858	1 858	–	1 858	–	1 858	–	1 858	–	1 858	–	–	1 858
Long-term receivable	–	24	–	24	–	24	–	24	–	24	–	–	24
Amounts due from contract customers	1 417	1 417	–	1 417	–	1 417	–	1 417	–	1 417	–	–	1 417
	9 062	9 136	–	9 136	–	9 136	–	9 136	–	9 136	–	–	9 136
Current assets
Inventories	2 211	2 211	–	2 211	–	2 211	–	2 211	–	2 211	–	–	2 211
Derivative instruments	20	20	–	20	–	20	–	20	–	20	–	–	20
Amounts due from contract customers	8 047	8 047	–	8 047	–	8 047	–	8 047	–	8 047	–	–	8 047
Trade and other receivables	2 058	2 058	–	2 058	–	2 058	–	2 058	–	2 058	–	–	2 058
Cash and bank balances	2 450	2 536	295	2 831	39	2 575	331	2 867	195	2 731	(4)	856	3 392
	14 786	14 872	295	15 167	39	14 911	331	15 203	195	15 067	(4)	856	15 728
Non-current assets held-for-sale	1 484	1 086	(295)	791	(39)	1 047	(331)	755	(195)	891	–	(860)	226
TOTAL ASSETS	25 332	25 094	–	25 094	–	25 094	–	25 094	–	25 094	(4)	(4)	25 090

PRO FORMA STATEMENT OF FINANCIAL POSITION OF THE AVENG GROUP

PRO FORMA STATEMENT OF FINANCIAL POSITION OF THE AVENG GROUP
											Adjustments
		Steeledale									that cannot
	30 June	Transaction	Blue Falcon Equity Interest		Imvelo Equity Interest		Windfall Equity Interest				be
	2016	pro forma	disposal		disposal		disposal		N3TC Shares disposal		allocated	Proposed Transaction
		After	Adjustments	After	Adjustments	After	Adjustments	After	Adjustments	After	Adjustments	Adjustments	After
Rm	Audited	Pro forma Column 1	Pro forma Column 2	Pro forma Column 3	Pro forma Column 4	Pro forma Column 5	Pro forma Column 6	Pro forma Column 7	Pro forma Column 8	Pro forma Column 9	Pro forma Column 10	Pro forma Column 11	Pro forma Column 12
EQUITY AND LIABILITIES
Equity
Share capital and share premium	2 009	2 009	–	2 009	–	2 009	–	2 009	–	2 009	–	–	2 009
Other reserves	1 821	1 821	–	1 821	–	1 821	–	1 821	–	1 821	–	–	1 821
Retained earnings	9 689	9 682	–	9 682	–	9 682	–	9 682	–	9 682	(4)	(4)	9 678
Equity attributable to equity-holders of parent	13 519	13 512	–	13 512	–	13 512	–	13 521	–	13 512	(4)	(4)	13 508
Non-controlling interest	37	37	–	37	–	37	–	37	–	37	–	–	37
TOTAL EQUITY	13 556	13 549	–	13 549	–	13 549	–	13 549	–	13 549	(4)	(4)	13 545
Liabilities
Non-current liabilities	266
Borrowings and other liabilities Deferred taxation	1 770	266 1 770	–	266 1 770	–	266 1 770	–	266 1 770	(33)	233 1 770	–	(33)	233 1 770
Employee-related payables	379	379	– –	379	– –	379	– –	379	– –	379	– –	– –	379
	2 415	2 415	–	2 415		2 415	–	2 415	(33)	2 382	–	(33)	2 382
Current liabilities
Amounts due to contract customers	1 322	1 322	–	1 322	–	1 322	–	1 322	–	1 322	–	–	1 322
Borrowings and other liabilities	1 214	1 214	–	1 214	–	1 214	–	1 214	–	1 214	–	–	1 214
Payables other than contract related	–	–	–	–	–	–	–	–	–	–	–	–	–
Employee-related payables	559	559	–	559	–	559	–	559	–	559	–	–	559
Derivative instruments	27	27	–	27	–	27	–	27	–	27	–	–	27
Trade and other payables	5 886	5 902	–	5 902	–	5 902	–	5 902		5 902	–	–	5 902
Taxation payable	106	106	–	106	–	106	–	106	33	139	–	33	139
	9 114	9 130	–	9 130	–	9 130	–	9 130	33	9 163	–	33	9 163
Non-current liabilities held-for-sale	247	–	–	–	–	–	–	–	–	–	–	–	–
TOTAL LIABILITIES	11 776	11 545	–	11 545	–	11 545	–	11 545	–	11 545	–	–	11 545
TOTAL EQUITY AND LIABILITIES	25 332	25 094	–	25 094	–	25 094	–	25 094	–	25 094	(4)	(4)	25 090

Notes:

• 1. The "30 June 2016" column presents the financial information relating to the Aveng Group, which has been extracted from the published results of the Aveng Group for the year ended 30 June 2016;
• 1. Column 1 presents the pro forma results of Aveng subsequent to the proposed Steeledale Transaction, the details of which are included in the relevant Circular to Aveng shareholders dated Wednesday, 12 October 2016;
• 1. Column 2 presents the following adjustments which relate to the Blue Falcon Equity Interest disposal:
• (a) The receipt of the cash proceeds amounting to ZAR295 million relating to the Blue Falcon Equity Interest disposal as obtained from the sales agreement and the reversal of the non-current assets held-for-sale of the same amount.
• 1. Column 3 presents the pro forma financial position of Aveng subsequent to the Steeledale Transaction and the Blue Falcon Equity Interest disposal on a standalone basis;
• 1. Column 4 presents the following adjustments which relate to the Imvelo Equity Interest disposal:
• (a) The receipt of the cash proceeds amounting to ZAR39 million relating to the Imvelo Equity Interest disposal as obtained from the Share Sale Agreement and the reversal of the non-current assets held-for-sale of the same amount.
• 1. Column 5 presents the pro forma financial position of Aveng subsequent to the Steeledale Transaction and the Imvelo Equity Interest disposal on a standalone basis;
• 1. Column 6 presents the following adjustments which relate to the Windfall Equity Interest disposal:
• (a) The receipt of the cash proceeds amounting to ZAR331 million relating to the Windfall Equity Interest disposal as obtained from the sales Agreement and the reversal of the non-current assets held-for-sale of the same amount.
• 1. Column 7 presents the pro forma financial position of Aveng subsequent to the Steeledale Transaction and the Windfall Equity Interest disposal on a standalone basis;
• 1. Column 8 presents the following adjustments which relate to the N3TC Share disposal:
• (a) The receipt of the cash proceeds amounting to ZAR195 million relating to the N3TC Share disposal as obtained from the Share Sale Agreement and the reversal of the non-current assets held-for-sale of the same amount.
• (b) The transfer of tax payable from deferred taxation of ZAR33 million as obtained from the tax calculation of the tax paying entity related to the Proposed Transaction.
• 1. Column 9 presents the pro forma financial position of Aveng subsequent to the Steeledale Transaction and the N3TC Share disposal on a standalone basis;
• 1. Column 10 presents the estimated transaction costs of ZAR4 million, as detailed in paragraph 13 of this Circular, which will be expensed.
• 1. Column 11 presents the following adjustments which relate to the Proposed Transaction on a collective basis after the Steeledale Transaction:
• (a) The receipt of the cash proceeds amounting to ZAR860 million as obtained from the Share Sale Agreement and the reversal of the noncurrent assets held-for-sale of the same amount. The Aveng Africa Loans, which collectively amount to ZAR3.9 million, are included in the non-current assets held-for-sale amounting to ZAR860 million at a value of ZAR1;
• (b) The payment of transaction costs of ZAR4 million, as detailed in paragraph 13 of this Circular, which will be expensed; and
• (c) The transfer of tax payable from deferred taxation of ZAR33 million as obtained from the tax calculation of the tax paying entity related to the Proposed Transaction. No further tax movements are assumed as Aveng Africa is in a tax loss position.
• 1. Column 12 presents the pro forma statement of financial position subsequent to the Steeledale Transaction and the Proposed Transaction on a collective basis.

INDEPENDENT REPORTING ACCOUNTANT'S REPORT ON THE PRO FORMA FINANCIAL INFORMATION OF AVENG

The Directors Aveng Limited Aveng Park 1 Jurgens Street Jet Park Boksburg 1459

INDEPENDENT REPORTING ACCOUNTANT'S ASSURANCE REPORT ON THE COMPILATION OF THE PRO FORMA FINANCIAL INFORMATION OF AVENG LIMITED INCLUDED IN THE CIRCULAR TO SHAREHOLDERS

We have completed our assurance engagement to report on the compilation of pro forma financial information of Aveng Limited by the Directors. The pro forma financial information, as set out on pages 17 to 24 of the Circular relating to the proposed sale of the Aveng Capital Partners Investment Portfolio and Aveng Africa Loans consists of the consolidated statement of comprehensive earnings for the year ended 30 June 2016, the consolidated statement of financial position at 30 June 2016 and the pro forma financial effects (collectively the "pro forma financial information"). The pro forma financial information has been compiled by the directors on the basis of the applicable criteria specified in the JSE Limited (JSE) Listings Requirements.

The pro forma financial information has been compiled by the Directors to illustrate the impact of the transaction, described in paragraph 2 on pages 10 to 12 of the Circular, on the Group's consolidated financial position as at 30 June 2016, as if the transaction had taken place at 30 June 2016 and the Group's consolidated financial performance for the year then ended, as if the transaction had taken place at 1 July 2015. As part of this process, information about the Group's consolidated financial position and consolidated financial performance has been extracted by the Directors from the Company's consolidated financial results for the year ended 30 June 2016, on which an audit report has been published.

Directors' responsibility for the pro forma financial information

The directors are responsible for compiling the pro forma financial information on the basis of the applicable criteria specified in the JSE Listings Requirements as described in paragraph 3 on page 14 of the Circular. The Directors of Aveng Limited are also responsible for the financial information from which it has been prepared.

Our independence and quality control

We have complied with the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants and the Code of Professional Conduct for Registered Auditors issued by the Independent Regulatory Board for Auditors, which includes independence and other requirements founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

In accordance with International Standard on Quality Control 1, Ernst & Young Inc. maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting accountant's responsibility

Our responsibility is to express an opinion about whether the pro forma financial information has been compiled, in all material respects, by the Directors on the basis specified in the JSE Listings Requirements. We conducted our engagement in accordance with the International Standard on Assurance Engagements (ISAE) 3420, Assurance Engagements to Report on the Compilation of Pro forma Financial Information Included in a Prospectus, issued by the International Auditing and Assurance Standards Board, which is applicable to an engagement of this nature.

This standard requires that we comply with ethical requirements and plan and perform our procedures to obtain reasonable assurance about whether the Directors have compiled the pro forma financial information, in all material respects, on the basis specified in the JSE Listings Requirements.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the pro forma financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the pro forma financial information.

As the purpose of pro forma financial information included in the Circular is solely to illustrate the impact of a significant corporate action or transaction on unadjusted financial information of the entity as if the transaction had occurred or had been undertaken at an earlier date selected for purposes of the illustration, we do not provide any assurance that the actual outcome of the transaction at 30 June 2016 would have been as presented.

A reasonable assurance engagement to report on whether the pro forma financial information has been compiled, in all material respects, on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the directors in the compilation of the pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the transaction, and to obtain sufficient appropriate evidence about whether:

• The related pro forma adjustments give appropriate effect to those criteria; and
• The pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

Our procedures selected depend on our judgement, having regard to our understanding of the nature of the company, the transaction in respect of which the pro forma financial information has been compiled, and other relevant engagement circumstances.

Our engagement also involves evaluating the overall presentation of the pro forma financial information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion, the pro forma financial information has been compiled, in all material respects, on the basis of the applicable criteria specified by the JSE Listings Requirements and described in paragraph 3 on page 14 of the Circular.

Ernst & Young Inc. Director: Louis van Breda CA(SA) Registered Auditor Reporting Accountant Specialist

Date: 30 September 2016

REPORT OF HISTORICAL FINANCIAL INFORMATION OF BLUE FALCON FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013

Basis of preparation

The statements of comprehensive income, statements of cash flows and the statements of changes in equity for the three years ended 31 December 2015, the statements of financial position as at 31 December 2015, 2014 and 2013, accounting policies and the notes thereto ("historical financial information of Blue Falcon") have been extracted, from the audited financial statements of Blue Falcon for the years ended 31 December 2015, 2014 and 2013 ("audited financial statements"). The historical financial information is prepared in accordance with the requirements of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the disclosures required by the JSE Listings Requirements.

The additional disclosure required in terms of paragraphs 8.11 and 8.12 of the JSE Listings Requirements, to the extent applicable, have been included in the report of historical financial information of Blue Falcon.

The audited financial statements were audited by Deloitte & Touche and unqualified audit opinions were issued in respect thereto. Deloitte & Touche is also the Independent Reporting Accountant to Aveng with regards to the historical financial information of Blue Falcon and has issued the Reporting Accountant's report on this report of historical financial information of Blue Falcon which is included as Annexure 4 to this Circular.

The Directors are responsible for the report of historical financial information of Blue Falcon.

Directors' commentary

Blue Falcon 140 Trading (RF) Proprietary Limited ("the Company") is a renewable energy company with the purpose of producing wind energy and consequently supplying electrical energy to Eskom under a 20-year power purchase agreement.

Revenue was earned from the sale of electrical energy to Eskom and other income (delay damages) and totalled ZAR205 684 337 for the year ended 31 December 2015 (2014: ZARnil; 2013: ZARnil).

As at 31 December 2015, the company had a receivable of ZAR65 849 316 (2014: ZARnil; 2013: ZARnil) relating to the substation built by the company that was transferred to Eskom. The substation was transferred to Eskom at commencement operation date and the receivable will be utilised over its useful life.

The company has interest rate swap contracts, which it designates as hedge accounting instruments. The company uses these instruments to hedge potential cash flow variations deriving from interest payments on non-current variable financial liabilities. The fair value of the derivative financial instrument liability as at 31 December 2015 was ZAR31 761 565 (2014: ZAR98 630 343; 2013: ZAR34 356 035). The interest rate swaps are used to fix or limit the company's exposure to the volatility in variable interest rates applicable to hedging financing. These financial derivatives are used to cover cash flows from debt contracted to finance wind facilities. Changes in the fair value of the interest rate swaps, net of taxation of ZAR48 145 520 (gain) were deferred and recognised in other comprehensive income for the year ended 31 December 2015 (2014: ZAR46 279 502 (loss); 2013: ZAR24 736 345 (loss)).

BLUE FALCON STATEMENT OF FINANCIAL POSITION at 31 December

		2015	2014	2013
	Notes	R	R	R
ASSETS
Non-current assets		2 398 079 406	2 179 384 639	712 671 233
Property, plant and equipment	4	2 160 024 713	1 975 424 305	527 348 005
Intangible assets	5	171 874 119	175 515 738	175 515 738
Deferred taxation	6	2 200 058	27 616 496	9 619 690
Financial assets	7	828 100	828 100	187 800
Long term portion of receivables	8	63 152 416	–	–
Current assets		515 436 337	43 955 964	65 746 814
Short term portion of receivables	8	2 696 900	–	–
Trade and other receivables	9	79 098 279	15 869 753	20 154 502
Cash and cash equivalents	10	433 641 158	28 086 211	45 592 312
Total assets		2 913 515 743	2 223 340 603	778 418 047
EQUITY AND LIABILITIES
Capital and reserves		276 239 024	166 300 253	57 492 755
Share capital	11	312 322 704	237 314 100	82 229 100
Other reserves	12	(22 868 327)	(71 013 847)	(24 736 345)
Accumulated loss		(13 215 353)	–	–
Non-current liabilities		2 386 250 515	1 873 712 203	700 400 114
Shareholder loans	13	428 876 708	307 588 590	104 157 754
Fair value of financial instrument	14	31 761 565	98 630 343	34 356 035
Loans and other borrowings	15	1 925 612 242	1 467 493 270	487 504 325
Other debts	15	–	–	74 382 000
Current liabilities		251 026 204	183 328 147	20 525 178
Loans and other borrowings	15	59 491 400	2 666 631	–
Trade and other payables	16	117 152 804	106 279 516	20 525 178
Other debts	23	74 382 000	74 382 000	–
Total equity and liabilities		2 913 515 743	2 223 340 603	778 418 047

BLUE FALCON STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December

		2015	2014	2013
	Notes	R	R	R
Revenue	19	205 684 337	–	–
Gross profit		205 684 337	–	–
General and administrative expenses		(34 890 536)	–	–
Depreciation and amortisation		(55 424 766)	–	–
Operating profit	17	115 369 035	–	–
Investment income on call accounts		1 459 852	–	–
Finance charges – loans and other borrowings	18	(107 069 384)	–	–
Finance charges – shareholder loans	18	(16 050 453)	–	–
Unrealised foreign exchange losses		(127 639)	–	–
Realised foreign exchange losses		(103 583)	–	–
Loss before taxation		(6 522 172)	–	–
Taxation	20	(6 693 181)	–	–
Loss for the year		(13 215 353)	–	–
Other comprehensive gain/(loss), net of taxation
Item that may be reclassified subsequently to profit or loss:
Fair value gain/(loss) on financial derivative instrument, net of taxation		48 145 520	(46 277 502)	(24 736 345)
Total comprehensive profit/(loss) for the year		34 930 167	(46 277 502)	(24 736 345)

STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December

		Other	Accumulated
	Share capital	reserves	loss	Total
	R	R	R	R
Balance at 1 January 2013	100	–	–	100
Issue of share capital	82 229 000	–	–	82 229 000
Fair value of financial derivative instrument recognised directly in equity	–	(24 736 345)	–	(24 736 345)
Balance at 1 January 2014	82 229 100	(24 736 345)	–	57 492 755
Issue of share capital	155 085 000	–	–	155 085 000
Fair value of financial derivative instrument recognised directly in equity	–	(46 279 502)	–	(46 277 502)
Balance at 31 December 2014	237 314 100	(71 013 847)	–	166 300 253
Loss for the year	–	–	(13 215 353)	(13 215 353)
Issue of share capital	75 008 604	–	–	75 008 604
Dividend paid	–	–	–	–
Fair value of financial derivative instrument recognised directly in equity	–	48 145 520	–	48 145 520
Balance at 31 December 2015	312 322 704	(22 868 327)	(13 215 353)	276 239 024

BLUE FALCON STATEMENT OF CASH FLOWS for the year ended 31 December

		2015	2014	2013
	Notes	R	R	R
Cash flows from operating activities
Cash generated from operations	21	119 780 533	90 039 087	(87 010 643)
Investment income		1 459 852	–	–
Finance charges paid		(134 062 543)	–	–
Net cash (outflow) inflow from operating activities		(12 822 158)	90 039 087	(87 010 643)
Cash flows from investing activities
Additions to property, plant and equipment		(154 354 663)	(1 434 199 864)	(483 897 642)
Additions to financial asset		–	(640 300)	(26 751 738)
Additions to receivables		(67 422 508)	–	(187 800)
Net cash outflow from investing activities		(221 777 171)	(1 434 840 164)	(510 837 180)
Cash flows from financing activities
Proceeds from issue of share capital		75 008 604	155 085 000	82 229 000
Proceeds from shareholder loan		91 639 253	189 554 400	72 757 802
Proceeds from loan and borrowings		473 506 419	982 655 576	487 504 325
Net cash inflow from financing activities		640 154 276	1 327 294 976	642 491 127
Net increase (decrease) in cash and cash equivalents		405 554 947	(17 506 101)	44 643 304
Cash and cash equivalents at the beginning of the year		28 086 211	45 592 312	949 008
Cash and cash equivalents at the end of the year	10	433 641 158	28 086 211	45 592 312

NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December

1. ACCOUNTING POLICIES

The financial statements have been prepared in accordance with International Financial Reporting Standards and JSE Listings Requirements. The financial statements have been prepared on the historical cost basis, and incorporate the principal accounting policies set out below. They are presented in South African Rand.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.

All interest rate swap hedging contracts are classified as level 1 instruments as the prices are based on quoted prices (unadjusted) in active markets for identical assets or liabilities.

1.1 Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. The company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised using tax rates (and laws) that have been enacted or substantively enacted by the reporting date. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the company intends to settle its current tax assets and liabilities on a net basis.

1.2 Financial instruments

• 1.2.1 Financial assets
• 1.2.1.1 Non-current financial assets

Non-current financial assets are financial assets with fixed maturity dates and not recoverable within the next 12 months of the reporting date.

Deposits are stated at cost and held to maturity dates. The company has positive intent and ability to hold to maturity.

1.2.1.2. Current financial assets

Current financial assets are financial assets when maturity is within 12 months of the reporting date.

Trade and other receivables

Trade and other receivables are stated at nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.

Cash and cash equivalents

Cash and cash equivalents are defined as cash on hand, demand deposits, bank overdrafts and short-term highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. Cash and cash equivalents are measured at cost or amortised cost.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period. Income is recognised on an effective interest basis for debt instruments other than those financial assets designated as at fair value through profit or loss.

Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each reporting date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

For all financial assets evidence of impairment could include:

• Significant financial difficulty of the issuer or counterparty; or
• Default or delinquency in interest or principal payments; or
• It becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the company's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 30 days, as well as observable changes in national or local economic conditions that correlate with a default on receivables.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.

Impairment of financial assets

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account.

When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

Derecognition of financial assets

The company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

If the company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the company retains substantially all the risks and rewards of ownership of a transferred financial asset, the company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

1.2.2 Financial liabilities and equity instruments issued by the company

Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.

Borrowings

The non-interest-bearing loans are recorded at the proceeds received, net of direct issue costs.

Trade and other payables

Trade and other payables are stated at their nominal value.

Derecognition of financial liabilities

The company derecognises financial liabilities when, and only when, the company's obligations are discharged, cancelled or they expire.

1.3 Foreign currency translation

1.3.1 Functional and presentation currency

Items included in the financial statements of the company are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The financial statements are presented in South African Rand, which is Blue Falcon 140 Trading (RF) Proprietary (Pty) Ltd's functional and presentation currency.

1.3.2 Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.

Translation differences on financial assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available-for-sale financial assets are included in the fair value reserve in equity.

1.4 Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and accumulated impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains/ losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statement of comprehensive income during the reporting period in which they are incurred.

Depreciation on property, plant and equipment is calculated using the straight-line method to allocate their cost, net of their estimated residual values, over their estimated useful lives.

The depreciation method, residual values and useful lives are reviewed at each reporting date with the effects of any changes accounted for on a prospective basis.

The following percentages are used in the calculation of depreciation:

Plant	4.00%
Furniture	16.67%
Computer equipment	33.33%

Land and capital work in progress is not depreciated.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount. These are included in the statement of comprehensive income.

1.5 Intangible assets

Intangible assets are stated at cost less accumulated amortisation and accumulated impairment.

Amortisation of intangible assets is calculated on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes accounted for on a prospective basis.

The following percentages are used in the calculation of amortisation: Development costs 4.00% Computer software 33.33%

1.6 Provisions

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

1.7 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties.

The company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and costs incurred or to be incurred in respect of the transaction can be reliably measured. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

1.8 Employee benefits

Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

1.9 Impairment of assets

Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cashgenerating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

1.10 Derivative financial instruments and hedges

The company uses interest rate swaps to mitigate the financial risks of exposure to interest rate fluctuations. It is not company policy to acquire financial instruments for speculative purposes.

The use of financial derivatives is governed by the accounting policies of the company and is approved by the board of directors.

Derivatives are carried at fair value at year end and are recognised under non-current financial assets if the financial instrument value is positive and non-current liabilities if the financial instrument value is negative. Changes in fair value of the derivative financial instrument are recognised in the statement of comprehensive income when they arise, except for derivatives that are designated as highly effective as hedging instruments.

Fair value hedges are hedges contracted to totally or partially cover the exposure to changes of the underlying assets and liabilities recognised in the statement of financial position. The portion of the underlying for which the risk is being hedged is carried at fair value through profit or loss, as is the hedging instrument.

Hedge accounting is only applicable when the hedge is expected to be effective at inception of the hedge and in subsequent years in achieving offsetting changes in fair value to the hedge risk. It is company policy not hedge forecast transactions and it only hedges firm commitments.

Interest rate swaps are measured based on the related amount of future settlements between fixed and variable interest rates, in accordance with implicit market rates, obtained from long-term swap rate curves. The calculation is based on implicit volatility using options, fair value caps and floor measurement formulae.

2. ADOPTION OF NEW AND REVISED STANDARDS

2.1 Standards and interpretations effective in the current period

The company adopted the following standards during the year:

• IFRS 7: Financial Instruments: Disclosures
• IAS 1: Presentation of Financial Statements (amendments)
• IAS 39: Financial Instruments Recognition and Measurement (amendments)

Adoption of these revised standards did not result in any restatement of comparative information or additional disclosure.

2.2 Early adoption of standards and interpretations

The company has not early adopted any standard or interpretations.

2.3 Accounting standards and interpretations issued but not yet effective

The following table contains effective dates of new and revised standards and interpretations which have not been early adopted by the company and that might affect future financial periods, on the assumption that the company will continue with its current activities, which were in issue at 31 December 2015. It is the intention of the company to adopt the new or revised standards in the period they become effective:

	Revised International Financial Reporting Standards	Effective date
IFRS 15:	Revenue from Contracts with Customers	Annual periods beginning on or after 1 January 2017
IFRS 9:	Financial Instruments	Annual periods beginning on or after 1 January 2018
IFRS 7:	Financial Instruments Disclosure	Annual periods beginning on or after 1 January 2016
IAS 1:	Presentation of Financial Statements (amendments)	Annual periods beginning on or after 1 January 2016
IAS 16:	Property, Plant and Equipment (amendments)	Annual periods beginning on or after 1 January 2016
IAS 19: IAS 38:	Employee Benefits (amendments) Intangible Assets (amendments)	Annual periods beginning on or after 1 January 2016 Annual periods beginning on or after 1 January 2016

A reliable estimate of the impact of the adoption of the recent amendments for the company has not yet been determined.

3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Management has not made any judgements or assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year except for the following:

• useful lives and residual values used to calculate depreciation of property, plant and equipment;
• future cash flows used to test for impairment of property, plant and equipment and intangible assets;
• recoverability of receivables;
• valuation of derivative instruments;
• determination of the carrying value of the receivable detailed in note 8; and
• recoverability of the deferred taxation asset.

4. PROPERTY, PLANT AND EQUIPMENT

	Opening				Closing
	balance	Additions	Disposals	Transfers	balance
	R	R	R	R	R
2015
Cost
Land	28 200 000	–	–	–	28 200 000
Capital work in progress	1 947 224 305	236 383 555	–	(2 183 607 860)	–
Plant	–	–	–	2 182 957 234	2 182 957 234
Furniture	–	–	–	21 274	21 274
Computer equipment	–	–	–	55 436	55 436
	1 975 424 305	236 383 555	–	(573 916)	2 211 233 944
	Opening				Closing
	balance	Additions	Disposals	Transfers	balance
	R	R	R	R	R
Accumulated depreciation
Plant	–	51 194 833	–	–	51 194 833
Furniture	–	2 079	–	–	2 079
Computer equipment	–	12 319	–	–	12 319
	–	51 209 231	–	–	51 209 231
Net book value	1 975 424 305				2 160 024 713
	Opening				Closing
	balance	Additions	Disposals	Transfers	balance
	R	R	R	R	R
2014
Cost
Land	28 200 000	–	–	–	28 200 000
Capital work in progress	499 148 005	1 448 076 300	–	–	1 947 224 305
	527 348 005	1 448 076 300	–	–	1 975 424 305
Net book value	527 348 005				1 975 424 305
2013
Cost
Land	28 200 000	–	–	–	28 200 000
Capital Work in progress	15 250 363	483 897 642	–	–	499 148 005
	43 450 363	483 897 642	–	–	527 348 005
Net book value	43 450 363				527 348 005

During the year finance costs of ZAR94 809 194 (2013: ZAR27 379 215) have been capitalised to capital work in progress. Finance has been obtained specifically for the purpose of construction of the capital work in progress asset and borrowing costs are capitalised at the rate of interest incurred which ranges from prime -0.5% to monthly JIBAR +3.15% (2013: prime -0.5% to monthly JIBAR +3.15%).

5. INTANGIBLE ASSETS

	Opening balance	Additions	Transfers	Disposals	Closing balance
	R	R	R	R	R
2015
Cost
Development cost Computer software	175 515 738 –	– –	– 573 916	– –	175 515 738 573 916
	175 515 738	–	573 916	–	176 089 654
	Opening				Closing
	balance	Additions	Transfers	Disposals	balance
	R	R	R	R	R
Accumulated amortisation
Development cost Computer software	– –	4 103 372 112 163	– –	– –	4 103 372 112 163
	–	4 215 535	–	–	4 215 535
Net book value	175 515 738				171 874 119
	Opening				Closing
	balance	Additions	Transfers	Disposals	balance
	R	R	R	R	R
2014 Cost
Development cost	175 515 738	–	–	–	175 515 738
	175 515 738	–	–	–	175 515 738
	Opening				Closing
	balance	Additions	Transfers	Disposals	balance
	R	R	R	R	R
Accumulated amortisation Development cost	–	–	–	–	–
Net book value	175 515 738				175 515 738
	Opening				Closing
	balance	Additions	Transfers	Disposals	balance
	R	R	R	R	R
2013
Cost Development cost	148 764 000	26 751 738	–	–	175 515 738
	148 764 000	26 751 738	–	–	175 515 738
	Opening				Closing
	balance	Additions	Transfers	Disposals	balance
	R	R	R	R	R
Accumulated amortisation Development cost	–	–	–	–	–
Net book value	148 764 000				175 515 738
DEFERRED TAXATION
			2015	2014	2013

	R	R	R
Opening balance	27 616 496	9 619 690	–
Charged via the statement of changes in equity (refer note 12)	(18 723 257)	17 996 806	9 619 690
Credited via statement of comprehensive income	(6 693 181)	–	–
Closing balance	2 200 058	27 616 496	9 619 690
Deferred taxation comprises:
Cash flow hedges	8 893 238	27 616 496	9 619 690
Estimated tax loss	288 716 952	43 941 925	–
Capital work in progress	–	(43 351 860)	–
Capital allowances	(295 410 132)	–	–
Prepayments	–	(590 065)	–
	2 200 058	27 616 496	9 619 690

7. FINANCIAL ASSETS

	Opening balance R	Additions R	Disposals R	Balance R
2015
Deposits	828 100	–	–	828 100
2014
Deposits	187 800	640 300	–	828 100
2013
Deposits	–	187 800	–	187 800
RECEIVABLE
		2015	2014	2013
		R	R	R
Eskom substation and overhead line transferred		67 422 508	–	–
Amount settled		(1 573 192)	–	–
		65 849 316	–	–
Long-term portion of receivable		63 152 416	–	–
Current position transferred to current assets		2 696 900	–	–

The receivable relates to the substation that was transferred to Eskom. The company built the Eskom portion of the substation. The asset was transferred to Eskom at commencement operation date. The receivable will be settled over the useful life of the asset.

65 849 316 – –

9. TRADE AND OTHER RECEIVABLES

	2015	2014	2013
	R	R	R
Trade receivable	68 305 871	–
Value added taxation – South African Revenue Services	–	13 507 420	684 784
Prepayments	5 489 998	2 107 376	6 892 135
Other receivables	593 787	–	12 370 429
Related party receivable (note 22)	4 708 623	254 957	207 154
	79 098 279	15 869 753	20 154 502

The average credit period is 45 days and no interest is charge on the first 45 days. Thereafter interest is charge at the prime rate on the outstanding balance. No allowance for doubtful debts has been raised on trade receivables as the company expects to recover all amounts in full. The company has one customer who is a parastatal. No trade receivables were past due at the reporting date.

In determining the recoverability of a trade receivable, the company considers any changes in the credit quality of the trade receivable from the date credit was initially granted up to the end of the reporting period.

10. CASH AND CASH EQUIVALENTS

	2015 R	2014 R	2013 R
Cash and cash equivalents comprise:
Current account	179 404	28 086 211	45 592 312
Call deposit account	120 600 000	–	–
Debt service reserve account	115 559 660	–	–
Liquidity reserve account	16 912 153	–	–
Nedbank restricted account	180 389 941	–	–
	433 641 158	28 086 211	45 592 312

Access to the Nedbank restricted account facility is restricted until such time that the company is granted take-over of the wind farm from the contractor. The account facility terminates 31 March 2016.

11. SHARE CAPITAL

	2015	2014	2013
	R	R	R
Authorised
Class A: 400 000 no par value shares
Class B: 200 000 no par value shares
Issued
Class A: 173 519 no par value shares	173 519 100	131 840 100	45 683 100
Class B: 138 804 no par value shares	138 803 604	105 474 000	36 546 000
Closing balance	312 322 704	237 314 100	82 229 100
Opening balance	237 314 100	82 229 100	100
Shares issued during the year	75 008 604	155 085 000	82 229 000
Closing balance	312 322 704	237 314 100	82 229 100

The unissued shares were placed under the sole and absolute control of the directors by the shareholders. This authority will remain until the next annual general meeting.

12. OTHER RESERVES

	2015 R	2014 R	2013 R
Balance at the beginning of the year	71 013 847	24 736 345	–
(Gain) loss arising from changes in fair value of financial derivative instruments	(66 868 777)	64 274 308	34 356 035
Deferred taxation related to loss recognised in equity	18 723 257	(17 996 806)	(9 619 690)
Balance at the end of the year	22 868 327	71 013 847	24 736 345
Comprising:
Changes in fair value of financial derivative instruments	31 761 565	98 630 343	34 356 035
Deferred taxation	(8 893 238)	(27 616 496)	(9 619 690)
	22 868 327	71 013 847	24 736 345

13. SHAREHOLDER LOANS

	Principal	Interest	Total
2015
Acciona Energy South Africa (Pty) Ltd	243 331 591	30 077 224	273 408 815
Aveng Africa (Pty) Ltd	138 363 226	17 104 667	155 467 893
	381 694 817	47 181 891	428 876 708
2014
Acciona Energy South Africa (Pty) Ltd	184 911 292	11 175 987	196 087 279
Aveng Africa (Pty) Ltd	105 144 272	6 357 039	111 501 311
	290 055 564	17 533 026	307 588 590

Interest on shareholders loans is charged at prime less 0.5% (2014: prime less 0.5%). Repayments are not expected within the next year.

2013

Acciona Energy South Africa (Pty) Ltd	64 069 492	2 331 076	66 400 568
Aveng Africa (Pty) Ltd	36 431 672	1 325 514	37 757 186
	100 501 164	3 656 590	104 157 754

Interest on shareholder loans is charged at prime less 0.5% (2012: prime less 0.5%). Further drawdowns are expected within the next 12 months. Repayments are expected within the next five years, once the company reaches commercial operations date.

14. FINANCIAL INSTRUMENTS – DERIVATIVE

The company has contracts, which it designates as hedge accounting instruments. The company uses these instruments to hedge potential cash flow variations deriving from interest payments on non-current variable financial liabilities.

Derivatives contracted and open at 31 December 2015, 2014 and 2013 are recognised in the statement of financial position as follows:

	2015	2014	2013
	R	R	R
Interest rate swap
Nominal value contracted	1 975 286 060	1 902 606 240	581 107 795
Derivative financial instrument liability	31 763 565	98 630 343	34 356 035

The interest rate derivatives are the interest rate swaps used to fix or limit movement in variable rates applicable to hedging financing. These financial derivatives are used to cover cash flows from debt contracted to finance wind facilities. At 31 December 2015, fixed interest rates for these financial derivatives ranged between 6.16% and 9.5% (2014: 8.16% and 9.5%) (2013: 6.28% and 9.5%)

The amounts recognised by the company are based on market values of the equivalent instrument at the reporting date. Changes in fair value of these swaps are deferred and recognised in equity. See note 12. The deferred tax asset generated by the recognition of these instruments amounts to ZAR8 893 238 (2014: ZAR27 616 496) (2013: ZAR9 619 690).

The methods and criteria used by the company to measure the fair value of the financial instruments are based on estimated future cash flows.

The nominal amount does not represent the risk assumed by the company, as the amount is merely the basis on which settlement of the derivative is calculated.

15. LOANS AND OTHER BORROWINGS

	2015 R	2014 R	2013 R
Principal debt amount	1 972 615 429	1 500 844 440	520 075 951
Capitalised arranging fees	(33 579 795)	(33 579 795)	(33 579 795)
Unwinding of capitalised arranging fees	4 630 686	2 895 256	1 008 169
	1 943 666 320	1 470 159 901	487 504 325
Loan principle non-current portion	1 925 612 242	1 467 493 270	487 504 325
Loan principle current portion	18 054 078	2 666 631	–
	1 943 666 320	1 470 159 901	487 504 325

Included in the current portion of loans and borrowings disclosed on the face of the statement of financial position are accrued finance charges of ZAR41 437 322.

Interest is payable bi-annually in April and October at the monthly JIBAR rate plus the operating margin of 2.94% (2014: JIBAR rate plus the construction margin of 3.15%). The final loan repayment will be in April 2031. The shares issued in the company have been ceded, in securitatem debiti, as security for the debt.

	2015 R	2014 R	2013 R
Other debts
Aveng Africa Proprietary Limited	–	74 382 000	74 382 000
Less: Transferred to current liabilities	–	(74 382 000)	–
	–	–	74 382 000

The debt is repayable on successful completion of the development which will not occur within the next 12 months. No interest was payable on the amount owing in the current year.

16. TRADE AND OTHER PAYABLES

	2015	2014	2013
	R	R	R
Trade payables	14 465 374	1 007 952	4 120 280
Value added taxation – South African Revenue Service	2 821 353	–	–
Related party payables	99 866 077	105 271 564	16 404 898
	117 152 804	106 279 516	20 525 178

The company has financial risk management policies in place which will ensure that all payables are settled within the credit timeframe. Please refer to note 23 for details of related party balances.

17. OPERATING PROFIT

	2015 R	2014 R	2013 R
Administration and general expenses	855 507	–	–
Staff costs	1 067 096	–	–
Repairs and maintenance – Firefly Investment Holdings (Pty) Ltd	14 152 971	–	–
Insurance premiums	3 421 223	–	–
Social economic development	2 585 886	–	–
Electricity charges	3 474 266	–	–
Project management services – Acciona Energy South Africa Global	784 186	–	–
External professional services External audit services	3 127 228 106 000	– –	– –
Tax advisory services	90 000	–	–
18. FINANCE CHARGES
Total finance charges incurred for the year	205 148 729	94 809 194	–
Less: Amounts capitalised	(82 028 892)	(94 809 194)	–
Net finance charges for the year	123 119 837	–	–
Finance charges – Acciona Energy South Africa (Pty) Ltd	10 232 210	–	–
Finance charges – Aveng Africa (Pty) Ltd	5 818 243	–	–
Bank borrowings	92 667 050	–	–
Derivative financial instrument	14 402 334	–	–
Net finance charges for the year	123 119 837	–	–
19. REVENUE
Sale of energy Other income – delay damages	123 137 448 82 546 889	– –	– –
Gross revenue for the year	205 684 337	–	–
20. TAXATION 20.1 Income tax recognised in profit or loss
Deferred taxation	6 693 181	–	–
Total income tax expense recognised in current year	6 693 181	–	–
Net loss before tax	(6 522 172)	–	–
Permanent differences	30 426 389	–	–
Temporary differences originating in current period	(899 693 745)	(58 305 102)	–
Taxable loss for the year	(875 789 529)	(58 305 102)	–
Tax rate reconciliation
Standard rate of taxation	(1 826 208)	–
Permanent differences	8 519 389	–
Total tax expense recognised in current year	6 693 181	–	–
20.2 Income tax recognised in other comprehensive income Deferred taxation
Loss arising from changes in fair value of financial derivative instruments	8 893 238	27 616 496	–
20.3 Deductible unused tax losses
Total estimated tax loss available for set-off against future taxable income	1 031 131 970	98 630 343	–
Value of total estimated tax loss at currently enacted tax rates	288 716 952	43 941 925	–
21. CASH GENERATED FROM OPERATIONS
Loss before taxation	(6 522 172)	–	–
Adjustments for:
Depreciation and amortisation Finance charges	55 424 766 123 119 837	– –	– –
Investment income	(1 459 852)	–	–
Unwinding receivable	1 573 192	–	–
Operating profit before working capital changes	172 135 771	–	–
Working capital changes:		–	–
(Increase)/decrease in trade and other receivables	(63 228 526)	4 284 749	(14 368 689)
Increase in trade and other payables	10 873 288	85 754 338	(72 641 954)
Cash generated from operations	119 780 533	90 039 087	(87 010 643)

22. CAPITAL COMMITMENTS

At the end of the year, the entity has no further contracted capital commitments for the construction of a Wind Power Plant in Gouda (2014: ZAR210 586 504) ( 2013: ZAR1 541 038 444)

23. RELATED PARTIES

The holding company is Acciona Energy South Africa (Pty) Ltd, incorporated in South Africa which owns 51% of the issued share capital of the company. The ultimate holding company is Acciona, S.A incorporated in Spain. A shareholding of 29% is held by Aveng Africa (Pty) Ltd, 10% is held by Main Street 885 (Pty) Ltd and 10% is held by Main Street 908 (Pty) Ltd. Related party transactions exist between group companies.

	2015	2014	2013
	R	R	R
Transactions with related parties during the year:
(i) Amounts capitalised to property plant and equipment
Management service fees
Aveng Africa (Pty) Ltd	588 992	2 129 098	103 051 397
Acciona Energy South Africa Global (Pty) Ltd	961 994	276 265	–
Acciona Energy South Africa (Pty) Ltd	–	1 944 896	67 367 004
Vexicom (Pty) Ltd	–	–	19 466 983
Construction costs
Oakleaf Investment Holdings 86 (Pty) Ltd	114 818 050	1 362 234 081	380 221 152
Finance charges
Aveng Africa (Pty) Ltd	4 929 384	6 357 038	1 325 514
Aveng Energy South Africa (Pty) Ltd	8 669 026	8 844 911	2 331 076
(ii) Finance charges that have been recognised in profit and loss
Aveng Africa (Pty) Ltd	5 818 243	–	–
Acciona Energy South Africa (Pty) Ltd	10 232 210	–	–
(iii) Repairs and maintenance charges that have been recognised in profit and loss
Firefly Investments 238 (Pty) Ltd	14 152 971	–	–
(iv) Management service fees that have been recognised in profit and loss
Acciona Energy South Africa Global (Pty) Ltd	784 186	–	–
(v) Liquidity damages that have been recognised in profit and loss
Oakleaf Investment Holdings 86 (Pty) Ltd	82 546 889	–	–
All related party transactions are arm's length in nature and on the same terms and conditions as those offered to third parties.
Balances with related parties at year end:
(i) Receivables due from group company
Oakleaf Investment Holdings 86 (Pty) Ltd	4 708 623	254 957	207 154
(ii) Payables due to related parties:
Vexicom (Pty) Ltd
– trade payable	–	185 294	22 007 067
Aveng Africa (Pty) Ltd
– trade payable	–	–	69 586 391
– long-term liability	–	–	74 382 000
– other payable	74 382 000	74 382 000	–
Oakleaf Investment Holdings 86 (Pty) Ltd
– trade payable	95 768 455	105 204 097	10 851 116
Firefly Investment 238 (Pty) Ltd
– trade payable	4 097 622	–	–
Acciona Energa International S.A	–	67 467	42 740
Acciona Energy South Africa (Pty) Ltd	–	–	3 996 933
The Aveng Africa (Pty) Ltd debt is repayable on successful completion of the development which will not occur within the next 12 months. No
interest was payable on the amount owing in the current year.
(iii) Loans due to shareholders:
Acciona Energy South Africa (Pty) Ltd	273 408 815	196 087 279	66 400 568
Aveng Africa (Pty) Ltd	155 467 893	111 501 311	37 757 186
The amounts outstanding are unsecured and will be settled in cash. No expense has been recognised in the current period for bad or doubtful
debts in respect of amounts owed by related parties. No guarantees have been given or received.

24. FINANCIAL INSTRUMENTS

Capital risk management

The company manages its capital to ensure that it will continue as a going concern. This strategy is unchanged since the prior year.

The capital structure of the company consists of debt and equity comprising of share capital, other reserves, accumulated profit, shareholder loans and loan and borrowings.

Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 1 to the financial statements.

	2015 R	2014 R	2013 R
Categories of financial instruments Financial assets
Loans and receivables (including cash and cash equivalents) Financial liabilities	573 926 855	29 169 268	58 357 695
Loans and payables	2 602 693 801	1 958 410 006	686 569 257

Market risk

There has been no change to the company's exposure to market risks or the manner in which it manages and measures the risk.

Liquidity and interest risk management

Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk management framework for the management of the company's short, medium and long-term funding and liquidity management requirements. The directors manage liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring actual cash flows and matching the maturity profiles of financial assets and liabilities. The company is able to actively source financing from its shareholders.

Interest rate sensitivity analysis

The sensitivity analysis presented below has been determined based on the exposure to interest rates for non-derivative instruments at the reporting date. For floating rate assets and liabilities, the analysis is prepared assuming the amount of the asset or liability outstanding at the reporting date was outstanding for the entire year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible change in interest rates.

If interest rates had been 100 basis points higher or lower and all other variables were held constant, the company's profit for the year ended 31 December 2015 would decrease or increase by ZAR1 216 600 (2014: ZAR244 232). This is primarily attributable to the company's exposure to interest rates on its shareholder loans and external borrowings.

Liquidity and interest risk management

Liquidity and interest risk tables

The following tables detail the company's remaining contractual maturity for its non-derivative financial assets and liabilities.

			Year one	Over five
	Interest rate	Year one	to five	years	Total
	%	R	R	R	R
2015
Assets
Trade and other receivables	Interest free	73 608 281	–	–	73 608 281
Cash and cash equivalents	Daily bank rate	433 641 158	–	–	433 641 158
Receivable asset	Interest free	2 696 900	12 630 483	50 521 933	65 849 316
Financial asset	Interest free	–	–	828 100	828 100
		509 946 339	12 630 483	51 350 033	573 926 855
Liabilities
Shareholder loans	Prime less 0,5%	–	428 876 708	–	428 876 708
Loans and borrowings	JIBAR plus 2,	59 491 400	152 600 069	1 773 012 173	1 985 103 642
	95%
Other debts	Interest free	74 382 000	–	–	74 382 000
Trade and other payables	Interest free	114 331 451	–	–	114 331 451
		248 204 851	581 476 777	1 773 012 173	2 602 693 801

			Year one	Over five
	Interest rate	Year one	to five	years	Total
	%	R	R	R	R
2014
Assets
Trade and other receivables	Interest free	254 957	–	–	254 957
Cash and cash equivalents	Daily bank rate	28 086 211	–	–	28 086 211
Financial asset	Interest free	–	–	828 100	828 100
		28 341 168	–	828 100	29 169 268
Liabilities
Shareholder loans	Prime less 0,5% JIBAR plus	–	307 588 590	–	307 588 590
Loans and borrowings	2,95%	2 666 631	145 084 467	1 322 408 802	1 470 159 900
Other debts	0%	74 382 000	–	–	74 382 000
Trade and other payables	Interest free	106 279 516	–	–	106 279 516
		183 328 147	452 673 057	1 322 408 802	1 958 410 006
2013
Assets
Other receivables	Interest free	12 577 583	–	–	12 577 583
Cash and cash equivalents	Daily bank rate	45 592 312	–	–	45 592 312
Financial asset	Interest free	187 800	–	–	187 800
		58 357 695	–	–	58 357 695
Liabilities
Shareholder loans	8%	–	104 157 754	–	104 157 754
Loans and borrowings	Variable	–	35 477 799	452 026 526	487 504 325
Other debts	0%	–	74 382 000	–	74 382 000
Trade and other payables	Interest free	20 525 178	–	–	20 525 178
		20 525 178	214 017 553	452 026 526	686 569 257

25. RETIREMENT BENEFIT INFORMATION

The company does not provide retirement benefits to its employees.

26. EVENTS SUBSEQUENT TO THE REPORTING PERIOD

No other material fact or circumstance has affected the state of affairs of the company or its operations between 31 December 2015 and the date of this report.

INDEPENDENT REPORTING ACCOUNTANT'S REPORT ON THE REPORT OF HISTORICAL FINANCIAL INFORMATION OF BLUE FALCON FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013

The Directors Aveng Limited Block A, Aveng Park 1 Jurgens Street Jet Park, Boksburg, 1459 PO Box 6062 Rivonia, 2128 South Africa

Dear Sir(s)/Madam

INDEPENDENT REPORTING ACCOUNTANT'S REPORT ON THE HISTORICAL FINANCIAL INFORMATION INCLUDED IN THE CIRCULAR

Introduction

We have audited the historical financial information of Blue Falcon 140 Trading (RF) Proprietary Limited (the company) in respect of the year ended 31 December 2015 set out on in Annexure 3 and we have reviewed the historical financial information of the company in respect of the years ended 31 December 2014 and 31 December 2013 set out in Annexure 3.

The historical financial information in respect of each annual period comprises the statements of financial position as at the year-end date, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the years then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

Directors' responsibility for the historical financial information

The company's directors are responsible for the preparation and fair presentation of the historical financial information in accordance with the requirements of the JSE Listings Requirements, and for such internal control as the directors determine is necessary to enable the preparation of historical financial information that is free from material misstatement, whether due to fraud or error.

The JSE Listings Requirements require the historical financial information in respect of each annual period to be prepared in accordance with International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and also, as a minimum, to be presented and contain the disclosures required by the JSE Listings Requirements.

Auditor's responsibility

Our responsibility is to express an opinion or conclusion on the historical financial information based on our audit or review.

We conducted our audit of the historical financial information in accordance with International Standards on Auditing (ISAs) and the review of the historical financial information was conducted in accordance with International Standard on Review Engagements (ISRE) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. The standards require that we comply with ethical requirements.

We plan and perform the audit to obtain reasonable assurance about whether the historical financial information is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the historical financial information, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation of the historical financial information in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the historical financial information.

ISRE 2410 requires us to conclude whether anything has come to our attention that causes us to believe that the historical financial information is not prepared in all material respects in accordance with the applicable financial reporting framework. A review of financial statements in accordance with this standard consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the ISAs and consequently does not enable the auditor to obtain assurance that the auditor would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We believe that the evidence we have obtained in our audit or review is sufficient and appropriate to provide a basis for our opinion or conclusion respectively.

Opinion/Conclusion

In our opinion, the historical financial information in respect of the year ended 31 December 2015 is prepared, in all material respects, in accordance with International Financial Reporting Standards ("IFRS"), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and contain the disclosures required by the JSE Listings Requirements.

Based on our review of the historical financial information of the company in respect of the years ended 31 December 2014 and 31 December 2013, nothing has come to our attention that causes us to believe that the historical financial information of Blue Falcon 140 Trading (RF) Proprietary Limited for the years ended 31 December 2014 and 31 December 2013 are not prepared, in all material respects, in accordance with IFRS, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and contain the disclosures required by the JSE Listings Requirements.

Other information in the Circular

As required by paragraph 8.53 of the JSE Listings Requirements, we have read the Circular in which the historical financial information is contained, for the purpose of identifying whether there are material inconsistencies between the Circular and the historical financial information which has been subject to audit or review. The Circular is the responsibility of the Directors. Based on reading the Circular we have not identified material inconsistencies between this report and the historical financial information which has been subject to audit or review. However, we have not audited the Circular and accordingly do not express an opinion on it.

Consent

We consent to the inclusion of this report, which will form part of the Circular to the Shareholders of Aveng Limited, to be issued on 12 October 2016, in the form and context in which it appears.

Deloitte & Touche Registered Auditor

Per: Corinne Ringwood Partner 30 September 2016

1st Floor The Square Cape Quarter Extension 27 Somerset Road Green Point 8005

REPORT OF HISTORICAL FINANCIAL INFORMATION OF WINDFALL FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013

Basis of preparation

The statements of comprehensive income, statements of cash flows and the statements of changes in equity for the three years ended 31 December 2015, the statements of financial position as at 31 December 2015, 2014 and 2013, accounting policies and the notes thereto ("historical financial information of Windfall") have been extracted, from the audited financial statements of Windfall for the years ended 31 December 2015, 2014 and 2013 ("audited financial statements"). The historical financial information is prepared in accordance with International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and contain the disclosures required by the JSE Listings Requirements.

The additional disclosure required in terms of paragraphs 8.11 and 8.12 of the JSE Listings Requirements, to the extent applicable, have been included in the report of historical financial information of Windfall.

The audited financial statements were audited by Deloitte & Touche and unqualified audit opinions were issued in respect thereto. Deloitte & Touche is also the Independent Reporting Accountant to the Aveng Group with regards to the historical financial information of Windfall and has issued the Reporting Accountant's Report on this report of historical financial information of Windfall which is included as Annexure 6 to this Circular.

The Directors are responsible for the report of historical financial information of Windfall.

Directors' commentary

Windfall 59 Properties (RF) Proprietary Limited ("the company") is a renewable energy company with the purpose of producing solar energy and consequently supplying electrical energy to Eskom under a twenty year power purchase agreement.

Revenue was earned from the sale of electrical energy to Eskom and other income (liquidated damages) and totalled ZAR444 891 487 for the year ended 31 December 2015 (2014: ZAR48 073 523; 2013: ZARnil).

As at 31 December 2015, the company had a receivable of ZAR27 699 237 (2014: ZAR28 908 015; 2013: ZARnil) relating to the substation built by the company that was transferred to Eskom. This substation was transferred to Eskom at commencement operation date and the receivable will be utilised over its useful life.

The company has interest rate swap contracts, which it designates as hedge accounting instruments. The Company uses these instruments to hedge potential cash flow variations deriving from interest payments on non-current variable financial liabilities. The fair value of the derivative financial instrument asset as at 31 December 2015 was ZAR13 218 231 (2014: ZAR108 384 416 (liability); 2013: ZAR40 866 514 (liability)). The interest rate swaps are used to fix or limit the Company's exposure to the volatility in variable interest rates applicable to hedging financing. These financial derivatives are used to cover cash flows from debt contracted to finance solar facilities. Changes in the fair value of the interest rate swaps, net of taxation of ZAR87 553 906 (gain) were deferred and recognised in other comprehensive income for the year ended 31 December 2015 (2014: ZAR48 612 890 (loss); 2013: ZAR29 423 890 (loss)).

WINDFALL STATEMENT OF FINANCIAL POSITION 31 December

		2015	2014	2013
	Notes	R	R	R
ASSETS
Non-current assets		2 046 996 099	2 142 492 444	503 166 053
Property, plant and equipment	4	1 869 362 750	1 946 349 326	349 827 918
Intangible assets	5	136 064 066	141 929 522	141 853 768
Deferred taxation	6	–	24 665 407	11 442 624
Financial assets	7	651 816	640 174	41 743
Long-term portion of receivable	8	27 699 236	28 908 015	–
Financial instrument – derivative	14	13 218 231	–	–
Current assets		276 904 731	235 660 179	32 424 481
Short-term portion of receivable	8	1 208 778	1 208 778
Trade and other receivables	9	111 071 172	82 068 420	11 348 474
Cash and cash equivalents	10	164 624 781	152 382 981	21 076 007
Total assets		2 323 900 830	2 378 152 623	535 590 534
EQUITY AND LIABILITIES
Capital and reserves		142 698 988	41 152 233	(7 591 790)
Share capital	11	116 626 100	106 886 100	21 832 100
Other reserves	12	9 517 126	(78 036 780)	(29 423 890)
Accumulated profit		16 555 762	12 302 913	–
Non-current liabilities		2 136 876 124	2 117 504 843	489 759 116
Shareholder loans	13	414 336 620	451 446 644	91 156 077
Financial instrument – derivative	14	–	108 384 416	40 866 514
Loans and borrowings	15.1	1 678 148 194	1 557 673 783	298 536 525
Deferred taxation	6	44 391 310	–	–
Other debts	15.2	–	–	59 200 000
Current liabilities		44 325 718	219 495 547	53 423 208
Loans and borrowings	15	27 640 070	18 018 632	–
Trade and other payables	16	16 685 648	201 476 915	53 423 208
Total equity and liabilities		2 323 900 830	2 378 152 623	535 590 534

WINDFALL STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December

		2015	2014	2013
	Notes	R	R	R
Revenue	21	444 891 487	48 073 523	–
Gross profit		444 891 487	48 073 523	–
General and administrative expenses		(65 053 477)	(8 653 899)	–
Depreciation and amortisation		(83 732 026)	(7 111 456)	–
Operating profit	17	296 105 984	32 308 168	–
Interest income on call account		16 108 618	1 234 274	–
Finance charges – shareholder loans	18	(40 729 975)	(2 926 608)	–
Finance charges – loans and other borrowings	18	(203 005 809)	(12 582 406)	–
Realised foreign exchange losses		(28 859)	(48 286)	–
Extraordinary income		10 866	–	–
Profit before taxation		68 460 825	17 985 142	–
Taxation	19	(35 007 976)	(5 682 229)	–
Profit for the year		33 452 849	12 302 913	–
Other comprehensive profit/(loss), net of taxation
Item that may be reclassified subsequently to profit or loss:
Fair value profit/(loss) on financial derivative instrument, net of taxation		87 553 906	(48 612 890)	(29 423 890)
Total comprehensive profit/(loss) for the year		121 006 755	(36 309 977)	(29 423 890)

STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December

		Other	Accumulated
	Share capital	reserves	profit	Total
	R	R	R	R
Balance at 1 January 2013	100	–	–	100
Net loss for the year	–	–	–	–
Issue of share capital	21 832 000	–	–	21 832 000
Fair value of financial derivative instrument recognised directly in equity	–	(29 423 890)	–	(29 423 890)
Balance at 31 December 2013	21 832 100	(29 423 890)	–	(7 591 790)
Profit for the year	–	–	12 302 913	12 302 913
Issue of share capital	85 054 000	–	–	85 054 000
Fair value of financial derivative instrument recognised directly in equity	–	(48 612 890)	–	(48 612 890)
Balance at 31 December 2014	106 886 100	(78 036 780)	12 302 913	41 152 233
Profit for the year	–	–	33 452 849	33 452 849
Issue of share capital	9 740 000	–	–	9 740 000
Dividend paid*	–	–	(29 200 000)	(29 200 000)
Fair value of financial derivative instrument recognised directly in equity	–	87 553 906	–	87 553 906
Balance at 31 December 2015	116 626 100	9 517 126	16 555 762	142 698 988

* The payment of this dividend did not have any tax consequence for the company.

WINDFALL STATEMENT OF CASH FLOWS for the year ended 31 December

		2015	2014	2013
	Notes	R	R	R
Cash flows from operating activities
Cash generated from operations	20	167 234 776	116 705 099	(16 211 696)
Investment income		16 108 618	1 234 274	–
Interest paid		(246 944 779)	–	–
Net cash (outflow) inflow from operating activities		(63 601 385)	117 939 373	(16 211 696)
Cash flows from investing activities
Additions to property, plant and equipment		(879 994)	(1 546 297 276)	(332 626 483)
Additions to financial asset		(50 457)	(598 431)	(23 453 768)
Additions to intangible asset		–	–	(41 743)
Proceeds of financial asset		38 816	–	–
Net cash outflow from investing activities		(891 635)	(1 546 895 707)	(356 121 994)
Cash flows from financing activities
Proceeds from issue of share capital		9 740 000	85 054 000	21 832 000
Proceeds from shareholder loan		38 960 000	340 216 000	72 399 949
Repayment of shareholder loan		(72 861 029)	–	–
Dividend paid		(29 200 000)	–	–
Proceeds from loan and borrowings		148 061 895	1 194 193 308	298 536 525
Repayment of loan and borrowings		(17 966 046)	–	–
Repayment of other debts		–	(59 200 000)	–
Net cash inflow from financing activities		76 734 820	1 560 263 308	392 768 474
Net increase in cash and cash equivalents		12 241 800	131 306 974	20 434 784
Cash and cash equivalents at the beginning of the year		152 382 981	21 076 007	641 223
Cash and cash equivalents at the end of the year	10	164 624 781	152 382 981	21 076 007

NOTES TO THE FINANCIAL STATEMENTS

for the year ended 31 December

1. ACCOUNTING POLICIES

The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and incorporate the following principal accounting policies.

1.1 Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards and JSE Listings Requirements. The financial statements have been prepared on the historical cost basis, and incorporate the principal accounting policies set out below. They are presented in South African Rand. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or liability, the company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.

All foreign exchange contracts/interest rate swap hedging contracts are classified as level 1 instruments as the prices are based on quoted prices (unadjusted) in active markets for identical assets or liabilities.

1.2 Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. The company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised using tax rates (and laws) that have been enacted or substantively enacted by the reporting date. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the company intends to settle its current tax assets and liabilities on a net basis.

1.3 Financial instruments

1.3.1 Financial assets

1.3.1.1 Non-current financial assets

Non-current financial assets are financial assets with fixed maturity dates and not recoverable within the next 12 months of the reporting date.

Deposits are stated at cost and held to maturity dates. The company has positive intent and ability to hold to maturity.

1.3.1.2 Current financial assets

Current financial assets are financial assets when maturity is within 12 months of the reporting date.

Trade and other receivables

Trade and other receivables are stated at nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.

Cash and cash equivalents

Cash and cash equivalents are defined as cash on hand, demand deposits, bank overdrafts and short- term highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. Cash and cash equivalents are measured at cost or amortised cost.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period. Income is recognised on an effective interest basis for debt instruments other than those financial assets designated as at fair value through profit or loss.

Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each reporting date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

For all financial assets evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or
• default or delinquency in interest or principal payments; or
• it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the company's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 30 days, as well as observable changes in national or local economic conditions that correlate with a default on receivables.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.

Impairment of financial assets

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account.

When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

Derecognition of financial assets

The company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

If the company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the company retains substantially all the risks and rewards of ownership of a transferred financial asset, the company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

1.3.2 Financial liabilities and equity instruments issued by the company

Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.

Borrowings

The non-interest-bearing loans are recorded at the proceeds received, net of direct issue costs.

Trade and other payables

Trade and other payables are stated at their nominal value.

Derecognition of financial liabilities

The company derecognises financial liabilities when, and only when, the company's obligations are discharged, cancelled or they expire.

1.4 Foreign currency translation

1.4.1 Functional and presentation currency

Items included in the financial statements of the company are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The financial statements are presented in South African Rand, which is Windfall 59 Properties Proprietary Limited's functional and presentation currency.

1.4.2 Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.

Translation differences on financial assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available-for-sale financial assets are included in the fair value reserve in equity.

1.5 Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and accumulated impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains/ losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statement of comprehensive income during the reporting period in which they are incurred.

Depreciation on property, plant and equipment is calculated using the straight line method to allocate their cost, net of their estimated residual values, over their estimated useful lives.

The depreciation method, residual values and useful lives are reviewed at each reporting date with the effects of any changes accounted for on a prospective basis.

The following percentages are used in the calculation of depreciation:

Plant	4.00%
Furniture	16.67%
Computer equipment	33.33%
Spare parts	4.00%

Land and capital work in progress is not depreciated.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount. These are included in the statement of comprehensive income.

1.6 Intangible assets

Intangible assets are stated at cost less accumulated amortisation and accumulated impairment.

Amortisation of intangible assets is calculated on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes accounted for on a prospective basis.

The following percentages are used in the calculation of amortisation: Development costs 4.00% Computer software 33.33%

1.7 Provisions

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

1.8 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties.

The company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and costs incurred or to be incurred in respect of the transaction can be reliably measured. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

1.9 Employee benefits

Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

1.10 Impairment of assets

Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cashgenerating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

1.11 Derivative financial instruments and hedges

The company uses interest rate swaps to mitigate the financial risks of exposure to interest rate fluctuations. It is not company policy to acquire financial instruments for speculative purposes.

The use of financial derivatives is governed by the accounting policies of the company and is approved by the board of directors.

Derivatives are carried at fair value at year end and are recognised under non-current financial assets if the financial instrument value is positive and non-current liabilities if the financial instrument value is negative. Changes in fair value of the derivative financial instrument are recognised in the statement of comprehensive income when they arise, except for derivatives that are designated as highly effective as hedging instruments.

Fair value hedges are hedges contracted to totally or partially cover the exposure to changes of the underlying assets and liabilities recognised in the statement of financial position. The portion of the underlying for which the risk is being hedged is carried at fair value through profit or loss, as is the hedging instrument.

Hedge accounting is only applicable when the hedge is expected to be effective at inception of the hedge and in subsequent years in achieving offsetting changes in fair value to the hedge risk. It is company policy not hedge forecast transactions and it only hedges firm commitments.

Interest rate swaps are measured based on the related amount of future settlements between fixed and variable interest rates, in accordance with implicit market rates, obtained from long-term swap rate curves. The calculation is based on implicit volatility using options, fair value caps and floor measurement formulae.

2. ADOPTION OF NEW AND REVISED STANDARDS

2.1 Standards and interpretations effective in the current period

The company adopted the following standards during the year:

• IFRS 7: Financial instruments: Disclosures
• IAS 1: Presentation of Financial Statements (amendments)
• IAS 39: Financial Instruments Recognition and Measurement (amendments)

Adoption of these revised Standards did not result in any restatement of comparative information or additional disclosure.

2.2 Early adoption of standards and interpretations

The company has not early adopted any standard or interpretations,

2.3 Accounting standards and interpretations issued but not yet effective

The following table contains effective dates of new and revised standards and interpretations which have not been early adopted by the company and that might affect future financial periods, on the assumption that the company will continue with its current activities, which were in issue at 31 December 2015. It is the intention of the company to adopt the new or revised standards in the period they become effective:

Revised International Financial Reporting Standards		Effective date
IFRS 15:	Revenue from Contracts with Customers	Annual periods beginning on or after 1 January 2017
IFRS 9:	Financial Instruments	Annual periods beginning on or after 1 January 2018
IFRS 7:	Financial Instruments Disclosure	Annual periods beginning on or after 1 January 2016
IAS 1:	Presentation of Financial Statements (amendments)	Annual periods beginning on or after 1 January 2016
IAS 16:	Property, Plant and Equipment (amendments)	Annual periods beginning on or after 1 January 2016
IAS 19: IAS 38:	Employee Benefits (amendments) Intangible Assets (amendments)	Annual periods beginning on or after 1 January 2016 Annual periods beginning on or after 1 January 2016

A reliable estimate of the impact of the adoption of the recent amendments for the company has not yet been determined.

3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Management has not made any judgements or assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year except for the following:

• useful lives and residual values used to calculate depreciation of property, plant and equipment;
• future cash flows used to test for impairment of property, plant and equipment and intangible assets;
• recoverability of receivables;
• valuation of derivative instruments;
• determination of the carrying value of the receivable detailed in note 8; and
• recoverability of the deferred taxation asset.

4. PROPERTY, PLANT AND EQUIPMENT

			Opening			Closing
			balance	Additions	Disposals	balance
			R	R	R	R
2015
Cost
Land			6 800 000	–	–	6 800 000
Plant			1 946 082 129	–	–	1 946 082 129
Furniture			21 274	–	–	21 274
Computer equipment			59 217	–	–	59 217
Spare parts			–	879 994	–	879 993
			1 952 962 620	879 994	–	1 953 842 613
			Opening			Closing
			balance	Depreciation	Disposals	balance
			R	R	R	R
Accumulated depreciation
Plant			6 611 348	77 843 285	–	84 454 633
Furniture			301	3 546	–	3 847
Computer equipment			1 645	19 739	–	21 384
			6 613 294	77 866 570	–	84 479 864
Net book value			1 946 349 326			1 869 362 750
					Transfer to long-term
					receivable
	Opening				and intangible
	balance	Additions	Disposals	Transfers	assets	Closing
	R	R	R	R	R	balance R
2014
Cost
Land	6 800 000	–	–	–	–	6 800 000
Capital work in progress	343 027 918	1 633 928 074	–	(1 946 162 620)	(30 793 372)	–
Plant	–	–	–	1 946 082 129	–	1 946 082 129
Furniture	–	–	–	21 274	–	21 274
Computer equipment	–	–	–	59 217	–	59 217
	349 827 918	1 633 928 074	–	–	(30 793 372)	1 952 962 620
			Opening			Closing
			balance	Depreciation	Disposals	balance
			R	R	R	R
Accumulated depreciation
Plant			–	6 611 348	–	6 611 348
Furniture			–	301	–	301
Computer equipment			–	1 645	–	1 645
			–	6 613 294	–	6 613 294
Net book value			349 827 918			1 946 349 326

A mortgage bond is held by Opiconsivia Trading 259 (Pty) Ltd (2014 and 2013) for ZAR1 900 000 000 which is secured by land and plant.

	Opening balance	Additions	Disposals	Transfers	Transfer to long-term receivable and intangible assets	Closing
	R	R	R	R	R	balance R
2013 Cost
Land Capital work in progress	6 800 000 10 401 435	– 332 626 483	–	–	– –	6 800 000 343 027 918
Plant Furniture	– –	– –	– –	– –	– –	– –
Computer equipment	– 17 201 435	– 332 626 483	– –	– –	– –	– 349 827 918
Net book value	17 201 435					349 827 918
INTANGIBLE ASSETS
			Opening balance R	Transfer from property, plant equipment R	Disposals R	Closing balance R
2015
Cost Development cost Computer software			141 853 768 573 916	– –	– –	141 853 768 573 916
			142 427 684	–	–	142 427 684
			Opening balance R	Amortisation R	Disposals R	Closing balance R
Accumulated amortisation Development cost Computer software			481 914 16 248	5 674 151 191 305	– –	6 156 065 207 553
			498 162	5 865 456	–	6 363 618
Net book value			141 929 522			136 064 066
			Opening balance R	Transfer from property, plant equipment R	Disposals R	Closing balance R
2014 Cost
Development cost Computer software			141 853 768 –	– 573 916	– –	141 853 768 573 916
			141 853 768	573 916	–	142 427 684
			Opening balance R	Amortisation R	Disposals R	Closing balance R
Accumulated amortisation Development cost Computer software			– –	481 914 16 248	– –	481 914 16 248
			–	498 162	–	498 162
Net book value			141 853 768			141 929 522
			Opening	Transfer from property, plant		Closing

Development cost 118 400 000 23 453 768 – 141 853 768 Net book value 118 400 000 141 853 768

6. DEFERRED TAXATION

	2015	2014	2013
	R	R	R
Opening balance	24 665 407	11 442 624	–
(Credited)/debited via other comprehensive income (refer note 12)	(34 048 741)	18 905 012	11 442 624
Charged to profit before taxation	(35 007 976)	(5 682 229)	–
	(44 391 310)	24 665 407	11 442 624
Comprising:
Fair value of financial derivative instrument	(3 701 105)	30 347 636	11 442 624
Capital allowances	(384 711 687)	(261 109 635)	–
Estimated tax losses	344 027 670	255 173 447	–
Accruals	–	253 959	–
Prepayments	(6 188)	–	–
	(44 391 310)	24 665 407	11 442 624

7. FINANCIAL ASSETS

	Opening balance R	Additions R	Disposals R	Closing balance R
2015
Deposits	640 174	50 457	(38 815)	651 816
2014
Deposits	41 743	598 431	–	640 174
2013
Deposits	–	41 743	–	41 743
RECEIVABLE
		2015	2014	2013
		R	R	R
Eskom substation transferred		30 116 793	30 219 456	–
Amount settled		(1 208 778)	(102 663)	–

The receivable relates to the substation that was transferred to Eskom. The Company built the Eskom portion of the substation. The asset was transferred to Eskom at commencement operation date. The receivable will be settled over the useful life of the asset.

Less: current portion transferred to current assets (1 208 778) (1 208 778) –

28 908 014 30 116 793 –

27 699 236 28 908 015 –

9. TRADE AND OTHER RECEIVABLES

	2015	2014	2013
	R	R	R
Trade receivable	107 248 874	54 803 817	–
Value added taxation	–	26 931 793	7 198 843
Prepayments	2 242 818	7 500	4 142 712
Other receivables	1 305 378	32 499	100
Related party receivable (note 22)	274 102	292 631	6 819
	111 071 172	82 068 420	11 348 474

The average credit period is 45 days and no interest is charge on the first 45 days. Thereafter interest is charge at the prime rate on the outstanding balance. No allowance for doubtful debts has been raised on trade receivables as the company expects to recover all amounts in full. The Company has one customer who is a parastatal. No trade receivables were past due at the reporting date.

In determining the recoverability of a trade receivable, the company considers any changes in the credit quality of the trade receivable from the date credit was initially granted up to the end of the reporting period.

10. CASH AND CASH EQUIVALENTS

	2015 R	2014 R	2013 R
Cash and cash equivalents comprise: Current account	44 973 673	46 248 519	21 076 007
Debt service reserve call account	112 273 461	106 134 462	–
Maintenance reserve call account	7 377 647	–	–
	164 624 781	152 382 981	21 076 007
11. SHARE CAPITAL
	2015	2014	2013
	R	R	R
Authorised
Class A: 100 000 no par value shares
Class B: 200 000 no par value shares
Issued
Class A: 80 no par value shares	80	80	100
Class B: 116 626 (2014: 106 886) no par value shares	116 626 020	106 886 020	21 832 000
Closing balance	116 626 100	106 886 100	21 832 100
Opening balance	106 886 100	21 832 100	100
Shares issued during the year	9 740 000	85 054 000	21 832 000
Closing balance	116 626 100	106 886 100	21 832 100
The unissued shares were placed under the sole and absolute control of the directors by the shareholders. This authority will remain until the next
annual general meeting
12. OTHER RESERVES

2015 R 2014 R 2013 R Balance at the beginning of the year 78 036 780 29 423 890 – (Gain)/loss arising from changes in fair value of financial derivative instruments (121 602 647) 67 517 902 40 866 514 Deferred taxation related to gain/(loss) recognised in equity 34 048 741 (18 905 012) (11 442 624) Balance at the end of the year (9 517 126) 78 036 780 29 423 890 Comprising: Changes in fair value of financial derivative instruments (13 218 231) 108 384 416 40 866 514 Deferred taxation 3 701 105 (30 347 636) (11 442 624) (9 517 126) 78 036 780 29 423 890

13. SHAREHOLDER LOANS

	Principal	Interest	Total
	R	R	R
2015
Acciona Energy South Africa (Pty) Ltd	250 947 394	13 192 201	264 139 595
Aveng Africa (Pty) Ltd	142 695 577	7 501 448	150 197 025
	393 642 971	20 693 649	414 336 620
2014
Acciona Energy South Africa (Pty) Ltd	272 559 300	15 237 936	287 797 236
Aveng Africa (Pty) Ltd	154 984 700	8 664 708	163 649 408
	427 544 000	23 902 644	451 446 644
Interest on shareholders loans is charged at prime less 0.5% (2014: prime less 0.5%). Repayments are expected within the next 2 to 5 years.

	Principal	Interest	Total R
	R	R
2013
Acciona Energy South Africa (Pty) Ltd	55 671 600	2 440 399	58 111 999
Aveng Africa (Pty) Ltd	31 656 400	1 387 678	33 044 078
	87 328 000	3 828 077	91 156 077

Interest on shareholders loans is charged at prime less 0.5% (2012: 0%). Further drawdowns are expected within the next 12 months. Repayments are expected within the next 5 years, once the company reaches commercial operations date.

14. FINANCIAL INSTRUMENT – DERIVATIVE

	2015	2014	2013
	R	R	R
Interest rate swap
Nominal value contracted	1 302 356 416	1 315 868 931	730 871 136
Derivative financial instrument asset/(liability)	13 218 231	(108 384 416)	(40 866 514)

The Company has contracts, which it designates as hedge accounting instruments. The company uses these instruments to hedge potential cash flow variations deriving from interest payments on non-current variable financial liabilities.

Derivatives contracted and open at 31 December 2015 and 2014 are recognised in the statement of financial position as follows:

The interest rate derivatives are the interest rate swaps used to fix or limit movement in variable rates applicable to hedging financing. These financial derivatives are used to cover cash flows from debt contracted to finance photovoltaic solar plants. At 31 December 2015, variable interest rates for these financial derivatives ranged between 6.16% and 9.5% (2014: 8.16% and 9.5%) (2013: 6.28% and 9.5%)

The amounts recognised by the Company are based on market values of the equivalent instrument at the reporting date. Changes in fair value of these swaps are deferred and recognised in equity. Refer note 12. The deferred taxation liability arising from the recognition of these instruments amounts to ZAR3 701 105 (deferred taxation asset 2014: ZAR30 347 636) (2013: ZAR 11 442 624). Refer note 6.

The methods and criteria used by the company to measure the fair value of the financial instruments are based on estimated future cash flows.

The nominal amount does not represent the risk assumed by the company, as the amount is merely the basis on which settlement of the derivative is calculated.

15.1 LOANS AND BORROWINGS

	2015	2014	2013
	R	R	R
Principal debt amount	1 731 405 444	1 602 961 586	327 457 687
Capitalised arranging fees	(29 826 363)	(29 826 363)	(29 826 363)
Unwinding of capitalised arranging fees	4 209 183	2 557 192	905 201
	1 705 788 264	1 575 692 415	298 536 525
Non-current portion	1 678 148 194	1 557 673 783	298 536 525
Current portion	27 640 070	18 018 632	–
	1 705 788 264	1 575 692 415	298 536 525

Interest on the loans and borrowings is payable monthly at the monthly JIBAR rate plus 2,95%. Repayments on the loan will commence in 2015 and the loan will be repaid over a period of 16 years. The shares issued in the company have been ceded, in securitatem debiti, as security for the debt.

15.2 OTHER DEBTS

Related party	–	–	59 200 000
This debt is a success fee which is payable on successful completion of the development which will not occur within the next 12 months. No

interest was payable on the amount owing in the current year.

16. TRADE AND OTHER PAYABLES

	2015	2014	2013
	R	R	R
Trade payables	2 342 378	715 406	123 125
Other payables	4 964 778	1 146 582	–
Value Added Taxation – South African Revenue Services	5 603 248	–	–
Related party payables (refer note 22)	3 775 244	199 614 927	53 300 083
	16 685 648	201 476 915	53 423 208

The company has financial risk management policies in place which will ensure that all payables are settled within the credit timeframe. Please refer to note 22 for details of related party balances.

17. OPERATING PROFIT

	2015 R	2014 R	2013 R
Operating profit is stated after taking the following items into account:
Administrative expenses	5 956 662	256 694	–
Staff costs	2 495 678	205 733	–
External management and professional services – group	1 000 691	94 673	–
External professional services	3 228 925	2 105 839	–
Depreciation	77 866 570	6 613 294	–
Amortisation	5 865 456	498 162	–

18. FINANCE CHARGES

	2015	2014	2013
	R	R	R
Total finance charges	243 735 784	103 037 149	21 944 230
Less: Amounts capitalised	–	(87 528 135)	(21 944 230)
Net finance charges for the year	243 735 784	15 509 014	–
Finance charges – Acciona Energy South Africa (Pty) Ltd	25 965 359	1 865 713	–
Finance charges – Aveng Africa (Pty) Ltd	14 764 616	1 060 895	–
Bank borrowings	159 886 364	12 160 066	–
Derivative financial instrument	43 094 540	422 340	–
Other companies	24 905	–	–
Net finance charges for the year	243 735 784	15 509 014	–

19. TAXATION

	2015	2014	2013
	R	R	R
19.1 Income tax recognised in profit or loss
Deferred taxation – current year	34 544 449	5 695 308	–
Deferred taxation – prior year	463 527	(13 079)	–
Total income tax expense recognised in current year	35 007 976	5 682 229	–
Reconciliation of taxation rate
Taxation at standard	19 169 031	5 035 840	–
Permanent differences	15 375 418	659 468	–
Temporary differences originating in current period relating to prior period adjustment	463 527	(13 079)	–
Total tax expense recognised in current year	35 007 976	5 682 229	–
19.2 Income tax recognised in other comprehensive income
Deferred taxation
(Profit)/loss arising from changes in fair value of financial derivative instruments	(3 701 105)	30 347 636	11 442 624
19.3 Deductible unused tax losses
Value of total estimated tax loss at currently enacted tax rates	344 027 670	255 173 447	–

20. CASH GENERATED FROM OPERATIONS

	2015	2014	2013 R
	R	R
Reconciliation of profit before taxation to cash generated in operations from (utilised in) operations:
Profit before taxation	68 460 825	17 985 142	–
Adjustments for:
Depreciation	77 866 570	6 613 294	–
Amortisation	5 865 456	498 162	–
Unwinding of receivable	1 208 778	–	–
Finance charges	243 735 784	15 509 014	–
Investment income	(16 108 618)	(1 234 274)	–
Operating profit before working capital changes	381 028 795	39 371 338	–
Working capital changes:
Increase in trade and other receivables	(29 002 752)	(70 719 946)	(8 253 747)
(Decrease)/increase in trade and other payables	(184 791 267)	148 053 707	(7 957 949)
Cash generated from operations	167 234 776	116 705 099	(16 211 696)
21. REVENUE
	2015	2014	2013
	R	R	R

	R	R	R
Sale of energy	441 686 772	48 073 523	–
Other income – liquidated damages	3 204 715	–	–
Gross revenue for the year	444 891 487	48 073 523	–

22. RELATED PARTIES

The holding company is Acciona Energy South Africa (Pty) Ltd, incorporated in South Africa which owns 51% of the voting rights of the company. The ultimate holding company is Acciona, S.A. Voting rights of 29% are held by Aveng Africa Limited, 10% are held by Main Street 885 (Pty) Ltd and 10% are held by Main Street 908 (Pty) Ltd.

Related party balances exist between group companies. Refer to notes 9, 13 and 16 for details of balances with related parties.

Related party transactions exist between group companies. Refer to notes 4, 5, 17 and 18 for details of transactions and balances with related parties.

		2015	2014	2013
		R	R	R
	Transactions with related parties during the year:
(i)	Amounts capitalised to property,plant and equipment
	Service and management fees
	Aveng Africa (Pty) Ltd	–	2 054 832	5 202 171
	Acciona Energy South Africa (Pty) Ltd	–	2 855 257	2 440 399
	Other management income
	Oakleaf Investment Holdings 86 (Pty) Ltd	–	200 140	43 838
	(a fellow subsidiary)
	Construction costs
	Oakleaf Investment Holdings 86 (Pty) Ltd	–	1 519 203 243	257 790 128
	Interest – capitalised
	Aveng Africa (Pty) Ltd	–	6 216 135	1 387 678
	Acciona Energy South Africa (Pty) Ltd	–	10 931 824	2 440 399
(ii)	Interest expensed through profit and loss
	Aveng Africa (Pty) Ltd	14 764 616	1 060 895	–
	Acciona Energy South Africa (Pty) Ltd	25 965 359	1 865 713	–
	(iii) Service and management fees that have been recognised in profit and loss
	Aveng Africa (Pty) Ltd	6 668	–	–
	Firefly Investments 238 (Pty) Ltd	38 940 067	4 080 923	–
	Acciona Energy South Africa Global (Pty) Ltd	1 212 556	454 843	–

		2015	2014	2013
		R	R	R
	(iv) Other income that have been recognised in profit and loss
	Oakleaf Investment Holdings 86 (Pty) Ltd	3 147 574	256 694	–
(v)	Amounts capitalised to intangible assets as a result of development costs due to
	shareholder
	Aveng Africa (Pty) Ltd	–	–	–
	(vi) Development cost paid to related party
	Aveng Africa (Pty) Ltd	–	–	80 087 424
	Acciona Energy South Africa (Pty) Ltd	–	–	41 993 349
	Vexicom (Pty) Ltd	–	–	4 234 919

All related party transactions are arm's length in nature and on the same terms and conditions as those offered to third parties.

Balances with related parties at year end:

(i)	Receivables due from group company
	Oakleaf Investment Holdings 86 (Pty) Ltd	218 899	292 631	6 819
	Firefly 222 (Pty) Ltd	–	–	–
(ii)	Payables due to related parties
	Aveng Africa (Pty) Ltd – trade payable	–	–	–
	Aveng Africa (Pty) Ltd – long-term liability	–	–	59 200 000
	Vexicom (Pty) Ltd – trade payable	–	142 729	–
	Acciona Energy South Africa (Pty) Ltd – trade payable	–	–	133
	Oakleaf Investment Holdings 86 (Pty) Ltd – trade payable	–	194 650 995	53 299 950
	Firefly Investment 238 (Pty) Ltd – trade payable	3 767 131	4 362 294

All payable will be paid within the next 12 months. No interest was payable on the amount owing in the current year.

(iii) Loans due to shareholders
Acciona Energy South Africa (Pty) Ltd	264 139 595	287 797 236	58 111 999
Aveng Africa (Pty) Ltd	150 197 025	163 649 408	33 044 078
The amounts outstanding are unsecured and will be settled in cash. No expense has been recognised in the current period for bad or doubtful
debts in respect of amounts owed by related parties.

23. FINANCIAL INSTRUMENTS

23.1 Capital risk management

The company manages its capital to ensure that it will continue as a going concern. This strategy is unchanged since the prior year.

The capital structure of the company consists of debt and equity comprising of share capital, other reserves, accumulated profit, shareholder loans and loan and borrowings.

23.2 Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 1 to the financial statements.

	2015	2014	2013
	R	R	R
23.3 Categories of financial instruments
Financial assets
Loans and receivables (including cash and cash equivalents)	301 707 587	238 268 895	21 124 569
Financial liabilities
Loans and payables	2 126 242 506	2 228 615 974	502 315 810

23.4 Market risk

There has been no change to the company's exposure to market risks or the manner in which it manages and measures the risk.

23.5 Liquidity and interest risk management

Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk management framework for the management of the company's short, medium and long-term funding and liquidity management requirements. The directors manage liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring actual cash flows and matching the maturity profiles of financial assets and liabilities. The company is able to actively source financing from its shareholders.

Interest rate sensitivity analysis

The sensitivity analysis presented below has been determined based on the exposure to interest rates for non-derivative instruments at the reporting date. For floating rate assets and liabilities, the analysis is prepared assuming the amount of the asset or liability outstanding at the reporting date was outstanding for the entire year. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible change in interest rates.

If interest rates had been 100 basis points higher or lower and all other variables were held constant, the company's profit for the year ended 31 December 2015 would decrease or increase by ZAR2 276 272 (2014: ZAR142 747) (2013: ZARnil). This is primarily attributable to the Company's exposure to interest rates on its shareholder loans and external borrowings.

Liquidity and interest risk tables

The following tables detail the company's remaining contractual maturity for its non-derivative financial assets and liabilities.

	Interest rate	Year 1	Year 1 – 5	Over 5 years	Total
	%	R	R	R	R
2015
Assets
Trade and other receivables	Interest free	107 522 976	–	–	107 522 976
Cash and cash equivalents	Daily bank rate	164 624 781	–	–	164 624 781
Receivable asset	Interest free	–	–	651 816	651 816
Financial asset	Interest free	1 208 778	4 835 112	22 864 124	28 908 014
		273 356 535	4 835 112	23 515 940	301 707 587
Liabilities
Shareholder loans	Prime less 0.5%	–	414 336 620	–	414 336 620
Loans and borrowings	JIBAR plus	27 640 070	190 786 455	1 487 361 739	1 705 788 264
	2.95%
Trade and other payables	Interest free	6 117 622	–	–	6 117 622
		33 757 692	605 123 075	1 487 361 739	2 126 242 506

	Interest rate	Year 1	Year 1 – 5	Over 5 years	Total
	%	R	R	R	R
2014
Assets
Trade and other receivables	Interest free	55 128 947	–	–	55 128 947
Cash and cash equivalents	Daily bank rate	152 382 980	–	–	152 382 980
Financial asset	Interest free	640 174	–	–	640 174
Receivable	Interest free	1 208 778	4 835 113	24 072 902	30 116 793
		209 360 879	4 835 113	24 072 902	238 268 894
Liabilities
Shareholder loans	Prime less 0.5%	–	451 446 644	–	451 446 644
	JIBAR plus
Loans and borrowings	2.95%	18 018 632	154 447 923	1 403 225 860	1 575 692 415
Trade and other payables	Interest free	201 476 915	–	–	201 476 915
		219 495 547	605 894 567	1 403 225 860	2 228 615 974
2013
Assets
Other receivables	Interest free	6 919	–	–	6 919
Cash and cash equivalents	Daily bank rate	21 076 007	–	–	21 076 007
Financial asset	Interest free	41 743	–	–	41 743
		21 124 669	–	–	21 124 669
Liabilities
Shareholder loans	8%	–	91 156 077	–	91 156 077
Loans and borrowings	Variable	–	28 241 491	270 295 034	298 536 525
Other Debts	0%		59 200 000	–	59 200 000
Trade and other payables	Interest free	53 423 208	–	–	53 423 208
		53 423 208	178 597 568	270 295 034	502 315 810

24. RETIREMENT BENEFIT INFORMATION

The company does not provide retirement benefits to its employees.

25. EVENTS SUBSEQUENT TO THE REPORTING PERIOD

No other material fact or circumstance has affected the state of affairs of the company or its operations between 31 December 2015 and the date of this report.

26. CAPITAL COMMITMENTS

The entity had no capital commitments at the reporting date for 2015 and 2014.

At the end of the 2013 year, the entity had capital commitment of ZAR1 552 606 943 for the construction of a Solar Power Facility in Sishen.

INDEPENDENT REPORTING ACCOUNTANT'S REPORT ON THE REPORT OF HISTORICAL FINANCIAL INFORMATION OF WINDFALL FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013

The Directors Aveng Limited Block A, Aveng Park, 1 Jurgens Street Jet Park, Boksburg, 1459 PO Box 6062 Rivonia, 2128 South Africa

Dear Sir(s)/Madam

INDEPENDENT REPORTING ACCOUNTANT'S REPORT ON THE HISTORICAL FINANCIAL INFORMATION INCLUDED IN THE CIRCULAR

Introduction

We have audited the historical financial information of Windfall 59 Properties (RF) Proprietary Limited (the company) in respect of the year ended 31 December 2015 set out in Annexure 5 and we have reviewed the historical financial information of the company in respect of the years ended 31 December 2014 and 31 December 2013 set out in Annexure 5.

The historical financial information in respect of each annual period comprises the statements of financial position as at the year-end date, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the years then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

Directors' responsibility for the historical financial information

The company's directors are responsible for the preparation and fair presentation of the historical financial information in accordance with the requirements of the JSE Listings Requirements, and for such internal control as the directors determine is necessary to enable the preparation of historical financial information that is free from material misstatement, whether due to fraud or error.

The JSE Listings Requirements require the historical financial information in respect of each annual period to be prepared in accordance with International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and also, as a minimum, to be presented and contain the disclosures required by the JSE Listings Requirements.

Auditor's responsibility

Our responsibility is to express an opinion or conclusion on the historical financial information based on our audit or review.

We conducted our audit of the historical financial information in accordance with International Standards on Auditing (ISAs) and the review of the historical financial information was conducted in accordance with International Standard on Review Engagements (ISRE) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. The standards require that we comply with ethical requirements.

We plan and perform the audit to obtain reasonable assurance about whether the historical financial information is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the historical financial information, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation of the historical financial information in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the historical financial information.

ISRE 2410 requires us to conclude whether anything has come to our attention that causes us to believe that the historical financial information is not prepared in all material respects in accordance with the applicable financial reporting framework. A review of financial statements in accordance with this standard consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the ISAs and consequently does not enable the auditor to obtain assurance that the auditor would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We believe that the evidence we have obtained in our audit or review is sufficient and appropriate to provide a basis for our opinion or conclusion respectively.

Opinion/Conclusion

In our opinion, the historical financial information in respect of the year ended 31 December 2015 is prepared, in all material respects, in accordance with IFRS, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and contain the disclosures required by the JSE Listings Requirements.

Based on our review of the historical financial information of the company in respect of the years ended 31 December 2014 and 31 December 2013, nothing has come to our attention that causes us to believe that the historical financial information of Windfall 59 Properties (RF) Proprietary Limited for the years ended 31 December 2014 and 31 December 2013 are not prepared, in all material respects, in accordance with the requirements IFRS, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and contain the disclosures required by the JSE Listings Requirements.

Other information in the Circular

As required by paragraph 8.53 of the JSE Listings Requirements, we have read the Circular in which the historical financial information is contained, for the purpose of identifying whether there are material inconsistencies between the Circular and the historical financial information which has been subject to audit or review. The Circular is the responsibility of the Directors. Based on reading the Circular we have not identified material inconsistencies between this report and the historical financial information which has been subject to audit or review. However, we have not audited the Circular and accordingly do not express an opinion on it.

Consent

We consent to the inclusion of this report, which will form part of the Circular to the Shareholders of Aveng Limited, to be issued on 12 October 2016, in the form and context in which it appears.

Deloitte & Touche Registered Auditor

Per: Corinne Ringwood Partner 30 September 2016

1st Floor The Square Cape Quarter Extension 27 Somerset Road Green Point 8005

REPORT OF HISTORICAL FINANCIAL INFORMATION OF N3TC FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013

Basis of preparation

The consolidated historical financial information for the three years ended 31 December 2015, 31 December 2014 and 31 December 2013, which comprises the consolidated statements of financial position, consolidated income statements, consolidated statements of comprehensive income, consolidated statements of changes in shareholders' equity and consolidated statements of cash flows as at 31 December 2015, 31 December 2014 and 31 December 2013, and the notes thereto ("historical financial information of N3TC"), have been extracted, from the annual consolidated financial statements of N3TC for the years then ended ("annual financial statements"). The accounting policies have been extracted from the annual financial statements for the year ended 31 December 2015. The historical financial information was prepared in accordance with IFRS and in compliance with the JSE Listings Requirements.

The annual financial statements were audited by Ernst &Young Inc. and unqualified audit opinions were issued for the years ended 31 December 2015, 31 December 2014 and 31 December 2013 in respect thereto. Ernst & Young Inc. is also the Independent Reporting Accountant to Aveng Limited with regards to the historical financial information of N3TC and has issued the Reporting Accountant's Report on the historical financial information of N3TC which is included as Annexure 8 to this Circular.

The Directors of Aveng are responsible for the report of historical financial information of N3TC.

Directors' comments

The N3 Toll Concession (RF) Proprietary Limited (N3TC) entered into a thirty year concession contract with the South African Roads Agency SOC Limited (SANRAL) for the design, construction, financing, operating and maintenance of a portion of the National Route 3 as a toll highway on 2 November 2016. The carrying amount of the highway concession rights as at 31 December 2015 was ZAR2 611 951 000 (2014: ZAR2 765 140; 2013: ZAR2 933 394 000).

Revenue for the years ended 31 December 2015, 2014 and 2013 was derived from toll revenues for the operation of the N3 toll highway and the construction of improvements to the highway. Toll revenues increased in accordance with the toll tariffs, which are adjusted annually in terms of the concession contract.

Traffic volumes reflected increases of 4.7% and 0.8% in light vehicle traffic and heavy vehicle traffic respectively (2014: 1.4% and 1.1% decrease; 2013: 1.2% and 4.9%).

• Light vehicle traffic for the year ended 31 December 2015 was positively impacted by the reduction in the fuel price and increased local tourism. Heavy vehicle traffic for the year ended 31 December 2015 increased lower than anticipated due to the decrease in trade volumes arising from the lower gross domestic product (GDP) growth rate.
• Light vehicle traffic was negatively impacted by the volatility in the fuel price and the difficult economic conditions, however there have been indications of a recovery during the final quarter of the year ended 31 December 2014. Heavy vehicle traffic was negatively impacted by the reduction in the GDP growth rate and thus the volume of trade for the year ended 31 December 2014.
• Despite a year-on-year increase, light vehicle traffic was negatively impacted by the volatility in the fuel price and the difficult economic conditions, whilst heavy vehicle traffic has been negatively impacted by the reduction in the export volumes of manufactured goods and, to a lesser extent, imports for the year ended 31 December 2013.

The net impact of traffic on the toll revenue, containment of costs and implementation of N3TC's rehabilitation strategy generated operating profit of ZAR975 594 000 (2014: ZAR898 042 000; 2013: ZAR898 143 000).

In terms of the rehabilitation requirements of the concession contract, N3TC is required to maintain the road surface. When expenditure is incurred in excess of the rehabilitation requirements, a rehabilitation prepayment is recognised. These prepayments are utilised when the liability to repair/replace the road surface would have fallen due, if early intervention was not made. The rehabilitation prepayments as at 31 December 2015 were ZAR1 031 923 000 (2014: ZAR815 743 000; 2013: ZAR617 818 000). The rehabilitation provisions relating to the rehabilitation requirements in terms of the concession contract as at 31 December 2015 totalled ZAR86 969 000 (2014: ZAR88 444 000; 2013: ZAR99 413 000).

N3TC is exposed to interest rates resulting from various loans amounting to ZAR2 796 855 000 (2014: ZAR2 911 640 000; 2013: ZAR2 978 703 000). The interest rate risk is managed by entering into fixed rate contracts, contracts where the rate is linked to CPI and interest rate caps and floors. The interest rate risk in relation to the CPI linked loan agreements is managed through the CPI linked increases in toll revenue permitted in the concession. N3TC's exposure to interest rate risk on fixed rate and floating rate debt instruments was ZAR465 245 000 and ZAR2 331 610 000 respectively (2014: ZAR510 777 000 and ZAR2 400 863 000; 2013: ZAR549 032 000 and ZAR2 429 671 000).

As at 31 December 2015, N3TC had designated interest rate caps and interest rate floors as hedging instruments in a cash flow hedge relationship. The fair value of the hedging instruments which is reflected at fair value through profit and loss was ZAR30 338 000 (2014: ZAR14 343 000; 2013: ZAR28 479 000).

N3TC has a guarantee of ZAR139 000 and ZAR13 475 000 respectively in favour of Centurion Vision Development (Pty) Ltd and SANRAL in accordance with its obligations under the respective contracts (2014: ZAR139 000 and ZAR12 700 000; 2013: ZAR139 000 and ZARnil).

No ordinary dividend was declared in 2015 (2014: ZAR200 000 000; 2013: ZAR300 000 000). The total preference dividend amounted to ZAR40 022 000 (2014: ZAR43 162 000; 2013: ZAR45 205 000).

N3TC CONSOLIDATED INCOME STATEMENTS for the year ended 31 December

	2015		2014	2013
	Notes	R'000	R'000	R'000
Revenue/Turnover	2	1 583 744	1 460 040	1 380 889
Operating profit	3	975 594	898 042	898 143
Share of profit of joint venture	8	1 658	1 625	848
Finance revenue	4	55 579	43 515	34 770
Finance costs	5	(386 638)	(403 482)	(408 484)
Profit before taxation		646 193	539 700	525 277
Taxation	6	(193 520)	(160 416)	(160 064)
Profit for the year		452 673	379 284	365 213

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

for the year ended 31 December

		2015	2014	2013
	Notes	R'000	R'000	R'000
Profit for the year		452 673	379 284	365 213
Other comprehensive income net of tax
Exchange differences on translation of foreign operations	12	3 131	269	1 248
Total comprehensive income for the year, net of tax		455 804	379 553	366 461

N3TC CONSOLIDATED STATEMENTS OF FINANCIAL POSITION at 31 December

	Notes	2015 R'000	2014 R'000	2013 R'000
ASSETS
Non-current assets		3 483 102	3 448 777	3 470 921
Intangible assets	7	2 611 951	2 765 140	2 933 394
Investment in a joint venture	8	4 803	3 618	2 352
Rehabilitation prepayments	14	836 010	665 618	506 366
Other financial assets	10	30 338	14 401	28 809
Current assets		1 141 985	1 098 576	764 107
Trade and other receivables	9	543	881	2 219
Rehabilitation prepayments	14	195 913	150 125	111 452
Cash and cash equivalents	11	945 529	947 570	649 974
Current taxation	24	–	–	420
Other financial assets	10	–	–	42
Total assets		4 625 087	4 547 353	4 235 028
EQUITY AND LIABILITIES
Capital and reserves	12	1 046 405	590 601	411 048
Ordinary share capital		105 594	105 594	105 594
Distributable reserves		935 958	483 285	304 001
Foreign currency translation reserve	12	4 853	1 722	1 453
Ordinary shareholders' funds		1 046 405	590 601	411 048
Preference Shares	12	–*	–*	–*
Non-current liabilities		3 118 284	3 288 554	3 442 724
Interest bearing debt	15	2 557 099	2 695 331	2 786 266
Deferred taxation	6	561 185	593 223	656 458
Current liabilities		460 398	668 198	381 256
Interest bearing debt	15	239 756	216 309	192 437
Current taxation	24	8 725	62 164	–
Shareholders for dividends	13	–	200 000	–
Trade and other payables	16	124 948	101 281	89 406
Provisions	17	86 969	88 444	99 413
Total equity and liabilities		4 625 087	4 547 353	4 235 028

* Less than ZAR1 000.

N3TC CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY for the year ended 31 December

				Distributable Reserves
Group	Ordinary share capital R'000 (Note 12)	Preference share capital* R'000 (Note 12)	Currency translation reserve R'000 (Note 12)	Revaluation reserve R'000 (Note 12)	Accumulated loss R'000	Total R'000
Balance at 31 December 2012	105 647	–	205	1 449 127	(1 209 642)	345 337
Profit for the year Other comprehensive Income	– –	– –	– 1 248	– –	365 213 –	365 213 1 248
Total comprehensive income Dividends paid Treasury shares	– (53)	– –	1 248 – –	– – –	365 213 (300 000) (697)	366 461 (300 000) (750)
Balance at 31 December 2013	105 594	–	1 453	1 449 127	(1 145 126)	411 048
Profit for the year Other comprehensive Income	– –	– –	– 269	– –	379 284 –	379 284 269
Total comprehensive income Dividends paid	– –	– –	269 –	– –	379 284 (200 000)	379 284 (200 000)
Balance at 31 December 2014	105 594	–	1 772	1 449 127	(965 842)	(590 601)
Profit for the year Other comprehensive Income	– –	– –	– 3131	– –	452 673 –	452 673 3131
Total comprehensive Income			3131		452 673	455 804
Balance as at 31 December 2015	105 594	–	4 853	1 449 127	(513 169)	1 046 405

* Less than ZAR1 000.

N3TC CONSOLIDATED STATEMENTS OF CASH FLOWS for the year ended 31 December

		2015	2014	2013
	Notes	R'000	R'000	R'000
Net cash inflow from operating activities		532 484	783 755	606 674
Operating profit and share of profit from joint venture		977 252	899 667	898 991
Adjustment for non-cash items:
– Share of profit of joint venture		(1 185)	(1 266)	(425)
– (Profit)/Loss on financial assets	3	(15 995)	13 508	(18 426)
Movement in foreign currency translation reserve	12	3 131	269	1 248
– Utilisation of prepayment	14	150 125	111 452	93 543
– Amortisation	7	186 291	184 868	184 398
– Decrease in provisions	17	(1 475)	(10 969)	2 866
Working capital changes		(342 242)	(296 222)	(149 043)
– Decrease/(Increase)in accounts receivable	10	338	1 338	(561)
– Increase/(Decrease) in accounts payable	16	23 725	1 1 817	(5 211)
– Increase in prepayments	14	(366 305)	(309 377)	(143 271)
Cash retained from operating activities		955 902	901 307	1 013 152
Finance revenue received	4	55 579	43 515	34 770
Dividends paid	13	(200 000)	–	(300 000)
Taxation paid	24	(278 997)	(161 067)	(141 248)
Net cash outflow from investing activities		(33 102)	(15 614)	(19 541)
Intangible asset expenditure	7	(33 102)	(16 614)	(10 443)
Financial assets cash flow	3, 10	–	1 000	(9 098)
Net cash outflow from financing activities		(501 423)	(470 545)	(464 205)
Decrease in interest bearing debt	15	(114 785)	(67 063)	(54 971)
Finance costs paid	5	(386 638)	(403 482)	(408 484)
Treasury shares		–	–	(750)
Net (decrease)/increase in cash and cash equivalents		(2 041)	297 596	122 928
Cash and cash equivalents at beginning of the year		947 570	649 974	527 046
Cash and cash equivalents at end of year	11	945 529	947 570	649 974

N3TC NOTES TO THE CONSOLIDATED HISTORICAL FINANCIAL INFORMATION

for the year ended 31 December

1. ACCOUNTING POLICIES

The consolidated historical financial information of N3 Toll Concession (RF) Proprietary Limited has been prepared in accordance with International Financial Reporting Standards (IFRS) and the JSE Listings Requirements. The consolidated historical financial information has been prepared on the historical cost basis except for the measurement of certain financial instruments at fair value, and incorporate the principal accounting policies set out below which are consistent with the previous period.

1.1 Intangible assets

Highway concession rights are considered to be intangible assets with finite useful lives and are initially recorded at cost.

Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.

Intangible assets with finite lives are amortised over the concession term and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year-end.

Prior to the adoption of IFRIC 12 Service Concession Arrangements N3TC considered Highway Concession Rights to be part of Property, Plant and Equipment. Property, Plant and Equipment were initially recognised at cost but was subsequently revalued at each reporting date to fair value.

1.2 Joint ventures

Joint ventures are businesses where N3TC, together with one or more other entities, perform an economic activity which is subject to joint control, contractual arrangement and requires unanimous consent. N3TC's interest in joint ventures is accounted for by applying the equity method. In applying the equity method, account is taken of N3TC's share of accumulated retained earnings and movements in reserves from the effective dates on which the companies become joint ventures and up to the effective dates of disposal.

Under the equity method, the investment in joint ventures is carried in the statement of financial position at cost plus changes in the group's share of net assets of the joint ventures since acquisition date. The share of the results of operations of joint ventures is reflected in profit or loss.

After application of the equity method, N3TC determines whether it is necessary to recognise an impairment loss on its investment in its joint ventures. N3TC determines at each reporting date whether there is any objective evidence that the investments in joint ventures are impaired. If this is the case N3TC calculates the amount of impairment as the difference between the recoverable amount of joint ventures and its carrying value and recognises the amount in profit or loss.

The reporting dates of the joint venture and N3TC are identical and the joint venture's accounting policies conform to those used by the group for like transactions and events in similar circumstances.

1.3 Deferred taxation

Deferred tax is provided, using the balance sheet method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts on the statement of financial position.

Deferred tax assets relating to assessed losses carried forward are recognised to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Income tax relating to items recognised directly in equity is recognised directly in equity and not in the income statement.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

N3TC NOTES TO THE CONSOLIDATED HISTORICAL FINANCIAL INFORMATION

for the year ended 31 December

1.4 Interest-bearing loans and borrowings

All loans and advances are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with the borrowing.

After initial recognition, interest-bearing loans and borrowings, are subsequently measured at amortised cost using the effective interest rate method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.

Gains and losses are recognised in net profit or loss when the liabilities are derecognised or impaired, as well as through the amortisation process.

1.5 Borrowing costs

Borrowing costs incurred in respect of assets which take a substantial period of time to prepare them for their intended use, are capitalised during their period of construction. Other financing costs are recognised as an expense when incurred.

1.6 Revenue recognition

Income from toll revenue is brought to account on the basis of the number of vehicles recorded as having passed through the toll plazas, net of value added taxation and adjusted by the appropriate level of discounts and concessions, where applicable.

Interest income is recognised as interest accrues using the effective interest rate method.

Construction services revenue is recognised as an amount corresponding to the fair value of the construction work as the infrastructure is built. In the case of N3 Toll Concession (RF) Proprietary Limited, no distinction is made between remuneration for the construction and operating phases of the concession for the determination of customer toll charges. As there are no external benchmarks that could be used to determine the fair value of these two items, revenue recognised during the construction phase is limited to an amount equal to the costs incurred.

Insurance revenue is recognised to the extent that it is probable that economic benefits will flow to the company and the revenue can be reliably measured.

I.7 Basis of consolidation

The consolidated historical financial information comprises the financial statements of N3 Toll Concession (RF) Proprietary Limited and its subsidiary drawn up to 31 December each year.

Subsidiaries are consolidated from the date on which control is transferred to the group and cease to be consolidated from the date on which control is transferred out of the group.

1.8 Foreign currency translation

The consolidated historical financial information is presented in Rand which is the company's functional and presentation currency. Each entity in the group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the reporting date.

All differences are taken to profit or loss with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in profit or loss. Tax charges and credits attributable to exchange differences on those borrowings are also dealt with in equity.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

As at the reporting date, the assets and liabilities of Euroguard Insurance Company Limited are translated into the presentation currency of N3 Toll Concession (RF) Proprietary Limited at the rate of exchange ruling at the statement of financial position date and its income statement is translated at the weighted average exchange rate for the year. The exchange differences arising on the translation are taken directly to a separate component of equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement.

1.9 Provisions

Provisions are recognised when N3TC has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.

1.10 Accounts payable

Accounts payable arc initially recorded at cost, and subsequently carried at cost less payments made.

1.11 Accounts receivable

Accounts receivable are stated at the gross invoice value adjusted for payments received and an allowance for doubtful debts where considered appropriate. Bad debts are written off when identified.

1.12 Leases

Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term.

1.13 Cash and cash equivalents

Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less.

For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

1.14 Other financial assets

Initial recognition and subsequent measurement

Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

Any gains or losses arising from changes in fair value on derivatives during the year that do not qualify for hedge accounting and the ineffective portion of an effective hedge, are taken directly to the income statement.

The fair value of derivative contracts is determined by reference to market values for similar instruments.

For the purpose of hedge accounting, hedges are classified as:

• fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment except for foreign currency risk; or
• cash flow hedges when hedging exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction of the foreign currency risk in an unrecognised firm commitment; or
• hedges of a net investment in a foreign operation.

At the inception of a hedge relationship, N3TC formally designates and documents the hedge relationship to which it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge.

The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument's effectiveness in offsetting the exposure to changes in the hedged item's fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

Cash flow hedges

The effective portion of the gain or loss on the hedging instrument is recognised directly in equity, while any ineffective portion is recognised immediately in the income statement.

Amounts taken to equity are transferred to the income statement when the hedged transaction affects profit or loss, such as when the hedged financial income or financial expense is recognised or when a forecast sale occurs. Where the hedged item is the cost of a non-financial asset or non-financial liability, the amounts taken to equity are transferred to the initial carrying amount of the non-financial asset or liability.

If the forecast transaction or firm commitment is no longer expected to occur, amounts previously recognised in equity are transferred to the income statement. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognised in equity remain in equity until the forecast transaction or firm commitment occurs.

N3TC has an interest rate cap that is used as a hedge for the exposure of changes in the interest rate relating to the dividends on the cumulative redeemable preference shares. See note 10 for more details.

Financial assets at fair value through profit and loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition as at fair value through profit and loss.

Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments or a financial guarantee contract. Gains or losses on investments held for trading are recognised in profit and loss.

Financial assets may be designated at initial recognition as at fair value through profit or loss if the following criteria are met: (i) the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or recognising gains or losses on them on a different basis; or (ii) the assets are part of a group of financial assets which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management strategy; or (iii) the financial asset contains an embedded derivative that would need to be separately recorded.

Impairment of financial assets

N3TC assesses at each balance sheet date whether a financial asset or group of financial assets is impaired.

1.15 Significant accounting judgements and estimates

Judgements

In the process of applying N3TC's accounting policies, management has made the following judgement which has the most significant effect on the amounts reflected in the consolidated historical financial information:

Provision/or road rehabilitation

A provision is recorded to cover the cost incurred to restore the road to the condition stipulated in the Concession Contract. The provision is dependent on management's judgment as to the current state of road damage.

Estimation uncertainty

The key assumption concerning the future and other key sources of estimation at the reporting date that has a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year is discussed below:

Amortisation

The intangible assets are amortised over the remaining period of the concession. The rehabilitation prepayments are amortised over eight years.

1.16 Changes in accounting policies and disclosures

The accounting policies adopted are consistent with those of the previous financial year, except as follows:

N3TC has adopted the following new and amended accounting standards and interpretations as of 1 January 2015:

Standard	Subject	Effective date
IFRS 9	Financial instruments – classification and measurement	1 January 2018

The adoption of the above standards and/or interpretations did not have a material impact on the consolidated historical financial information or performance of N3TC.

1.17 Standards and interpretations issued but not yet effective

The following is the list of standards and interpretations that have been issued which are not yet effective:

Standard	Subject	Effective date
IFRS 7	Financial instruments - disclosures	1 January 2016
	Equity method in separate financial statements –
IAS 27	Amendments to IAS 27	1 January 2016
IAS 1	Disclosure initiative amendments to IAS 1	1 January 2016

Management does not expect that any of these standards and interpretations will have a material impact on the consolidated historical financial information. Management expects to implement these standards and interpretations when they become effective.

		2015 R'000	2014 R'000	2013 R'000
2.	REVENUE/TURNOVER
	Revenue consists of:
	Toll revenue	1 550 642	1 443 426	1 370 446
	Construction service revenue	33 102	16 614	10 443
		1 583 744	1 460 040	1 380 889
3.	OPERATING PROFIT
	Operating profit is stated after charging/(crediting): Amortisation of intangible assets	186 291	184 868	184 398
	Rehabilitation prepayments utilised	150 125	111 452	93 543
	Rehabilitation expense
	– Additional provisions	16 297	9 047	16 324
	– Non-provisional expenditure Operating leases	11 644	10 431	–
	– Land and buildings	2 215	2 006	1 525
	– Office equipment	89	66	69
	Construction costs (Profit)/Loss on financial assets	33 102 (15 995)	16 614 13 508	10 443 (18 426)
	– Realised loss on maturity of interest rate cap – Unrealised loss on interest rate cap	–	372	49 906
	– Realised profit on preference share hedge	–	(1 000)	–
	– Unrealised (profit)/loss on preference share hedge	(15 995)	14 136	(19 381)
	Managerial, technical, administrative
	internal audit and secretarial fees paid outside the company	672	565	1 922
	Employee benefits	27 151	25 060	22 072
	– Short-term benefits	25 853	23 685	20 858
	– Long-term benefits	1 298	1 375	1 214
	There were on average 27 employees employed by the company and group during the
	year (2014: 28) (2013: 27).
4.	FINANCE REVENUE
	Interest received	44 679	33 940	34 221
	Interest received on preference shares	10 900	9 575	549
		55 579	43 515	34 770
5.	FINANCE COSTS
	Interest on preference shares	40 022	43 162	45 205
	Interest and guarantee fees	346 616	360 320	363 279
		386 638	403 482	408 484
6.	TAXATION
	SA normal tax
	– Current	(225 558)	(223 651)	(140 315)
	– Deferred (income statement): current	32 038	63 235	(19 749)
		(193 520)	(160 416)	(160 064)
	Composition of deferred tax in the statement of financial position
	– Capital allowances and interest capitalisation	(215 521)	(201 169)	(243 882)
	– Deferred taxation on the revaluation of highway improvements – Other	(362 086) 16 422	(417 360) 25 306	(436 261) 23 685
		(561 185)	(593 223)	(656 458)
	Tax rate reconciliation	%	%	%
	Standard rate of company taxation Adjusted for:	28.0	28.0	28.0
	– Dividends received	(0.1)	(0.5)	–
	– Foreign income	(0.1)	–	–
	– Preference dividends	2.1	2.2	2.4
	Effective taxation rate	29.9	29.7	30.4

		2015 R'000	2014 R'000	2013 R'000
7.	INTANGIBLE ASSETS Cost
	At 1 January	4 321 791	4 305 177	4 294 734
	Additions during the year	33 102	16 614	10 443
	At 31 December	4 354 893	4 321 791	4 305 177
	Accumulated amortisation
	At 1 January	(1 556 651)	(1 371 783)	(1 187 385)
	Amortisation for the year	(186 291)	(184 868)	(184 398)
	At 31 December	(1 742 942)	(1 556 651)	(1 371 783)
	Carrying amount at 31 December	2 611 951	2 765 140	2 933 394

8. INVESTMENT IN JOINT VENTURE

N3TC has a 30% interest in Zimele Investment Enterprise Company Proprietary Limited ("Zimele") which is primarily involved in truck stop operations, route management services activities and load control operations. The investment is classified as a joint venture.

The following table outlines the summarised financial information of N3TC's investment in Zimele Investment Enterprise Company Proprietary Limited:

	2015	2014	2013
	R'000	R'000	R'000
Share of the joint venture's statement of financial position:
Current assets	4 612	5 205	2 539
Non-current assets	1 443	1 042	1 133
Current liabilities	(1 252)	(2 629)	(1 320)
Equity	4 803	3 618	2 352
Share of joint venture's revenue and profit
Revenue	6 554	5 783	3 880
Profit	1 658	1 625	848
Less: Dividends	(473)	(359)	(423)
	1 185	1 266	425
Carrying amount of investment	4 803	3 618	2 352
TRADE AND OTHER RECEIVABLES
Group
Accrued interest	72	28	77
Other receivables	–	487	1 808
Deposits and prepayments	471	366	334
	543	881	2 219
Trade and other receivables are non-interest bearing.

N3TC NOTES TO THE CONSOLIDATED HISTORICAL FINANCIAL INFORMATION

for the year ended 31 December

10. OTHER FINANCIAL ASSETS (Group and Company)

As at 31 December 2015 the group held a cash flow hedge which is reflected at fair value, through profit and loss, on the statement of financial position. It was put in place in May 2013. The details are as follows (unchanged from 2013):

a.	Counterparty bank: Rand Merchant Bank
	• Interest rate cap with a strike of 7.75%
	NACQ Commencement 15 August 2014
	Termination 15 August 2024
	Notional 71.06% of adjusted closing balance.
	Resets quarterly against 90 day JIBAR
	The cap was adjusted to match the revised dividend and repayment profile per UF31 on 10 December 2014.
	This yielded a premium of ZAR1 million for the company and a hedge was entered into.
	The details are as follows:
b.	Counterparty bank: Rand Merchant Bank

• Interest rate cap with a strike of 7.75% NACQ Commencement 10 December 2014 Termination 15 August 2024 Notional 71.06% of adjusted closing balance Resets quarterly against 90 day JIBAR • Interest rate floor with a strike of 5.85% NACQ Commencement 15 August 2013 Termination 15 August 2024 Notional 71.06% of adjusted closing balance Resets quarterly against 90 day JIBAR

	2015	2014	2013
	R'000	R'000	R'000
Mark to market at 31 December 2015, 31 December 2014 and 31 December 2013	30 338	14 343	28 479
Total non-current financial assets	30 338	14 343	28 851
Less: Short term portion (note 16 – liability portion)	–	58	(42)
Total other financial assets	30 338	14 401	28 809
11. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of:
Restricted cash (excluding interest)	200 387	194 399	190 400
– Debt service reserve account	200 387	194 399	190 400
Cash on hand and balances with banks	17 108	23 009	17 608
Short term investments	728 034	730 162	441 966
	945 529	947 570	649 974
N3TC has undrawn facilities of ZAR25 million (2014: ZAR25 million, 2013: ZAR25 million).
12. CAPITAL AND RESERVES
Authorised
11 000 000 000 ordinary shares of 1 cent each	110 000	110 000	110 000
1 000 redeemable preference shares of 1 cent each	1	1	1
7 500 000 cumulative redeemable preference shares of 1 cent each	75	75	75
	110 076	1 10 076	110 076
Issued
Ordinary shares
10 559 451 462 ordinary shares of 1 cent each (2014: 10 564 733 283)	105 594	105 647	105 647
5 281 150 treasury shares of 1 cent each	–	(53)	(53)
	105 594	105 594	105 594
Redeemable preference shares
1 000 redeemable preference shares of 1 cent each	*	*	*

The redeemable preference shares are redeemable at the initial subscription price when the amounts owing under the loan facilities are repaid in full. In the event of default and enforcement of the security granted by the company under the loan agreements, the aggregate redeemable preference shares assume voting rights at meetings of shareholders, equivalent to one hundred times the aggregate voting right of the ordinary shares. They are also conferred with the right to receive a preferential dividend limited to the amount owing under the loan facilities. During the year N3TC purchased 671 ordinary shares from its shareholders and these, together with the treasury shares reflected in the prior year, were cancelled in terms of a resolution of the shareholders.

* Less than ZAR1 000.

12. CAPITAL AND RESERVES (continued)

Cumulative redeemable preference shares

At 31 December 2015, 7 500 000 cumulative redeemable preference shares had been issued. Each share has a par value of ZAR0.01 and was issued at a premium of ZAR99.99. Cumulative redeemable preference shares are redeemed at issue price as per the redemption agreement and carry a dividend of 71.06% of the 3 month JIBAR +3.69%, payable half yearly in arrears on 15 February and 15 August subject to a dividend freeze period. The preference shares rank ahead of ordinary shares in the event of a liquidation.

The cumulative redeemable preference shares are classified as a financial liability under note 15, in terms of the requirements of IAS 32, as follows:

	2015 R'000	2014 R'000	2013 R'000
7 500 000 cumulative redeemable preference shares of 1 cent each Share premium	75	75	75
7 500 000 cumulative redeemable preference shares at ZAR99.99	749 925	749 925	749 925
Less: Redemptions	750 000 (299 237)	750 000 (246 621)	750 000 (200 016)
	450 763	503 379	549 984
		Foreign currency translation	Revaluation
		reserve R'000	reserve R'000
Other reserves At 1 January 2013 Exchange difference on translation of foreign operations		205 1 248	1 449 127 –
At 31 December 2013 Exchange difference on translation of foreign operations		1 453 269	1 449 127 –
At 31 December 2014 Exchange difference on translation of foreign operations		1 722 3 131	1 449 127 –
At 31 December 2015		4 853	1 449 127

Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

Revaluation reserve

The revaluation reserve was used to record increases in the fair value of concession assets and decreases to the extent that a decrease relates to an increase on the same asset previously recognised in equity. This reserve will be transferred to retained earnings when the assets are derecognised.

	2015 R'000	2014 R'000	2013 R'000
13. DIVIDENDS AND SHAREHOLDERS FOR DIVIDENDS
Opening balance	200 000	–	–
Dividends declared	–	200 000	300 000
Dividends paid	(200 000)	–	(300 000)
Shareholders for dividends	–	200 000	–
14. REHABILITATION PREPAYMENTS
Opening balance	815 743	617 818	568 090
Prepayments during the year	366 305	309 377	143 271
Utilised during the year	(150 125)	(111 452)	(93 543)
Less: Current portion	(195 913)	(150 125)	(111 452)
Non-current closing balance	836 010	665 618	506 366

The rehabilitation prepayments relate to expenditure incurred in excess of the rehabilitation requirements in terms of the Concession Contract. These prepayments are utilised when the liability to repair/replace the road surface would have fallen due, if early intervention was not made.

				Amount
		Effective
	Financial	interest rate
	years of	(NACS)	2015	2014	2013
	redemption	%	R'000	R'000	R'000
15. INTEREST-BEARING DEBT (Group and
Company)
FirstRand Bank Limited/European Investment
Bank Limited
Repayable in quarterly instalments after five years
and by the 25th year from date of drawdown	2004 – 2024	17.99	253 561	265 000	274 468
Nedbank Limited
Repayable in bi-annual instalments after five years
and by the 20th year from date of drawdown	2004 – 2019	17.72	92 508	107 380	119 930
Old Mutual Life Assurance Company (South
Africa) Limited
Repayable in bi-annual instalments after five years
and by the 20th year from date of drawdown	2004 – 2019	17.56	26 462	30 733	34 342
Development Bank of Southern Africa Limited
Repayable in bi-annual instalments after five years
and by the 20th year from date of drawdown	2004 – 2019	17.60	92 714	107 664	120 292
Inflation linked bonds
Repayable in quarterly instalments after six years	2005 – 2024	8.30 plus	1 880 847	1 897 484	1 879 687
and by the 25th year from date of drawdown		adjustment
		for inflation
Cumulative redeemable preference shares (Note 12)			450 763	503 379	549 984
Less: Short-term portion included in current liabilities			(239 756)	(216 309)	(192 437)
			2 557 099	2 695 331	2 786 266

Under the loan agreements, N3TC's assets and rights which are both tangible and intangible, have been secured by a cession in security in favour of the senior lenders.

	2015	2014	2013
	R'000	R'000	R'000
16. TRADE AND OTHER PAYABLES
Trade payables	86 174	58 579	45 630
Interest payable	26 289	27 284	28 096
Other payables	12 485	15 360	15 680
Short-term portion of other financial assets (note 10)	–	58	–
	124 948	101 281	89 406
Trade payables are non-interest bearing and are normally settled on 30 days.
Interest payable is settled as per note 15.
17. PROVISIONS
Rehabilitation
Opening balance	88 444	99 413	96 547
Raised during the year	16 297	9 047	16 324
Utilised during the year	(17 772)	(20 016)	( 13 458)
Closing balance	86 969	88 444	99 413
This provision relates to rehabilitation requirements in terms of the Concession Contract
(Annexure 1).
18. CAPITAL COMMITMENTS
Commitments for highway improvements
Contracted for but not provided in the historical financial information	477 170	422 940	317 531
Authorised, but not contracted for	189 877	199 370	190 628
	667 047	622 310	508 159
Capital commitments will be financed from internal resources and existing facilities. In addition, there are commitments for the upgrade, repair
and replacement of the highway and for the De Beers Pass works, which are conditional upon traffic volumes, the condition of the highway and
environmental approvals.

19. LEASE COMMITMENTS

At the reporting date, the group had outstanding commitments under non-cancellable operating leases with a term of more than one year, which fall due as follows:

	2015	2014	2013
Group	R'000	R'000	R'000
Within one year	2 174	2 304	2 072
In the second to fifth year inclusive	3 410	5 511	7 493
	5 584	7 815	9 565

20. RETIREMENT BENEFIT PLANS

The employees of N3TC are members of the Momentum Employee Benefits, Fundsatwork: Provident Fund. N3TC is required to contribute a specified percentage of their payroll costs to the retirement scheme to fund the benefits. The only obligation of N3TC with respect to the retirement benefit scheme is to make the specific contribution.

N3TC NOTES TO THE CONSOLIDATED HISTORICAL FINANCIAL INFORMATION

for the year ended 31 December

21. FINANCIAL RISK MANAGEMENT

21.1 Credit risk management

N3TC only deposits cash surpluses with major banks of high quality credit standing or with shareholders provided a guarantee is received from a major bank of high quality credit standing.

N3TC is not exposed to any large degree of credit risk in regards to trade receivables as it operates mainly on a cash basis or through the use of credit cards and electronic tags issued by reputable banking institutions and/or SANRAL.

21.2 Liquidity and interest rate risk

N3TC is exposed to interest rate risk by virtue of the various loan agreements it has entered into. The interest rate risk is managed by N3TC entering into fixed rate contracts, contracts where the rate is linked to the CPI and interest rate caps and floors. The interest rate risk in relation to the CPI linked loan agreements is managed by virtue of the fact that the concession allows for CPI linked increases in toll income.

N3TC is managing its liquidity risk by the use of projected cash flows. In addition N3TC has unutilised borrowing capacity.

The following table sets out by maturity the financial instruments that are exposed to interest rate risk:

Fixed rate 2015 2016 2017 FirstRand Bank/European Investment Bank 17.99 13 624 86 422 153 515 Nedbank 17.72 17 575 74 933 – Development Bank of Southern Africa 17.60 17 648 75 066 – Old Mutual Life Assurance Company (South Africa) 17.56 5 040 21 422 – Fixed rate 2014 2015 2016 FirstRand Bank/European Investment Bank 17.99 11 439 72 727 180 834 Nedbank 17.72 14 872 92 508 Development Bank of Southern Africa 17.60 14 949 92 715 Old Mutual Life Assurance Company (South Africa) 17.56 4 271 26 462 Fixed rate 2013 2014 2015 FirstRand Bank/European Investment Bank 17.99 9 468 84 166 180 834 Ned bank 17.72 12 549 107 381 – Development Bank of Southern Africa 17.60 12 629 107 663 – Old Mutual Life Assurance Company (South Africa) 17.56 3 609 30 733 – Floating rate 2015 Inflation linked bonds 8.30 plus 113 662 824 321 942 864 inflation adjustment Cumulative redeemable preference shares 71.06 of 58 306 98 684 293 683 3 month JIBAR + 3.69 Cash assets money market 945 529 – – rates Floating rate 2014 Inflation linked bonds 8.30 plus 102 188 565 959 1 229 337 inflation adjustment Cumulative redeemable preference shares 71.06 of 3 month 68 590 137 116 297 673 JIBAR + 3.69 Cash assets money market 947 570 – – rates Floating rate 2013 Rand Merchant Bank Inflation linked loans consortium 8.30 plus 90 453 561 580 1 227 654 inflation adjustment Cumulative redeemable preference shares 71.06 of 63 729 81 409 404 846 3 month JIBAR + 3.69 Cash assets money market 649 974 – – rates	%	1 year R'000	2 – 5 years R'000	>5 years R'000

N3TC NOTES TO THE CONSOLIDATED HISTORICAL FINANCIAL INFORMATION

for the year ended 31 December

21.3 Commodity price risk

A significant portion of the input costs relating to N3TC's obligations for the upgrade, repair and replacement of the highway are influenced by the oil price and the Rand exchange rate. In order to reduce the risk of fluctuations in these areas, the group enters into diesel and bitumen option contracts when necessary.

21.4 Fair value

The directors are of the opinion that the book value of financial instruments approximates their fair value.

Fair value hierarchy

As at 31 December 2015, N3TC held the following financial instruments carried at fair value on the statement of financial position:

	Level 1 R'000	Level 2 R'000	Level 3 R'000
Assets measured at fair value
31 December 2015
Financial assets at fair value through profit and loss	–	30 338	–
31 December 2014
Financial assets at fair value through profit and loss	–	14 343	–
31 December 2013
Financial assets at fair value through profit and loss	–	28 857	–

N3TC use the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly. Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

During the reporting period ended 31 December 2015, 2014 and 2013, there were no transfers between Level 1 and Level 2 fair value measurements.

Description of significant observable inputs to valuation:

The value has been determined by RMB using the following inputs:

Interest rate cap:

Forward three-month JIBAR rate cap strike: 7.75%

Interest rate floor:

Forward three-month JIBAR rate floor strike: 5.85%

21.5 Capital management

The primary objective of N3TC's capital management is to ensure that it maintains a healthy capital ratio in order to support its business and maximise value.

What the group considers to be permanent capital can be clearly determined from the statements of financial position.

22. RELATED PARTIES

N3TC, in the ordinary course of business, has entered into various contracts and service agreements with various related parties. These transactions are under terms that are no less favourable than those arranged with third parties.

Details of these transactions are as follows:

	2015 R'000	2014 R'000	2013 R'000
Construction contracts
Aveng Grinaker-LTA	–	–	104 924
No amounts owed to related parties
Employee benefits paid to senior management personnel
Short-term benefits	19 022	17 355	16 239
Long-term benefits	1 298	1 161	969

23. CONTINGENT LIABILITIES

Guarantee of ZAR139 000 in favour of Centurion Vision Development (Pty) Ltd (2014: ZAR139 000, 2013: ZAR139 000).

Guarantee of ZAR13 475 000 in favour of The South African National Roads Agency SOC Limited (2014: ZAR12 700 000, 2013: ZAR0.00).

	2015 R'000	2014 R'000	2013 R'000
24. TAXATION PAID
(Unpaid)/prepaid at beginning of the year	(62 164)	420	(513)
Paid	278 997	161 067	141 248
Current charge	(225 558)	(223 651)	(140 315)
Unpaid at end of the year	(8 725)	(62 164)	420

INDEPENDENT REPORTING ACCOUNTANT'S REPORT ON THE REPORT OF HISTORICAL FINANCIAL INFORMATION OF N3TC FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013

The Directors Aveng Limited Aveng Park 1 Jurgens Street Jet Park Boksburg

To the Directors of Aveng Limited

INDEPENDENT REPORTING ACCOUNTANT'S REPORT ON THE HISTORICAL FINANCIAL INFORMATION OF N3 TOLL CONCESSION (RF) PROPRIETARY LIMITED.

Introduction

At your request, we present our Reporting Accountant's report on the consolidated historical financial information of N3 Toll Concession (RF) Proprietary Limited ("N3TC") for the three years ended 31 December 2015, 31 December 2014 and 31 December 2013 (the "consolidated historical financial information") which consists of the consolidated statements of financial position, consolidated income statements, consolidated statements of comprehensive income, consolidated statements of changes in equity and the consolidated statement of cash flows, for inclusion in the circular to be dated on Wednesday, 12 October 2016 (Circular). This report is required for the purposes of complying with section 8.48 of the Listings Requirements of the JSE Limited (the "JSE Listings Requirements") and is given for the purpose of complying with those requirements and for no other purpose. We are the independent auditor of N3TC.

To the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with the JSE Listings Requirements and consenting to its inclusion in the Circular.

Responsibility of the Directors

The Directors of Aveng Limited (Aveng) are responsible for the compilation, contents and preparation of the Circular in accordance with the JSE Listings Requirements. The Directors are also responsible for the fair presentation in accordance with International Financial Reporting Standards (IFRS) of the consolidated historical financial information contained therein to which this Independent Reporting Accountant's Report relates, and for such internal control as the Directors determine is necessary to enable the preparation of the consolidated historical financial information that are free from material misstatements, whether due to fraud or error.

Consolidated historical financial information subjected to audit

We have audited the consolidated historical financial information for the three years ended 31 December 2015, 31 December 2014 and 31 December 2013, attached as Appendix 7 to the Circular, prepared in accordance with IFRS and in compliance with the JSE Listings Requirements.

Responsibility of the Independent Reporting Accountant's on the consolidated historical financial information for the three years ended 31 December 2015, 31 December 2014 and 31 December 2013

Our responsibility is to express an audit opinion on the consolidated historical financial information for the three years ended 31 December 2015, 31 December 2014 and 31 December 2013 included in Annexure 7 to the Circular based on our audit.

We conducted our audit of the consolidated historical financial information for the three years ended 31 December 2015, 31 December 2014 and 31 December 2013 in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated historical financial information is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated historical financial information for the three years ended 31 December 2015, 31 December 2014 and 31 December 2013. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated historical financial information, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated historical financial information for the three years ended 31 December 2015, 31 December 2014 and 31 December 2013 in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated historical financial information for the three years ended 31 December 2015, 31 December 2014 and 31 December 2013.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion on consolidated historical financial information for the three years ended 31 December 2015, 31 December 2014 and 31 December 2013

In our opinion, the consolidated historical financial information for the three years ended 31 December 2015, 31 December 2014 and 31 December 2013 consisting of the consolidated statements of financial position, consolidated income statements, consolidated statements of comprehensive income, consolidated statements of changes in equity and the consolidated statement of cash flows of N3 Toll Concession (RF) Proprietary Limited for the three years ended 31 December 2015, 31 December 2014 and 31 December 2013 included in the Circular has been prepared, in all material respects, in accordance with IFRS and in compliance with the JSE Listings Requirements.

Ernst & Young Inc. Director: Dawid Petrus Venter CA(SA) Registered Auditor Reporting Accountant Specialist

Date: 30 September 2016

REPORT OF HISTORICAL FINANCIAL INFORMATION OF IMVELO FOR THE THREE YEARS ENDED 31 MARCH 2016, 2015 AND 2014

Basis of preparation

The statements of comprehensive income, statements of cash flows and the statements of changes in equity for the three years ended 31 March 2016, 2015, and 2014, the statements of financial position as at 31 March 2016, 2015 and 2014, accounting policies and the notes thereto (historical financial information of Imvelo) have been extracted, from the audited financial statements of Imvelo for the years ended 31 March 2016, 2015 and 2014 (audited financial statements). The audited financial statements were prepared in accordance with IFRS and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the Financial Pronouncements as issued by the Financial Reporting Standards Council.

The additional disclosure required in terms of paragraphs 8.11 and 8.12 of the JSE Listings Requirements, to the extent applicable, has been included in the report of historical financial information of Imvelo.

The audited financial statements were audited by PricewaterhouseCoopers Inc. ("PwC"). Unqualified audit opinions were issued in respect thereto. PwC is also the Independent Reporting Accountant to the Aveng Group with regards to the historical financial information of Imvelo and has issued the Independent Reporting Accountant's report on this report of historical financial information of Imvelo which is included as Annexure 10 to this Circular.

The Directors are responsible for the report of historical financial information of Imvelo.

Directors' commentary

Imvelo Concession Company Proprietary Limited (RF) (the company) entered into a Public Private Partnership Agreement ("PPP Agreement") with the Government of the Republic of South Africa, acting through the Department of Environmental Affairs ("the Department"), to design, construct, operate, maintain and finance a suitable working environment for the Department. The company subcontracted the design and the construction of the building to Aveng Grinaker-LTA/Keren Kula Joint Venture (the D&C Subcontractor) and the operations and maintenance of the building to Imvelo Facilities Management Proprietary Limited (the Operator).

Revenue is derived from construction services, construction delay payments, gross unitary payments net of unitary payment deductions and operator pass-through revenue. Revenue for the years ended 31 March 2016, 2015 and 2014 totalled ZAR49 714 964, ZAR46 178 787 and ZAR379 185 501 respectively. In 2014, revenue constituted construction revenue and in 2015 and 2016, revenue mainly constituted operations services.

As at 31 March 2016, the financial asset, arising from the public private partnership ("PPP") arrangement with the Department, was performing and the balance outstanding was ZAR579 003 371 (2015: ZAR531 850 104; 2014: ZAR472 498 394). The financial asset is derived from construction services and operating services. The financial asset represents amounts due from the Department to the company for services rendered.

The company manages its interest rate risk by entering into floating-to-fixed interest rate swaps. The fair value of the interest rate swaps was an asset valued at ZAR5 600 345 as at 31 March 2016 (2015: ZAR14 715 154 (liability); 2014: ZAR4 976 958 (asset)).

The company's performance is measured on a monthly basis in accordance with the PPP agreement's output specifications and performance deductions applied for performance failure. As at 31 March 2016, no warning notices had been received by the company, however performance deductions had been levied by the Department in respect of performance failures totalling ZAR1 022 065 in respect of 2016 and ZAR61 125 in respect of 2015.

During the year ended 31 March 2016, 18 defects were identified and reported to the D&C Subcontractor, of which 10 remain outstanding. Nine of the 10 were classified as genuine defects, fully recoverable from the D&C subcontractor. The total estimated cost to rectify the defects is ZAR14 707 496.

IMVELO STATEMENT OF FINANCIAL POSITION at 31 March

		2016 2015		2014
	Notes	R	R	R
ASSETS
NON-CURRENT ASSETS
Financial asset	5	579 003 371	531 850 104	472 498 394
Derivative financial instruments	13	5 600 345	–	4 976 958
Equipment	6	259 955	88 697	128 748
Deferred tax asset	7	6 595 681	–	–
		591 459 352	531 938 801	477 604 100
CURRENT ASSETS
Accounts receivable	9	877 200	11 026 617	441
Bank and cash	10	111 492 436	71 627 489	45 089 125
		112 369 636	82 654 106	45 089 566
TOTAL ASSETS		703 828 988	614 592 907	522 693 666
EQUITY
Share capital	11	19 279 410	19 279 410	12 872 134
Retained earnings		111 125 668	32 046 097	15 233 876
TOTAL EQUITY		130 405 078	51 325 507	28 106 010
LIABILITIES
NON-CURRENT LIABILITIES
Borrowings	12	389 787 683	399 343 707	391 800 741
Shareholders' loans	8	109 249 936	109 249 936	72 942 040
Derivative financial instruments	13	–	14 715 154	–
Provision for asset renewal	14	24 490 388	7 894 589	–
Provision for lease straight lining		30 170		–
Deferred tax liability	7	–	13 762 391	5 924 286
		523 558 177	544 965 777	470 667 067
CURRENT LIABILITIES
Borrowings	12	9 405 076	8 253 851	9 502 419
Shareholders' loans	8	19 530 132	4 273 618	–
Derivative financial instruments	13	–	–	71 563
Provision for defects rectification	27	14 799 969	–	–
Provision for asset renewal	14	139 469	90 650	–
Trade and other payables	15	5 991 087	5 683 504	14 346 607
		49 865 733	18 301 623	23 920 589
TOTAL LIABILITIES		573 423 910	563 267 400	494 587 656
TOTAL EQUITY AND LIABILITIES		703 828 988	614 592 907	522 693 666

IMVELO STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 March

		2016		2014
	Notes	R	R	R
Revenue	16	49 714 964	46 178 787	379 185 501
Contract costs	17	(29 670 297)	(22 028 624)	(375 854 328)
Gross profit		20 044 667	24 150 163	3 331 173
Other income		10 662	561 211	797 118
Operating expenses	18	(20 190 096)	(7 614 163)	(7 302 438)
Operating (loss)/profit		(134 767)	17 097 211	(3 174 147)
Finance income	19	101 372 805	90 349 325	48 552 185
Finance costs	19	(42 516 540)	(79 453 302)	578 029
Profit before tax		58 721 498	27 993 234	45 926 067
Income tax expense	20	20 358 073	(7 838 106)	(12 859 299)
Profit for the year		79 079 571	20 155 128	33 066 768
Other comprehensive income:
Other comprehensive income for the period, net of tax		–	–	–
Total other comprehensive income for the period		79 079 571	20 155 128	33 066 768
Profit attributable to:
Owners of the parent		79 079 571	20 155128	33 066 768
Total comprehensive profit attributable to:
Owners of the parent		79 079 571	20 155 128	33 066 768

STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2016

		Share	Retained earnings	Total
		capital
	Notes	R	R	R
Balance 1 April 2013		10	(17 832 892)	(17 832 892)
Proceeds from issue of shares	11	12 872 124	–	12 872 124
Profit for the year		–	33 066 768	33 066 768
Balance at 1 April 2014		12 872 134	15 233 876	28 106 010
Proceeds from issue of shares	11	6 407 276	–	6 407 276
Profit for the year		–	20 155 128	20 155 128
Dividends paid		–	(3 342 907)	(3 342 907)
Balance at 31 March 2015		19 279 410	32 046 097	51325 507
Profit for the year		–	79 079 571	79 079 571
Balance at 31 March 2016		19 279 410	111 125 668	130 405 078

IMVELO STATEMENT OF CASH FLOWS for the year ended 31 March 2016

		2016	2015	2014
	Notes	R	R	R
Cash flows generated from operating activities
Cash receipts from customer		116 094 509	83 689 921	129 070 173
Cash paid to suppliers and employees		(24 592 431)	(48 730 804)	(406 741 153)
Cash generated from operations	21.1	91 502 078	34 959 117	(278 670 980)
Income tax paid	20	–	–	–
Net cash generated from operating activities		91 502 078	34 959 117	(278 670 980)
Cash flows generated from investing activities
Increase in financial asset	5	–	(1 477 334)	(7 292 552)
Purchases of equipment	6	(230 377)	–	(123 895)
Interest received		4 573 569	2 949 054	953 389
Net cash generated from investing activities		4 343 192	1 471 720	(6 463 055)
Cash flows utilised in financing activities
Proceeds from issuance of ordinary shares	11	–	6 407 276	12 872 124
Increase in shareholders' loan	8	–	36 307 896	72 942 040
Repayment of shareholders' loan	8	–	(8 657 094)	–
Repayment of borrowings	12	(47 054 257)	(32 455 858)	210 362 374
Net swap settlements		(8 530 288)	(8 151 786)	–
Dividends paid		–	(3 342 907)	–
Agency fee		(395 778)	–	–
Net cash utilised in financing activities		(55 980 323)	(9 892 473)	296 176 538
Net increase in cash and bank overdrafts		39 864 947	26 538 364	11 042 503
Cash and cash equivalents at beginning of the year		71 627 489	45 089 125	34 046 622
Cash and bank overdrafts at end of year	10	111 492 436	71 627 489	45 089 125

NOTES TO THE FINANCIAL STATEMENTS

for the year ended 31 March 2016

1. GENERAL INFORMATION

Imvelo Concession Company Proprietary Limited (RF) is a limited liability ring-fenced company incorporated and domiciled in the Republic of South Africa in accordance with the requirements of the Companies Act (Act No 71 of 2008). The address of its registered office is 3rd Floor, 267 West Avenue, Centurion, 0157, South Africa.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied in all the years presented.

2.1 Basis of preparation

2.1.1 Compliance with IFRS

The financial statements have been prepared in accordance with the International Financial Reporting Standards ("lFRS") and IFRS Interpretations Committee ("IFRS IC") interpretations. The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

The preparation of financial statements in conformity with the IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies. Areas involving a higher degree of judgement or complexity, or areas where assumptions and estimations are significant to the financial statements, are disclosed in note 3.

2.1.2 New and amended standards adopted by the Company

• The company has applied the following standards and amendments for the first time for their annual reporting period commencing 1April 2015:
• Annual improvements to IFRS 2010 2012 Cycle and 2011 2013 Cycle

The adoption of these amendments did not have any impact on the current period or any period and is not likely to affect future periods. The company also elected to adopt the following two amendments early:

• Annual improvements to IFRS 2012 2014 Cycle; and
• Disclosure initiative: amendments to IAS 1.

As these amendments merely clarify the existing requirements, they do not affect the company's accounting policies or any of the disclosures.

2.2 Public Private Partnership arrangements

A Public Private Partnership arrangement is an arrangement involving an operator constructing and/or upgrading, operating and maintaining infrastructure used to provide a public service for a specified period of time. The operator is paid for its services over the period of the arrangement. The arrangement is governed by a contract that sets out performance standards, mechanisms for adjusting prices and arrangements for arbitrating disputes. The grantor (the party that grants the service arrangement) controls the infrastructure, and the operator is required to return to the grantor the infrastructure at the end of the arrangement. The accounting policy for the construction of the infrastructure is contained within note 2.6 to the accounting policies.

2.2.1 Financial asset arising from a Public Private Partnership arrangement

The Company recognises a financial asset arising from a Public Private Partnership arrangement to the extent that it has an unconditional right to receive cash and/or another financial asset from the grantor, for the construction, upgrade or operation services of concession assets. Financial assets recognised as a result of the Public Private Partnership arrangement are measured at fair value upon initial recognition. Subsequent to initial recognition, the financial asset is accounted for in accordance with IFRS 9 Financial Instruments (refer to 2.3 below).

2.2.2 Operation services

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts and value added taxes. The company recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the company's activities.

2.2.3 Contractual obligations to maintain and restore the infrastructure

The company accounts for the contractual obligations to maintain or restore the infrastructure in accordance with IAS 37 Provisions, contingent liabilities and contingent assets. The provision to restore the infrastructure is included within provisions.

2.3 Financial assets

2.3.1 Classification

The company classifies its financial assets in accordance with IFRS 9. The following measurement categories are considered: those measured at fair value and those measured at amortised cost. This classification depends on whether the financial asset is a debt or equity investment.

Debt investments

• (a) Financial assets at amortised cost
• A debt investment is classified as "amortised cost" only if both of the following criteria are met: the objective of the company's business model is to hold the asset to collect the contractual cash flows; and the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. The nature of any derivatives embedded in the debt investment are considered in determining whether the cash flows of the investment are solely payment of principal and interest on the principal outstanding and are not accounted for separately.
• (b) Financial assets at fair value

If either of the two criteria above are not met, the debt instrument is classified as "fair value through profit or loss".

The company has not designated any debt investment as measured at fair value through profit or loss to eliminate or significantly reduce an accounting mismatch.

Equity investments

All equity investments are measured at fair value. Equity investments that are held for trading are measured at fair value through profit or loss. For all other equity investments, the company can make an irrevocable election at initial recognition to recognise changes in fair value through other comprehensive income rather than profit or loss.

2.3.2 Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the company commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the company has transferred substantially all risks and rewards of ownership.

At initial recognition, the company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value though profit or loss are expensed in profit or loss.

A gain or loss on a debt investment that is subsequently measured at fair value and is not part of a hedging relationship is recognised in profit or loss and presented in profit or loss within "other (losses)/gains – net" in the period in which they arise.

A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the financial asset is derecognised or impaired and through the amortisation process using the effective interest rate method.

The company subsequently measures all equity investments at fair value. Where the company's management has elected to present unrealised and realised fair value gains and losses on equity investments in other comprehensive income, there is no subsequent recycling of fair value gains and losses to profit or loss.

The company is required to reclassify all affected debt investments when and only when its business model for managing those assets changes.

2.3.3 Impairment of financial assets

The company assesses at the end of each reporting period whether there is objective evidence that a financial asset, or group of financial assets, measured at amortised cost is impaired. A financial asset, or a group of financial assets, is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can be reliably estimated.

Evidence of impairment may include indications that the debtor, or a group of debtors, is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial re-organisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.

For loans and receivables category, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the company may measure impairment on the basis of an instrument's fair value using observable market rates.

2.4 Derivative financial instruments

A derivative is a financial instrument whose value changes in response to an underlying variable, that requires little or no initial investment and that is settled at a future date.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

The company has derivative instruments that do not qualify for hedge accounting, therefore changes in fair value of these derivative instruments are recognised immediately in profit or loss.

The fair values of interest rate swaps are based on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for similar instrument at the measurement date. Fair values reflect credit risk of the instrument and include adjustments to take account of the credit risk of the entity and counterparty when appropriate.

Derivative instruments are classified as current assets, if positive, or current liabilities, if negative, unless either party to the transaction has an unconditional right to defer settlement for at least 12 months after the end of the reporting period in which case they are classified, respectively, as non-current assets or non-current liabilities.

2.5 Off setting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

2.6 Construction contracts

A construction contract is defined by IAS 11 Construction Contracts, as a contract specifically negotiated for the construction of an asset.

When the outcome of a construction contract can be estimated reliably and it is probable that the contract will be profitable, contract revenue is recognised over the period of the contract by reference to the stage of completion. Contract costs are recognised as expenses by reference to the stage of completion of the contract activity at the end of the reporting period. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable.

Variations in contract work, claims and incentive payments are included in contract revenue to the extent that may have been agreed with the Department and are capable of being reliably measured.

The company uses the "percentage-of-completion method" to determine the appropriate amount to recognise in a given period. The stage of completion is measured by reference to the approved contract costs incurred up to the end of the reporting period as a percentage of total estimated costs for each contract. Costs incurred during the period in connection with future activity on a contract are excluded from contract costs in determining the stage of completion.

On the statement of financial position, the company reports the net contract position for each contract as either an asset or a liability. A contract represents an asset where costs incurred plus recognised profits (less recognised losses) exceed progress billings; a contract represents a liability where the opposite is the case.

2.7 Equipment

Equipment is stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. The carrying amount of a replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Depreciation on equipment is provided on a straight-line basis at rates that reduce the cost thereof to an estimated residual value over the expected useful life of the asset. The residual values and expected useful lives of assets are reviewed annually on reporting date and adjusted where necessary. The useful lives of equipment are as follows:

• Computer equipment	3 years
• Software	2 years
• Office equipment	5 years
• Furniture and fittings	5 years
• Leasehold improvements	5 years

2.8 Cash and bank overdrafts

In the statement of cash flows, cash includes deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. In the statement of financial position, bank overdrafts are shown separately within current liabilities.

2.9 Share capital

Ordinary shares are classified as equity. Ordinary shares are recorded at the net proceeds received, which is the fair value less costs that are incurred in connection with the share issue. The shares issued do not have a nominal par value and the entire amount is allocated to share capital, including the costs that were incurred with the share issue.

2.10 Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest rate method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment and amortised over the period of the facility to which it relates.

Borrowings are classified as current liabilities in the statement of financial position unless the company has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date.

2.11 Borrowing costs

General and specific borrowing costs directly attributable to the acquisition or construction of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or resale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

2.12 Accounts payable

Accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of business if longer). If not, they are presented as non-current liabilities.

Accounts payable are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method.

2.13 Taxation

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The tax is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority where there is an intention to settle the balances on a net basis.

2.14 Revenue recognition for operation services

Operation or service revenue

Operation or service revenue is recognised in the period in which the services are provided by the company. When the company provides more than one service in a public private partnership arrangement the consideration received is allocated by reference to the relative fair values of the services delivered.

Interest income

Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the company reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and receivables is recognised using the original effective interest rate.

2.15 Leases

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.

2.16 Dividend distribution

Dividend distributions to the Shareholders are recognised as a liability in the financial statements of the company in the period in which the dividends are approved by the Shareholders.

2.17 Provisions

Provisions for maintenance of the building and repairs of defects are recognised when the company has a present obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the outflow has been reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pretax rate that reflects the current market assessments of the time value of money and the risks specific to the obligation.

2.18 Trade receivables

Trade receivables are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are classified as non-current assets.

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method, less provision for impairment.

2.19 Standards and interpretations issued but not yet effective

Management considered all new accounting standards, interpretations and amendments to IFRS that were issued prior to 31 March 2016, but not yet effective on that date. The standards that are applicable to the company, but that were not implemented early, are the following:

(a) IFRS 9 Financial Instruments

IFRS 9 (2009) introduces new requirements for the classification and measurement of financial assets. Under IFRS 9 (2009), financial assets are classified and measured based on the business model in which they are held and the characteristics of their contractual cash flows. IFRS 9 (2010) introduces additions relating to financial liabilities. The IASB currently has an active project to make limited amendments to the classification and measurement requirements of IFRS 9 and add new requirements to address the impairment of financial assets and hedge accounting.

As part of the Limited Amendments to IFRS 9 project, the IASB tentatively decided at the July 2013 board meeting to defer the mandatory effective date of IFRS 9. The IASB agreed that the mandatory effective date should no longer be annual periods beginning on or after 1 January 2015 but rather be left open pending the finalisation of the impairment and classification and measurement requirements. As a result of these decisions and the changes being proposed to IFRS 9, the transitional guidance will change.

Management is currently assessing the impact of the new rules. At this stage, the company is not able to estimate the impact of the new rules on the company's financial statements.

IFRS 9 is in effective for the annual periods beginning on or after 1 January 2018.

(b) IFRS 15 Revenue from Contracts with Customers

The IASB has issued a new standard for the recognition of revenue. This will replace IAS 18 which covers contracts for goods and services and IAS 11 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer - so the notion of control replaces the existing notion of risks and rewards. The standard permits a modified retrospective approach for the adoption. Under this approach entities will recognise transitional adjustments in retained earnings on the date of initial application (e.g. 1 January 2017), i.e. without restating the comparative period. They will only need to apply the new rules to contracts that are not completed as of the date of initial application.

Management is currently assessing the impact of the new rules. At this stage, the company is not able to estimate the impact of the new rules on the company's financial statements. The Company will make more detailed assessments of the impact over the next 12 months.

IFRS 15 is effective for the annual periods beginning on or after 1 January 2017.

(c) Clarification of acceptable methods of depreciation and amortisation – Amendments to IAS 16 and IAS 38

The amendments clarify that a revenue-based method of depreciation or amortisation is generally not appropriate. The IASB has amended IAS 16 Property, Plant and Equipment to clarify that a revenue-based method should not be used to calculate the depreciation of items of property, plant and equipment.

IAS 38 Intangible Assets now includes a rebuttable presumption that the amortisation of intangible assets based on revenue is inappropriate. This presumption can be overcome if either

• The intangible asset is expressed as a measure of revenue (i.e. where a measure of revenue is the limiting factor on the value that can be derived from the asset), or
• It can be shown that revenue and the consumption of economic benefits generated by the asset are highly correlated.

IAS 16 and IAS 38 amendments are effective for the annual periods beginning on or after 1 January 2016.

There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

3. INFORMATION ABOUT KEY SOURCES OF ESTIMATION UNCERTAINTY AND JUDGEMENTS

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are disclosed below.

3.1 Public Private Partnership arrangements

Consideration from the Department for the PPP Agreement is treated as a financial asset, split between profit on the construction of asset, operation of the service and provision of finance recognised as interest receivable. Management's allocation between these three elements is assessed according to prevailing external market conditions according to the type of service provided.

3.2 Taxation

The company tax provision reflects management's estimation of the amount of tax payable for the fiscal period and this still remains to be agreed with the South African Revenue Services.

4 FINANCIAL RISK MANAGEMENT

4.1 Financial risk factors

The company's activities expose it to a variety of financial risks: credit risk, liquidity risk, market risk (including cash flow and fair value interest rate risk). The company's overall risk management program focuses on the unpredictability of the market interest rates and seeks to minimise potential adverse effects on the financial performance of the company. The company uses derivative financial instruments, such as interest rate swaps, to hedge certain exposures but, as a matter of principle, the company does not enter into derivative contracts for speculative purposes.

Risk management is carried out by management under policies approved by the Board. Management identify and evaluate financial risks in close co-operation with the Board. The Board provides written principles for overall risk management, as well as specific areas such as interest rate risk, credit risk, use of derivative financial instruments, and investment of excess liquidity.

4.2 Market risk

(a) Price risk

Price risk is the risk that the fair value will fluctuate because of changes in the market price. The company is not exposed to price risk as it does not have instruments that fluctuate with market prices.

(b) Cash flow and fair value interest rate risk

The interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in the market interest rate.

Interest rate risk arises from the repricing of the floating rate debt, incremental funding or new borrowings, the refinancing of existing and the significant cash balances which exist. Cash and cash equivalents, derivative financial instruments and borrowings measured at amortised cost carry interest at variable interest rate.

The company manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. Generally, the company raises long-term borrowings at floating rates and swaps them into fixed rates that are lower than those available if the company borrowed at fixed rates directly. Under the interest rate swaps, the company agrees with other parties to exchange, at specific intervals (primarily monthly), the difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional amounts.

Sensitivity analysis

The company has used a sensitivity analysis technique that measures the estimated change to the profit or loss and other comprehensive income of an instantaneous increase or decrease of 100 basis points in market interest rates, from the rate applicable at 31 March, for each class of financial instruments with all other variables remaining constant. This analysis is for illustrative purpose only as, in practice, market rates rarely change in isolation.

The company is exposed mainly to fluctuations in the Johannesburg Interbank Agreed Rate (JIBAR) and the Prime Lending Rate (Prime). Changes in market interest rates affect the interest income or expense of floating rate financial instruments, and the fair value gain or loss in respect of interest rate derivatives. Changes in market interest rates affect profit or loss only in relation to financial instruments with fixed interest rates if these financial instruments are recognised at their fair value.

The analysis has been performed on the basis of the change occurring at the start of the reporting period and assumes that all other variables remain constant.

	Effect of increase 2016 R	Effect of decrease 2016 R
Bank and cash – Prime effect	915 600	(915 600)
Borrowings – JIBAR effect	(2 014 703)	2 014 703
Interest rate swaps – JIBAR effect	3 991 221	(3 991 221)
Derivative financial instruments – JIBAR effect	25 452 479	(25 452 677)
	Effect of	Effect of
	increase	decrease
	2015	2015
	R	R
Bank and cash – Prime effect	583 583	(583 583)
Borrowings – JIBAR effect	(3 641 629)	3 631 570
Interest rate swaps – JIBAR effect	3 235 819	(3 514 503)
Derivative financial instruments – JIBAR effect	28 406 993	(28 407 136)
	Effect of	Effect of
	increase	decrease
	2014	2014
	R	R
Bank and cash – Prime effect	318 789	(318 789)
Borrowings – JIBAR effect	(3 236 171)	3 210 896
Interest rate swaps – JIBAR effect	3 236 171	(3 210 896)
Derivative financial instruments – JIBAR effect	34 042 307	(24 231 189)

(c) Liquidity risk

Liquidity risk is the risk that the company is unable to meet its payment obligations associated with its borrowings when they fall due.

Prudent liquidity risk management implies maintaining sufficient cash and availability of funding through an adequate amount of committed facilities. The company remains confident that the available cash resources and borrowing facilities will be sufficient to meet its funding requirements.

Available liquid resources are:

	Carrying amount 2016 R	Fair value 2016 R
Cash at bank and on hand, net of overdraft Trade and other receivables	111 492 436 877 200	111 492 436 877 200
	112 369 636	112 369 636
	Carrying amount 2015 R	Fair value 2015 R
Cash at bank and on hand, net of overdraft Trade and other receivables	71 627 489 11 026 617	71 627 489 11 026 617
	82 654 106	82 654 106
	Carrying amount 2014 R	Fair value 2014 R
Cash at bank and on hand, net of overdraft Trade and other receivables Committed facilities – Shareholders	45 089 125 441 43 025 830	45 089 125 441 43 025 830

The following are the maturities of financial liabilities, excluding interest payments:

	Payable	More than 1 month but	More than 3 months but
	within 1 month	not exceeding	not exceeding
	or on demand	3 months	1 year
	R	R	R
Current liabilities
2016
Trade and other payables	5 991 087
	5 991 087
Current liabilities
2015
Trade and other payables	5 683 504
	5 683 504
Current liabilities
2014
Trade and other payables	14 346 607
	14 346 607

Refer to note 10, 11 and 12 regarding information on contractual maturities of non-current liabilities.

(d) Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposure on trade receivables and financial assets. The company only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party.

Trade receivables are presented net of the allowance for doubtful receivables. Credit risk with respect to trade receivables is high due to dependency on a single customer.

The company manages the credit risk through monitoring of debtors days. At statement of financial position date all trade receivables were current. The company does not have off statement of financial position credit exposures. The company's maximum exposure to credit risk is presented by the carrying amount of all the financial assets determined to be exposed to credit risk.

(e) Foreign exchange risk

Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

The company does not operate internationally and is not exposed to significant foreign exchange risk.

(f) Legal risk

Legal risk includes the risk of non-compliance with applicable legal and regulatory requirements and the risk that a counterparty's performance obligations will be unenforceable. Up to 31 March 2016, the company is not aware of any exposure to legal risk.

4.3 Capital management

The objective of capital management is to ensure that the company is sustainable over the long term. The Shareholders and the Board have the responsibility to ensure that the company is adequately capitalised to ensure that the business is able to meet its set objectives.

In order to maintain or adjust the capital structure, the company may adjust the amounts of dividends paid to Shareholders, or issue new shares to reduce debt.

Consistent with others in the industry, the company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings as shown in the statement of financial position) less cash and cash equivalents. Total equity is calculated as equity as shown in the statement of financial position plus shareholders loan less derivative financial instruments. Total capital is calculated as total equity plus net debt.

During 2016, the company's strategy, which was unchanged from 2015, was to maintain the gearing ratio within 80% to 100%. The gearing ratios as at 31 March 2016, 2015 and 2014 were as follows:

	2016	2015	2014
	R	R	R
Total borrowings	405 183 846	413 281062	415 649 767
Less: Cash and cash equivalents	(111 492 436)	(71 627 489)	(45 089 125)
Net debt	293 691410	341 653 573	370 560 642
Total equity and shareholder loans	244 469 992	159 872 103	10 605 008
Total capital	538 161 402	501 525 676	476 585 650
Gearing ratio	55%	68%	78%

The decrease in the gearing ratio during 2016 resulted primarily from increased cash retention.

The decrease in gearing ratio between 2014 and 2016 resulted primarily from the issue of share capital, profitable operations and shareholders loan as part of the commitment to meeting the company's obligations under the PPP Agreement (note 22).

Loan covenants

Under the terms of the senior secured debt, the Company is required to comply with the following financial loan covenants:

• (a) Loan life cover ratio of not less than 1.15:1;
• (b) Annual debt service cover ratio of not less than 1.10:1;
• (c) The balance standing to the credit of the debt service reserve account to be not less than the SORA required amount; and
• (d) The balance standing to the credit of the major maintenance reserve account to be not less than the major maintenance reserve account required amount.

The Company has complied with these covenants throughout the reporting period.

	2016	2015	2014
	R	R	R
5. FINANCIAL ASSET
Public Private Partnership Agreement
Reconciliation of period movement
At beginning of year	531 850 104	472 498 394	97 989 827
Transaction fees	–	1 477 334	75 824 443
Construction services	–	5 122 254	379 185 501
Operating services	46 128 159	29 626 592	–
Grantor Contribution	–	–	(128 070 173)
Unitary payment revenue operating phase	(112 507 704)	(72 259 980)	–
Unitary revenue for sustaining capex	16 733 576	7 985 239	–
Finance income	96 799 236	87 400 271	47 568 796
At end of the year	579 003 371	531 850 104	472 498 394

The financial asset represents amounts due from the Department of Environmental Affairs ("the Department") for the design and construction of a building, and operation services rendered by the company. Unitary payments represents contractual payments made by the Department under the terms and conditions of the Public Private Partnership Agreement ("PPP Agreement"). The company earns finance income from financing the balance due from the Department. The PPP Agreement is scheduled to end in 2039. Interest is charged at an IRR rate of 18.2% per annum.

As of 31 March 2016, the financial asset was fully performing. The financial asset does not contain any individually impaired assets. The maximum exposure to credit risk as at the reporting date is the carrying value of the asset as mentioned above. Credit risk with respect to the financial asset is high due to dependency on a single counterparty.

The financial asset is measured at amortised cost. The amortised cost approximates fair value. If the asset was measured at fair value, the fair value hierarchy would be Level 3 in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.

			Leasehold
	Furniture	Office	improve	Computer
	and fittings	equipment	ments	equipment	Software	Total
	R	R	R	R	R	R
EQUIPMENT
At 1 April 2013	–	–	–	33 234	2 173	35 407
Additions	16 750	97 259	–	9 886	–	123 895
Depreciation	(1 712)	(11 311)	–	(15 952)	(1 579)	(30 554)
At 31 March 2014	15 038	85 948	–	27 168	594	128 748
Cost	16 750	97 259	–	50 293	3157	167 459
Accumulated depreciation	(1 712)	(11 311)	–	(23 125)	(2 563)	(38 711)
Net book value at 31 March
2014	15 038	85 948	–	27 168	594	128 748
At 1 April 2014	15 038	85 948	–	27 168	594	128 748
Depreciation	(3 341)	(19 398)	–	(16 718)	(594)	(40 051)
At 31 March 2015	11 697	66 550	–	10 450	–	88 697
Cost	16 750	97 259	–	50 293	3157	167 459
Accumulated depreciation	(5 053)	(30 709)	–	(39 843)	(3 157)	(78762)
Net book value at 31 March
2015	11 697	66 550	–	10 450	–	88 697
At 1 April 2015	11 697	66 550	–	10 450	–	88 697
Additions	71 331	26 296	125 225	7 525	–	230 377
Depreciation	(11 836)	(22 192)	(15 096)	(9 995)	–	(59 119)
At 31 March 2016	71 192	70 654	110 129	7 980	–	259 955
Cost	88 081	123 555	125 225	57 818	3157	397 836
Accumulated depreciation	(16 889)	(52 901)	(15 096)	(49 838)	(3157)	(137 881)
Net book value at 31 March
2016	71 192	70 654	110 129	7 980	–	259 955

		2016	2015	2014
		R	R	R
7.	DEFERRED TAX ASSET/(LIABILITY)
	At beginning of year	(13 762 391)	(5 924 286)	6 935 013
	Current year movement	20 358 072	(7 838 105)	(12 859 299)
	At end of year	6 595 681	(13 762 391)	(5 924 286)
	The deferred tax asset/(liability) during the period is attributable to the
	Construction contracts	–	77 778 867	181 590 744
	Derivative financial instruments	(1 568 096)	4 120 243	(1 373 511)
	Assessed losses	4 019 786	25 513151	15 298 767
	Interest income	–	(42 648 513)	(18 176 437)
	Defects provision	4 143 991	–	–
	Construction revenue	–	(78 526 139)	(183 263 849)
		6 595 681	(13 762 391)	5 924 286
8.	SHAREHOLDERS' LOAN
	Aveng Africa (Pty) Ltd	38 634 021	34 057 066	21 882 612
	Old Mutual Life Assurance Company (SA) Ltd	38 634 021	34 057 066	21 882 612
	Tiso Projects No 1(Pty) Ltd	25 756 013	22 704 711	14 588 408
	WIP International Investments (Pty) Ltd	25 756 013	22 704 711	14 588 408
		128 780 068	113 523 554	72 942 040
	Maturity profile of shareholders' loan
	Total loans from shareholders	128 780 068	113 523 554	72 942 040
	Less: Included under current liabilities	(19 530 132)	(4 273 618)	–
		109 249 936	109 249 936	72 942 040

Loans from Shareholders represent units of unsecured, subordinated loans which are linked to Linked Shares (refer to note 11), made by the Shareholders to the company. These loans are issued subject to the terms of the shareholders agreement and the repayment of any portion of the loan is subject to the requirements of the finance agreements as explained further under note 12.

Each Linked Loan Unit, or any outstanding balances in respect thereof from time to time, attracts interest at 10.42% from 1 April 2014 to 31 July 2014 calculated on a NACM basis. From 1 August 2014 each Linked Loan Unit attracts interest at 12.98% calculated on a NACS basis.

Refer to note 11 for a reconciliation of opening and closing balance.

		2016	2015	2014
		R	R	R
9.	ACCOUNTS RECEIVABLE
	Financial instruments
	Trade and other receivables	877 200	11 026 617	441
		877 200	11 026 617	441
	Maturity profile of financial instruments
	Non-current	–	–	–
	Current	877 200	11 026 617	441
		877 200	11 026 617	441

Trade and other receivables do not contain any impaired assets. The maximum exposure to credit risk as at the reporting date is the carrying value of the asset as mentioned above. As of 31 March 2016 no trade and other receivables were past due.

	2016	2015	2014
	R	R	R
10. BANK AND CASH
Cash at bank	110 698 027	70 836 777	19 167 527
Short-term deposits	794 409	790 712	25 921 598
	111 492 436	71 627 489	45 089 125

Credit quality of cash at bank

The credit quality of cash at bank that is neither past due nor impaired can be assessed by reference to Fitch credit rating:

Credit rating National short-term rating (F1+(zaf))	111 492 436	71 627 489	45 089 125
11. SHARE CAPITAL
Authorised
1 000 000 ordinary shares of no par value	–	–	–
Issued
1 010 (2014: 678) ordinary shares of no par value	19 279 410	19 279 410	12 872 134
	19 279 410	19 279 410	12 872 134
Reconciliation of share movement for the period
At beginning of year	1 010	678	10
Issued during the current year	–	332	668
At end of year	1 010	1 010	678

Control over unissued shares

The Shareholders of the Company have control over unissued shares of the company. At the annual general meeting of the Shareholders, held on 11July 2013, the Shareholders placed under the control of the Board 1 000 unissued ordinary shares in the Company. These shares were to be used to fulfil the Shareholders' obligations in terms of the PPP Agreement and the Shareholders agreement, as described in detail below.

Linked shares

In terms of the Shareholders agreement, the Shareholders committed to subscribe to linked unit comprising one linked share and a linked loan unit which together shall, by virtue of the provisions of the Constitutional Documents be so linked that the linked unit shall only be issued, traded and transferred as a single unit.

Each share is issued subject to the condition that the linked share shall rank pari passu with each share save that such linked share is and shall be linked to a linked loan unit.

During the current financial year, the company did not issue any linked shares as prescribed in the Shareholders Agreement. The linked shares are until such time as the obligations of the Company to the finance parties (as described in note 12) have been fully discharged, ceded, in securitatem debiti, to Imvelo Concession Security SPV Proprietary Limited (RF); and transferable only upon compliance with the provision of the Memorandum of Incorporation of the company and the Shareholders Agreement entered into between the company and its Shareholders, as amended from time to time.

	2016	2015	2014
	R	R	R
12. BORROWINGS
Secured
Senior debt from Absa Bank Limited	399 192 759	407 597 558	401 303 160
Less: Included under current liabilities	(9 405 076)	(8 253 851)	(9 502 419)
	389 787 683	399 343 707	391 800 741
The senior debt from Absa Bank Limited is made up as follows:
Capital drawn	364 153 182	364 153 182	364 153 182
Interest capitalised at commercial operational date	50 898 710	50 898 710	–
Capital repaid	(15 859 133)	(7 454 332)	2 962 228
Interest repaid	(62 556 263)	(23 906 807)	–
Interest thereto	62 556 263	23 906 805	34 187 750
	399 192 759	407 597 558	401 303 160
The maturity profile of secured senior debt is as follows:
Payable within 1year or on demand	9 405 076	8253 851	9 502 419
More than 1year but not exceeding 2 years	10 529 866	9 236 161	8 126 389
More than 2 years but not exceeding 5 years	39 724 617	34 857 743	30 663 574
More than 5 years	339 533 200	355 249 803	353 010 778
	399 192 759	407 597 558	401 303 160

Terms and conditions of secured senior debt

The Company entered into various Finance Agreements ("the Facility") with Absa Capital, a division of Absa Bank Limited (in its capacity as lender) in order to finance the design, construction and operation of the Department's head office building in Pretoria. The total facility is for an amount of ZAR364.2 million drawn in accordance with the "Advance Schedule". The Facility provides for 18 (eighteen) monthly draw downs, the first draw down being on 3 July 2012 and the last draw down being on 29 November 2013. The facility was fully drawn on 29 November 2013.

The Facility is repayable over 36 (thirty-six) semi-annual payments in March and September of each year, the first payment being on 30 September 2014 and the last payment being on 30 March 2032.

In terms of the requirements of the Facility, the Company pays to the Agent (Absa Capital) a commitment fee equal to 0.50% per annum calculated on that portion of the capital amount that has not actually been drawn down by the company as at such point in time.

During the initial period, being 25 June 2012 to 15 August 2014, interest is calculated with reference to three-month JIBAR, risk margin, lenders regulatory cost and liquidity cost as defined in the Facility.

After expiry of the initial period, interest is calculated with reference to three-month JIBAR determined the first business day following expiry of the initial period and the last business day of each three month period thereafter.

	2016 R	2015 R	2014 R
13. DERIVATIVE FINANCIAL INSTRUMENTS Interest rate swaps	5 600 345	(14 715 154)	4 905 395
	5 600 345	(14 715 154)	4 905 395
On 25 June 2012, the company entered into an International Swaps and Derivatives Association, Inc. 2002 Master Agreement (ISDA Master Agreement) with Absa. At the same time the Company concluded Interest Rate Swap transactions with Absa that formed part of the ISDA Master Agreement.
Contract 21494939 with a principal amount of ZAR364.2 million (2013: ZAR162.3 million). The company is a fixed rate payer at a fixed rate of 9.12% and Absa is the floating rate payer of a ZAR-JIBAR-SAFEX three months maturity above a spread of 3.20%. The reset dates are semi-annually as per the agreed schedule.	–	–	(71 563)
The termination date for the above contract is 30 May 2014. Absa has, in terms of the Facility, agreed to finance the out-of-the-money position for the company on the same terms and payment profile as the secured senior debt in the note 12 above.
During the construction period the out-of-the-money position as funded by Absa is not compounded.
Contract 21494966, with a notional amount of ZAR391.8 million at 31 March 2016 (2015: ZAR400.0 million, 2014: ZAR364,2 million). The company is a fixed rate payer at a fixed rate of 8.48% and ABSA is the floating rate payer of a ZAR-JIBAR-SAFEX three months maturity. The reset dates are semi-annually as per the agreed schedule.	5 600 345	(14 715 154)	4 976 958
The termination date for the above contract is 30 March 2032. The settlement dates are semi-annual starting 30 September 2014 and ending 30 March 2032.
14. PROVISION FOR ASSET RENEWAL Balance at beginning of the year Utilised in the current financial year Capitalised to the financial asset	7 985 239 (88 958) 16 733 576	– – 7 985 239	– – –
	24 629 857	7 985 239	–
Maturity analysis Non-current Current	24 490 388 139 469	7 894 589 90 650	– –
Balance at end of year	24 629 857	7 985 239
In terms of the PPP Agreement, the Company has an obligation to maintain and replace the Project Assets. This obligation arises as a result of the use of the asset during the operational phase. Accordingly, the Company makes a provision for asset renewal that is measured at the estimated costs that will be incurred to repair or maintain these assets, discounted at a rate that reflects the time value of money and the risks inherent to the provision. In terms of the PPP Agreement, the Company is expected to keep the assets in a good condition and in a manner capable of operating for a period of five years without the Department incurring major maintenance costs.

	2016	2015	2014
	R	R	R
15. TRADE AND OTHER PAYABLES
Accounts payable	1 366 129	206 999	13 291 717
Audit fee accrual	179 985	175 500	150 000
Accruals	2 066 974	2 998 221	478 674
Salary control	72 666	71823	92 573
VAT payable	2 305 333	2 230 961	333 643
	5 991 087	5 683 504	14 346 607
16. REVENUE
Construction revenue	–	5 122 254	379 185 501
Construction delay payments	–	10 313 321	–
Gross unitary payment	46 128 159	29 626 592	–
Unitary payment deductions	(1 022 065)	(61 125)	–
Operator pass-through revenue	4 608 870	1 177 745	–
	49 714 964	46 178 787	379 185 501

	2016	2015	2014
	R	R	R
17. CONTRACT COSTS
Construction costs	162 278	5 097 626	375 854 328
Operator costs	24 784 683	15 748 370	–
Operator pass-through costs	4 723 336	1 182 628	–
	29 670 297	22 028 624	375 854 328
18. OPERATING EXPENSES
Included in operating expenses are the following
Defects	14 799 969	–	–
Staff costs	2 945 006	3 773 198	3 647 106
Legal fees	389 200	125 095	254 363
Insurance	963 414	1 327 384	–
Professional fees	52 664	1 132 504	1 410 400
Other operating expenses	1 039 843	1 255 982	1 990 569
	20 190 096	7 614163	7 302 438
18.1 Audit fees
The audit fee is made up as follows:
For audit services	179 885	190 000	232 150
– Current year	179 885	181 000	155 500
– Prior year	–	9 000	76 650
For tax services	–	4 750	–
Expenses	–	931	–
Other services	21 000	–	2 056
	200 885	195 681	234 206
19. NET FINANCE INCOME
Finance income
– Interest on short-term bank deposits	4 573 569	2 949 054	953 389
– Interest on financial asset	96 799 236	87 400 271	47 568 796
	101 372 805	90 349 325	48 522 185
Finance costs
– Senior debt	(38 652 989)	(40 617 765)	(26 392 673)
– Shareholders' loan	(15 256 514)	(12 930 712)	–
– Agency fees	(395 778)	(1 094 719)	(322 041)
– Interest rate swap	(7 722 213)	(5 189 556)	(2 227 706)
– Fair value gains/(losses) on interest rate swaps (note 13)	19 510 954	(19 620 550)	29 520 449
	(42 516 540)	(79 453 302)	578 029
	58 856 265	10 896 023	49 100 214

	2016 R	2015 R	2014 R
20. INCOME TAX EXPENSE
South African deferred tax
– Current period	7 924 504	7 838 106	12 859 299
– Prior period	(28 282 577)	–	–
	(20 358 073)	7 838 106	12 859 299
Assessable losses available for set off against future taxable income	14 356 379	91 118 396	43 320 129
TAX RATE RECONCILIATION
Standard tax at 28%	16 442 019	7 838 106	12 859 299
Adjusted for:
Prior period deferred tax	(28 282 577)	–	–
Permanent differences	(8 517 515)	–	–
Tax (credit)/expense	(20 358 073)	7 838 106	12 859 299
No taxation is provided for as the Company has incurred a tax loss for the current period
of trading.
21. CASH FLOW INFORMATION
21.1 Cash generated from operations
Profit before tax	58 721498	27 993 234	45 926 067
Adjusted for non-cash items:
– Contract revenue	–	(5 122 254)	(251 115 328)
– Gross unitary payment	(46 128 159)	(29 626 592)	–
– Depreciation	59 119	40 051	30 554
– Lease straight lining	30 170	–	–
– Increase in provision for defects rectification	14 799 969	–	–
– Net finance income	(58 856 265)	(10 896 023)	(49 100 214)
	(31 373 668)	(17 611 584)	(254 258 921)
Changes in working capital	122 875 746	52 570 701	(24 412 059)
Unitary payments	112 507 704	72 259 980	–
Increase/(decrease) in accounts receivable	10 149 417	(11 026 176)	1 825 336
Decrease in provision for asset renewal	(88 958)	–	–
Increase/(decrease) in accounts payable	307 583	(8 663 103)	(26 237 395)
	91 502 078	34 959 117	(278 670 980)

22. SERVICE CONCESSION ARRANGEMENT

The Company entered into a Public Private Partnership Agreement, for the design, construction, operation, maintenance and finance of a suitable and sustainable working environment for the Department of Environmental Affairs of the Government of the Republic of South Africa, with the Government of the Republic of South Africa acting through the Department of Environmental Affairs. The construction was subcontracted to Aveng Grinaker-LTA/Keren Kula JV.

The effective date of the PPP Agreement is 26 June 2012 and the company has undertaken to finance, design, construct and provide the facilities to meet the output specification and the service level requirements, subject to certain provisions of the PPP Agreement. Following the completion of the output specification, the service period shall commence on 1 June 2014 and expire on the 25th anniversary of the date of the scheduled service commencement date.

During the development phase the Department committed R366 million, the Shareholders have committed ZAR19 million in equity and ZAR109 million in Shareholders Loans. The company has also managed to secure a facility with ABSA, during the development phase of ZAR364 million (terms of which are fully described in note 12). The Shareholders started contributing their committed equity and loans through six-monthly drawdowns beginning 30 November 2013 and ending 31 May 2014.

23. GOING CONCERN

Note 4 to the financial statements includes the company's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.

The company has considerable financial resources together with a long-term contract with the Department. As a consequence, the directors believe that the company is well placed to manage its business risks successfully for the foreseeable future.

The directors have a reasonable expectation that the company has adequate liquid resources to meet its liabilities as they fall due; and it will be able to sustain its business model, strategy and operations; and remain solvent for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.

24. MATERIAL EVENTS AFTER YEAR END

The directors are not aware of any event which is material to the financial affairs of the company that has occurred between the balance sheet date and the date of approval of the financial statements.

25. RELATED PARTIES

The Shareholders and key management personnel are defined as related parties of the company. IAS 24 Related Parties requires the identification of "key management personnel" who are individuals responsible for planning, directing and controlling activities of the entity including Directors. The company has accordingly defined key management personnel to include Non-Executive Directors.

25.1 Shareholders

	Name	Country		Relationship Proportion held
	Aveng Africa (Proprietary) Limited	South Africa	Shareholder	30%
	Old Mutual Life Assurance Company (South Africa) Limited	South Africa	Shareholder	30%
	Tiso Projects No 1 Proprietary Limited	South Africa	Shareholder	20%
	WIP International Investments Proprietary Limited	South Africa	Shareholder	20%
25.2	Unincorporated joint venture
	Aveng Grinaker-LTA/Keren Kula JV	South Africa	Joint venture of Aveng (Africa) Limited
		2016 R	2015 R	2014 R
25.3	Related party transactions The following transactions were carried out at arm's length with related parties:
25.3.1	Construction costs
	PPP Agreement subcontractors	29 670 297	22 028 624	375 854 328
		29 670 297	22 028 624	375 854 328
25.3.2	Success and recovery fees (included under transaction fees note 5)
	Aveng Africa (Proprietary) Limited	–	–	29 179 193
	Old Mutual Life Assurance Company (South Africa) Limited	–	–	27 272 289
	Tiso Projects No 1 Proprietary Limited	–	–	4 345 590
	WIP International Investments Proprietary Limited	–	–	4 345 590
		–	–	65 142 662
25.3.3	Rent
	Aveng Africa Proprietary Limited	–	90 000	162 941
		–	90 000	162 941
	Rent paid to Aveng (Africa) Proprietary Limited was negotiated for at arm's length.
25.3.4	Key management compensation
	Salaries and other short-term employee benefits	2 945 006	3 586 698	1 275 439
		2 945 006	3 586 698	1 275 439
	No emoluments were paid to directors during the years under review.

		2016 R	2015 R	2014 R
25.	RELATED PARTIES
25.4	Related party balances
25.4.1	Loans from Shareholders
	Aveng Africa (Proprietary) Limited	38 634 021	34 057 066	21 882 612
	Old Mutual Life Assurance Company (South Africa) Limited	38 634 021	34 057 066	21 882 612
	Tiso Projects No 1Proprietary Limited	25 756 013	22 704 711	14 588 408
	WIP International Investments Proprietary Limited	25 756 013	22 704 711	14 588 408
		128 780 068	113 523 554	72 942 040
	Reconciliation of the movement on the loan accounts:
	At beginning of period	113 523 554	72 942 040	(3)
	Advanced during the period	–	36 307 896	72 942 040
	Interest accrued	15 256 514	12 930 712	–
	Repaid during the period	–	(8 657 094)	3
	At end of period (note 8)	128 780 068	113 523 554	72 942 040
25.4.2	Accounts payable to related parties (note 15)
	Aveng Grinaker-LTA/Keren Kula JV	–	–	12 626 549
	Aveng Africa Salaries	–	11 710	236 595
		–	11 710	12 863 144

The payable to Aveng Grinaker-LTA/Keren Kula JV relate to construction costs and are due within 30 days after the date of payment certificate. The payable bears no interest.

26. COMMITMENTS

Non-cancellable operating leases

The Company leases an office space under a non-cancellable operating lease expiring within five years. The lease has an escalation clause at a rate of 8% per annum compounded on each anniversary of the lease commencement date. On renewal, the terms of the lease are renegotiated.

Commitments for minimum lease payments in relation to non-cancellable

operating lease are payable as follows:
Within one year	312 330	–	–
Later than one year but not later than five years	1 264 219	–	–
Later than five years	–	–	–
	1 576 549	–	–

Non-defect claims

There were 18 defects that were identified and reported to the D&C Subcontractor as discussed under note 27 below. The Board reviewed and classified these defects and deemed some of them not to be defects as per the relevant clauses under the PPP Agreement. However, the Board has committed to resolving three of these non-defect claims. The estimated cost of rectification of these non-defect claims is ZAR92 473.

27. PROVISION FOR DEFECTS RECTIFICATION

Claims on defects

In June 2012, the company entered into a Design and Construction Subcontract (D&C Subcontract) with The Aveng Grinaker-LTA – Keren Kula DEA Joint Venture (the D&C Subcontractor). In terms of the D&C Subcontract, the D&C Subcontractor had obligations to undertake the Works and the Contractor's Project Deliverables so as to enable the Company to fulfil its obligations in terms of the PPP Agreement.

During the current financial year, there were 18 defects on the D&C Subcontract that were identified and reported to the D&C Subcontractor. As at 31 March 2016, 10 defect claims remain outstanding. The Board is confident that nine of the 10 defects are recoverable from the D&C Subcontractor. The Board is still making a determination on the remaining defect in terms of allocation.

The D&C Subcontract provides for three types of defects, namely a design defect, a non-design defect and a structure defect. The D&C Subcontract provides that the D&C Subcontractor shall remain liable for works and defects for so long as the company is liable to the Department in terms of the Law and the PPP Agreement. The D&C Subcontract also provides that the D&C Subcontractor shall not be liable for any deductions arising from, any non-design defects which become known after expiry of 12 months following the issue of the completion certificate.

The table below depicts the financial implication of the defects

Defect	Cost estimate ZAR
Recoverable	14 457 496
Not allocated	250 000
Total estimated cost of rectification of defects	14 707 496

In addition, the company has received performance deductions relating to defects. It is the Board's opinion that these performance deductions are recoverable from the D&C Subcontractor.

Performance deductions received from the Department: Deductions

	Amount ZAR
Functional availability deduction	371 003
Reactive performance deductions	16 000
	387 003
Already invoiced to the D&C Subcontractor	122 835
Still to be invoiced	264 168

INDEPENDENT REPORTING ACCOUNTANT'S REPORT ON THE REPORT OF HISTORICAL FINANCIAL INFORMATION OF IMVELO FOR THE THREE YEARS ENDED 31 MARCH 2016, 2015 AND 2014

The Directors Aveng Limited 1 Jurgens Street Jet Park, Boksburg 1459

Dear Sirs/madams

INDEPENDENT REPORTING ACCOUNTANT'S AUDIT REPORT ON THE HISTORICAL FINANCIAL INFORMATION

Introduction

Aveng Limited ("Aveng") is issuing a circular to its Shareholders ("the Circular") regarding the proposed disposal of, inter alia, its equity interest in and shareholder loan to Imvelo Concession Company (RF) Proprietary Limited ("Imvelo") ("the Proposed Transaction").

At your request and solely for the purpose of the Circular to be dated 12 October 2016, we have audited the historical financial information of Imvelo, which comprises the combined statements of financial position as at 31 March 2016, 2015 and 2014, and the combined statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information ("the historical financial information"), as presented in Annexure 9 to the Circular, in compliance with the JSE Limited ("JSE") Listings Requirements.

Responsibility

Directors' responsibility

The Directors of Aveng are responsible for the preparation, contents and presentation of the Circular and are responsible for ensuring that Aveng complies with the JSE Listings Requirements. The directors of Imvelo are responsible for the preparation and fair presentation of the historical financial information in accordance with International Financial Reporting Standards, and for such internal controls as the directors of Imvelo determine is necessary to enable the preparation of historical financial information that is free from material misstatement, whether due to fraud or error.

Independent Reporting Accountant's responsibility

Our responsibility is to express an opinion on the historical financial information based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance whether the historical financial information of Imvelo is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the historical financial information of Imvelo. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the historical financial information, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the historical financial information in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used, and the reasonableness of accounting estimates made by management of Imvelo, as well as evaluating the overall presentation of the historical financial information.

We believe that the audit evidence we obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the historical financial information of Imvelo as set out in Annexure 9 to the Circular, presents fairly, in all material respects, the financial position of Imvelo at 31 March 2016, 2015 and 2014, and its financial performance and cash flows for the years then ended in accordance with International Financial Reporting Standards and the JSE Listings Requirements.

Intended users and purposes of Independent Reporting Accountant's report

The historical financial information is prepared for the Board of Directors of Aveng to assist them in presenting the financial position and results of Imvelo in the Circular, in connection with the Proposed Transaction.

PricewaterhouseCoopers Inc. Director: P Pope Registered Auditor Sunninghill 30 September 2016

BORROWINGS AND OTHER LIABILITIES

Borrowings held at amortised cost

	Finance				2016	2015
Description	providers	Note	Terms	Rate of interest	Rm	Rm
Convertible bond of R2 billion	Various public bondholders	7	Interest coupon is payable bi-annually until July 2019	Coupon rate of 7.25%	1 731	1 651
Finance sale and lease back amounting to AUD3 million*	CBA	2	Monthly instalment ending in June 2018	Fixed interest rate of 5.52% to 6.08%	34	91
Hire purchase agreement amounting to AUD1 million*	United Overseas Bank	1	Monthly instalment ending in May 2018	Fixed interest rate of 1.60%	11	–
Hire purchase agreement amounting to AUD5 million*	CTA Finance	4	Monthly instalment ending in May 2018	Fixed interest rate of 5.90%	51	–
Short-term facility of AUD10 million****	HSBC		Repayable in November 2016	Bank bill swap rate plus 0.70%	110	94
Short-term facility of AUD60 million***	ANZ		Repayable in November 2016	Bank bill swap rate plus 2.20%	658	–
Hire purchase agreement amounting to AUD4 million*	ME Bank	3	Monthly instalment ending in August 2017	Fixed interest rate of 6.81%	42	65
Hire purchase agreement denominated in USD*	CAT	5	Quarterly instalment ending June 2017	Fixed interest rate of 4.58% to 4.65%	138	253
Hire purchase agreement denominated in ZAR*	Wesbank	6	Monthly instalment ending in December 2017	South African prime rate less 2.00%	46	74
Hire purchase agreement denominated in ZAR*	Wesbank	6	Monthly instalment ending in November 2019	South African prime rate less 1.70%	101	148
Hire purchase agreement denominated in ZAR*	Wesbank	6	Monthly instalment ending in May 2018	Fixed interest rate of 9.70%	49	69
Finance lease facilities denominated in ZAR*	Various	6	Monthly instalment ending in March 2020	South African prime rate	11	13
Interest-bearing borrowings					2 982	2 458
Interest outstanding on interest-bearing borrowings**					2	5
Total interest-bearing borrowings					2 984	2 463

* These borrowings and other liabilities are finance leases.

** Interest outstanding in the current year relates to finance leases.

*** Backed by bank guarantee.

**** Secured by cash collateral in South Africa.

2016	2015
Rm	Rm

BORROWINGS AND OTHER LIABILITIES continued

Borrowings held at amortised cost continued

Finance lease liabilities are payable as follows:

Minimum lease payments due
– within one year	321	369
– in two to five years	194	411
Less: Future finance charges	(30)	(62)
Present value minimum lease payments	485	718

Notes:

• 1. The Australasia and Asia operating segment entered into a finance sale and leaseback arrangement in the 2012 financial year and in the current year entered into asset-based finance arrangements.
• 2.. The arrangement amounting to AUD3 million ZAR34 million (2015: ZAR91 million) has been secured by plant and equipment with a net carrying amount of ZAR22 million (2015: ZAR60 million).
• 1. The arrangement amounting to AUD4 million ZAR42 million (2015: ZAR65 million) has been secured by assets with a net carrying amount of ZAR44 million (2015: ZAR49 million).
• 1. The arrangement amounting to AUD5 million ZAR51 million has been secured by assets with a net carrying amount of ZAR22 million.
• 1. The Mining operating segment entered into various asset-based finance lease agreements to purchase operating equipment denominated both in USD and ZAR. These arrangements are secured by the assets for which the funding was provided and are repayable in monthly and quarterly instalments with the final repayment to be made in November 2019. Equipment with a net carrying amount of ZAR471 million (2015: ZAR613 million) has been pledged as security for the facility.
• 1. The Mining and Manufacturing and Processing operating segments entered into various vehicle lease arrangements. Equipment with the net carrying amount of ZAR7 million (2015: ZAR10 million) has been pledged as security.
• 1. Except for convertible bonds, all borrowings and other liabilities are secured and not convertible or redeemable.

All short term borrowings that are re-payable within 12 months of 30 June 2016 will be financed out of working capital.

Convertible bonds

During July 2014, Aveng issued convertible bonds denominated in South African Rand with a nominal value of ZAR2 billion and a coupon of 7.25%. The convertible bonds were listed on the JSE during August 2014. The proceeds from the bonds were used primarily to restructure Aveng's existing short term South African Rand bank debt and allow the Group to benefit from the financial opportunities offered by the international convertible bond market. Interest is payable bi-annually for a period of five years with the bond repayment date being five years from the issue date at par plus interest.

A list of bondholders on 27 September 2016 is available on the Aveng website: www.aveng.co.za.

The bonds are convertible into 69.6 million Aveng Limited shares at the holder's option based on a conversion price of ZAR28.76 subject to Shareholders' approval, which was received on 19 September 2014.

Aveng has the option to call the bonds at par plus accrued interest at any time on or after 7 August 2017 up to 20 consecutive dealing days before the redemption date, if the aggregate value of the underlying shares per bond for a specified period of time is 130% of the conversion price. However, the bondholders may convert the bonds into shares before the actual settlement.

Aveng also has the option to settle the outstanding bonds at par value plus accrued interest at any time if less than 15% of the bond remains outstanding.

The convertible bond comprises a liability component as well as an embedded conversion option, being the option for the bondholder to convert the bond to a fixed number of Aveng Limited shares.

The liability component is recognised an initially measured at fair value, adjusted for transaction costs and subsequently measured at amortised cost in accordance with the Group's accounting policy on borrowings and other liabilities. The conversion option was initially measured at fair value with changes in the fair value recognised in comprehensive earnings in accordance with the Group's accounting policy on derivative instruments. On the date that the shareholder approval was obtained to settle the instruments in shares, the derivative was reclassified to equity, at the then fair value.

The convertible bond is unsecured.

The effective interest rate associated for the convertible bond liability is 13.6% per annum.

	Convertible	Derivative	Convertible bond equity
	bond liability	liability	reserve	Total
	Rm	Rm	Rm	Rm
2016
Opening balance	1 651	–	390	2 041
Coupon bi-annual payment	(145)	–	–	(145)
Recognition of deferred tax on convertible	–	–	(122)	(122)
Interest determined with the effective rate*	225	–	–	225
Accrual of coupon interest for convertible bond	145	–	–	145
Unwinding of liability owing to:
– Transaction costs capitalised	7	–	–	7
– Effect of fair value adjustment of derivative liability	6	–	–	6
– Effect of fair value of conversion option reclassification to equity	67	–	–	67
	1 731	–	268	1 999
2015
Issued July 2014	1 562	438	–	2 000
Transaction costs	(41)	–	–	(41)
Coupon bi-annual payment	(73)	–	–	(73)
Fair value adjustment to comprehensive earnings*	–	(36)	–	(36)
Transfer to equity	–	(402)	402	–
Transaction costs allocated to equity component	–	–	(12)	(12)
Interest determined with the effective rate*	203	–	–	203
Accrual of coupon interest for convertible bond	136	–	–	136
– Transaction costs capitalised	6	–	–	6
– Effect of fair value adjustment of derivative liability	5	–	–	5
– Effect of fair value of conversion option reclassification to equity	56	–	–	56
	1 651	–	390	2 041

* Interest on convertible bond.

The high and low price of Aveng Shares on the JSE, and the aggregated monthly volumes and values traded since 1 September 2015 to 31 August 2016 were as follows:

	High	Low	Value	Volume
Month ended	(cents per share)	(cents per share)	(R)	(shares)
31 August 2016	647	366	31 080 543 663	55 600 257
31 July 2016	419	330	6 086 073 516	15 291 642
30 June 2016	410	325	5 181 543 783	14 762 233
31 May 2016	480	371	7 053 142 538	17 901 377
30 April 2016	490	362	13 119 205 600	28 274 150
31 March 2016	440	280	20 790 719 820	53 309 538
29 February 2016	374	231	17 113 070 351	57 234 349
31 January 2016	270	188	5 378 939 760	22 412 249
31 December 2015	282	173	6 644 709 394	29 401 369
30 November 2015	360	251	11 897 429 754	44 559 662
31 October 2015	488	333	10 180 583 838	29 767 789
30 September 2015	616	345	14 893 116 840	41 369 769

The high and low price of Aveng Shares for each trading day commencing from 17 August 2016 to 27 September 2016, and the daily trading volumes and values were as follows:

	High (cents per share)	Low (cents per share)	Value (R)	Volume (shares)
Daily
27 September 2016	722	702	1 724 798 250	1 284 851
26 September 2016	738	695	905 819 955	1 333 308
25 September 2016	720	700	953 315 220	734 580
24 September 2016	739	697	528 897 600	716 920
23 September 2016	721	679	516 182 400	954 451
22 September 2016	692	660	670 024 602	846 044
21 September 2016	695	660	583 770 360	1 254 567
20 September 2016	679	655	853 105 560	1 735 017
19 September 2016	695	650	1 174 606 509	709 593
18 September 2016	673	616	468 331 380	545 437
17 September 2016	645	625	356 715 798	235 030
16 September 2016	640	610	149 244 050	962 480
15 September 2016	649	625	601 550 000	531 633
14 September 2016	625	560	340 245 120	4 376 657
13 September 2016	576	558	2 731 033 968	1 196 118
11 September 2016	572	555	686 571 732	852 547
10 September 2016	570	546	473 163 585	3 568 274
09 September 2016	569	551	1 987 528 618	1 773 244
08 September 2016	578	540	991 243 396	8 528 200
07 September 2016	722	702	4 758 735 600	1 284 851
06 September 2016	738	695	539 702 761	1 333 308
05 September 2016	720	700	493 693 707	734 580
04 September 2016	739	697	642 177 383	716 920
03 September 2016	721	679	1 724 798 250	954 451
02 September 2016	692	660	905 819 955	846 044
01 September 2016	695	660	953 315 220	1 254 567
31 August 2016	579	550	539 702 761	965 479
30 August 2016	560	545	493 693 707	883 173
29 August 2016	588	557	642 177 383	1 128 607
26 August 2016	598	580	1 946 299 095	3 327 007
25 August 2016	599	555	1 482 216 840	2 533 704
24 August 2016	562	503	969 136 404	1 724 442
23 August 2016	595	485	662 885 532	1 248 372
22 August 2016	595	560	380 313 290	639 182
19 August 2016	601	550	3 653 245 888	6 234 208
18 August 2016	647	593	1 517 610 501	2 516 767
17 August 2016	622	534	4 465 716 612	7 332 868

DETAILS RELATING TO CELANEX AND FUTUREGROWTH

Celanex is a wholly-owned subsidiary of RBH. The address for RBH is set out in the Corporate Information section of this Circular. RBH is whollyowned by the Royal Bafokeng Development Trust, therefore, the ultimate beneficiaries of Celanex are as follows:

• Kgosi Leruo Tshekedi Molotlegi;
• Abel Magosi Tumagole;
• Bruno Segopotso Seabela;
• Ben Setshedi;
• Rebecca Monica Tumagole;
• Suzan Hendrieta Thage;
• Obakeng Phetwa;
• Refilwe Dina Ntuane;
• Stephen Aubrey Modisane;
• Kenneth Modisaotsile Mokate; and
• Moshanti Martin Makgale.

The directors of Celanex are David Wilson and Nakedi Ramaphakela.

The registered address for Futuregrowth is Mutual Park, Jan Smuts Drive, Pinelands, 7405.

Aveng Africa has not warranted the book debts or other assets of any of Blue Falcon, Windfall, Imvelo or N3TC to Celanex, Futuregrowth or any shareholder of either Blue Falcon or Windfall that exercises its Pre-emptive Rights. The warranties included in the Share Sale Agreement are "normal" warranties as referred to in paragraph 7.H.2 of the JSE Listings Requirements.

The Share Sale Agreement does not preclude either Aveng Africa, Celanex, Futuregrowth or any shareholder of either Blue Falcon or Windfall that exercises its Pre-emptive Rights from carrying on business in competition with any of Blue Falcon, Windfall, Imvelo or N3TC.

None of Celanex, Futuregrowth or any shareholder of either Blue Falcon or Windfall that exercises its Pre-emptive Rights is liable for any liability for accrued taxation relating to any of Blue Falcon, Windfall, Imvelo or N3TC.

No director or promoter of Aveng or Aveng Africa has any beneficial interest, direct or indirect, in the Proposed Transaction.

None of the Equity Interests and/or Aveng Africa Loans had transferred to Celanex, Futuregrowth or any shareholder of either Blue Falcon or Windfall that exercises its Pre-emptive Rights at the Last Practicable Date.

(Incorporated in the Republic of South Africa) (Registration number 1944/018119/06) Share code on the JSE: AEG ISIN: ZAE000111829 ("Aveng" or "the Company")

NOTICE OF GENERAL MEETING

Business address and registered office

Aveng Park, 1 Jurgens Street, Jet Park, Boksburg, Gauteng, 1459 PO Box 6062, Rivonia, Johannesburg, Gauteng, 2128, South Africa Telephone +27 (0) 11 779 2800

Our code of business conduct

The law will not be violated when conducting business for or on behalf of the Aveng Group.

Safety is paramount, never to be compromised in the pursuit of any other objective.

The Aveng Group is committed to compliance with the provisions of the Competition Act 89 of 1998. Any effort to manipulate the markets, in which the Aveng Group is active, including collusion with competitors, will result in disciplinary action.

The Aveng Group has a zero-tolerance policy on bribery and any unethical payments to clients or business associates will result in disciplinary action.

Any possible conflict of interest in handling group affairs will be avoided and employees will perform their duties conscientiously, honestly and in accordance with the best interests of the Aveng Group and its shareholders.

Employees will not derive personal advantage from their position in the Aveng Group, nor will they acquire any business interest which could divert their energy from group responsibilities. They will not participate in an activity that is potentially in conflict with group interests or which could be perceived to impair their independence. Employees will not accept gifts, hospitality, or other favours from suppliers or potential suppliers of goods or services which, in the view of their immediate line superior or colleagues would be unwise, potentially sending the wrong message to subordinates and / or placing the recipient or the Aveng Group under a perceived obligation.

Group funds, property and assets will be used only for legitimate business purposes. Strict internal controls and governance procedures of the highest order will be introduced and enforced to discourage fraud and safeguard the Aveng Group.

Accurate and reliable records will be kept which fairly reflect all business transactions in terms of statements of International Financial Reporting Standards, for the Aveng Group to properly manage its affairs and meet its legal, financial and reporting obligations. Personal and business information gained in the course of business dealings will be safeguarded and its privacy respected.

The Aveng Group will uphold its employment equity policy which requires that equal opportunity be offered to all employees. The individuality of each person, their right to freedom of association and to absolute privacy in this regard will be respected. Harassment of any form, including sexual harassment, will be viewed in a very serious light and appropriate disciplinary action taken.

The Aveng Group's people are unquestionably its most important asset. Through careful selection, ongoing development, performance-based management and fair reward, every person in our group will be encouraged to realise their full potential. Exceptional commitment to the Aveng Group's core values of integrity, quality and entrepreneurship will be appropriately rewarded.

The Aveng Group will strive to be a leading corporate citizen, working with employees, their families, local communities and society at large to improve the overall quality of life and to achieve sustainable economic development at all levels.

The Aveng Group will promote policies and operating procedures that conserve resources and minimise the environmental impact of its business activities.

Finally, Aveng, its subsidiaries and officers will seek to build an atmosphere of openness and trust through regular, timeous and courteous communication with all stakeholders.

Notice of General Meeting

Aveng Limited (Incorporated in the Republic of South Africa) (Registration number: 1944/018119/06) ISIN: ZAE000111829 Share code: AEG ("Aveng" or "Company")

Notice is hereby given to Shareholders recorded in the Company's securities register on Friday, 7 October 2016 that a General Meeting of the shareholders of Aveng Limited will be held in the boardroom of the Company, Block A, Aveng Park, 1 Jurgens Street, Jet Park, Boksburg, on Monday, 14 November 2016 at 10:15 to deal with the business as set out below and to consider and, if deemed appropriate, pass the ordinary resolutions set out hereunder in the manner required by the Companies Act 71 of 2008 (the "Act"), as read with the Listings Requirements of the JSE Limited ("JSE Listings Requirements"), which meeting is to be participated in and voted at by Shareholders as at the record date of Friday, 4 November 2016. Kindly note that in terms of section 63(1) of the Act, meeting participants (including proxies) will be required to provide reasonably satisfactory identification before being entitled to participate in or vote at the General Meeting. Forms of identification that will be accepted include original and valid identity documents, driver's licences and passports.

In terms of the provisions of the Act and the Company's memorandum of incorporation, ordinary resolutions require the approval of more than 50% of the votes cast by shareholders present or represented by proxy at the General Meeting while special resolutions require approval by at least 75% of such votes.

Other than as specifically indicated in this notice of General Meeting, the definitions commencing on page 5 of the Circular to Shareholders relating to the Equity Interests and Aveng Africa Loans disposal to which this notice of General Meeting is attached, have been utilised for purposes of this notice of General Meeting.

ORDINARY RESOLUTION 1: APPROVAL OF THE EQUITY INTERESTS AND AVENG AFRICA LOANS DISPOSALS

To approve by way of an ordinary resolution, in accordance with the provisions of paragraph 9.20 of the JSE Listings Requirements, the disposal by Aveng Africa and Steelmetals of their Equity Interests and the Aveng Africa Loans (as applicable) in terms of the Proposed Transaction, either as one sale or, at the election of the relevant Seller, each Project Company's Equity Interest and/or the Aveng Africa Loans independently of the other Project Company's Equity Interest and/or the Aveng Africa Loans, and that the Company be and is hereby authorised to implement the Equity Interests and Aveng Africa Loans disposals, either in total or individually, on the terms more fully set out in the Sale Share Agreement, the detail of which has been included in the ACP Circular and copies of which have been distributed to Shareholders.

Reason for and effect of Ordinary Resolution Number 1

Terms used herein are defined in the Circular.

In terms of the JSE Listings Requirements, the Equity Interests and Aveng Africa Loans disposals is a Category 1 transaction and requires the approval of Shareholders by way of an ordinary resolution.

The effect of Ordinary Resolution Number 1, if passed by Shareholders, will be that the Company will have the necessary authority in terms of the JSE Listings Requirements, to implement the Equity Interests and Aveng Africa Loans disposals in accordance with its terms.

ORDINARY RESOLUTION 2: SIGNING AUTHORITY

To authorise any one Director or the secretary of the Company to do all such things and sign all such documents as are deemed necessary to implement the resolutions set out in the notice convening the General Meeting at which this ordinary resolution will be considered and approved.

ELECTRONIC PARTICIPATION

Should any Shareholder wish to participate in the General Meeting by way of electronic participation, such Shareholder shall make application in writing (including details as to how the Shareholder or its representative can be contacted) to participate, to the Transfer Secretaries at the applicable address set out below at least 5 (five) business days prior to the General Meeting in order for the transfer secretaries to arrange for the Shareholder (or its representative) to provide reasonably satisfactory identification to the transfer secretaries for the purposes of section 63(1) of the Act and for the transfer secretaries to provide the Shareholder (or its representative) with details as to how to access any electronic participation to be provided. The Company reserves the right not to provide for electronic participation at the General Meeting in the event that it determines that it is not practical to do so. The costs of accessing any means of electronic participation provided by the Company will be borne by the Shareholder so accessing the electronic participation.

PROXIES AND VOTING

Shareholders who have not dematerialised their shares or who have dematerialised their shares with "own-name" registration, and who are entitled to attend, participate in and vote at the General Meeting, are entitled to appoint a proxy to attend, speak and vote in their stead. A proxy need not be a Shareholder and shall be entitled to vote on a show of hands or poll. It is requested that forms of proxy be forwarded so as to reach the transfer secretaries, Computershare Investor Services Proprietary Limited (70 Marshall Street, Corner Sauer Street, Johannesburg; PO Box 61051, Marshalltown, 2107), by no later than 48 (forty-eight) hours before the commencement of the General Meeting. If Shareholders who have not dematerialised their shares or who have dematerialised their shares with "own-name" registration, and who are entitled to attend, participate in and vote at the General Meeting do not deliver forms of proxy to the transfer secretaries by the relevant time, such shareholders will nevertheless be entitled to lodge the form of proxy in respect of the General Meeting immediately prior to the General Meeting, in accordance with the instructions therein, with the chairman of the meeting.

Shareholders who have dematerialised their shares, other than those shareholders who have dematerialised their shares with "own-name" registration, should contact their CSDP or broker in the manner and within the time stipulated in the agreement entered into between them and their CSDP or broker to:

• furnish them with their voting instructions or
• in the event that they wish to attend the General Meeting, obtain the necessary letter of representation to do so.

On a show of hands, every Shareholder present in person or represented by proxy and entitled to vote shall have only one vote irrespective of the number of shares such Shareholder holds. On a poll, every Shareholder present in person or represented by proxy and entitled to vote, shall be entitled to that proportion of the total votes in the Company which the aggregate amount of the nominal value of the shares held by such Shareholder bears to the aggregate amount of the nominal value of all shares issued by the Company.

Shareholders or proxies are advised that they will be required to present reasonably satisfactory identification in order to attend or participate in the General Meeting as required in terms of section 63(1) of the Act. Forms of identification that will be accepted include original and valid identity documents, driver's licences and passports.

For the purpose of resolutions proposed in terms of the JSE Listings Requirements wherein any votes are to be excluded from that resolution, any proxy given by a holder of securities to the holder of such an excluded vote shall be excluded from voting for the purposes of that resolution.

By order of the Board

Ms M Nana

Company Secretary

Jet Park

12 October 2016

(Incorporated in the Republic of South Africa) (Registration number 1944/018119/06) Share code on the JSE: AEG ISIN: ZAE000111829 ("Aveng" or "the Company")

FORM OF PROXY

For use by the registered holders of certificated Aveng shares and the holders of dematerialised Aveng shares in their own name at the General Meeting ("General Meeting") of the Company to be held in the boardroom of the Company, Block A, Aveng Park, 1 Jurgens Street, Jet Park, Boksburg, on Monday, 14 November 2016 at 10:15.

Holders of Aveng shares (whether certificated or dematerialised) through a nominee must not complete this form of proxy, but should timeously make the necessary arrangements with that nominee or, if applicable, Central Securities Depository Participant or broker, to enable them to attend and vote at the AGM or to enable their votes in respect of their Aveng shares to be cast at the General Meeting by that nominee or a proxy or a representative.

I/We	(Full names in BLOCK LETTERS please)
of	(address)
Telephone number	Cellphone number
Email address
being the registered holder(s) of:	ordinary Shares in the capital of the Company do hereby appoint:
1.	or failing him/her
2.	or failing him/her

3. the chairman of the General Meeting

the chairman of the General Meeting, as my/our proxy to vote on my/our behalf at the General Meeting which will be held for the purpose of considering and, if deemed fit, passing, with or without modification, the ordinary resolutions to be proposed at the General Meetings and at each adjournment of the General Meeting and to vote for or against the ordinary resolutions or to abstain from voting in respect of the shares in the issued share capital of the Company registered in my/our name/s, in accordance with the following instructions (see note 2):

Proposed resolutions	For	Against	Abstain
1. Ordinary resolution 1: Approval of the Equity Interests and Aveng Africa Loans disposal
2. Ordinary resolution 2: Signing authority

Signed at	on	2016
Signature
Assisted by me (where applicable)

Each member is entitled to appoint one or more proxies (who need not be a member of the Company) to attend, speak and vote in place of that member at the General Meeting.

Please read the notes on the reverse side hereof.

NOTES TO THE FORM OF PROXY

• 1. A member may insert the name of a proxy or the names of two alternative proxies of the member's choice in the space(s) provided, with or without deleting "the chairman of the General Meeting" but any such deletion must be initialled by the member. The person whose name appears first on the form of proxy and who is present at the General Meeting will be entitled to act as proxy to the exclusion of those whose names follow.
• 1. A member's instructions to the proxy must be indicated in the appropriate box provided. Failure to comply with the above will be deemed to authorise the proxy to vote or abstain from voting at the General Meeting as he/she deems fit. A member may instruct the proxy to vote fewer than the total number of shares held by inserting the relevant number of shares in the appropriate box provided. A member who fails to do so will be deemed to have authorised the proxy to vote or abstain from voting, as the case may be, in respect of all the member's votes exercisable at the General Meeting.
• 1. Forms of proxy must be lodged with or posted to the Company's share registrar, Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107), to be received by no later than 10:15 on Thursday, 10 November 2016. Alternatively, such forms of proxy may be handed to the company secretary or chairman of the General Meeting not later than 30 minutes prior to the commencement of the General Meeting.
• 1. The completion and lodging of this form of proxy will not preclude the member from attending the General Meeting and speaking and voting in person thereat to the exclusion of any proxy appointment in terms thereof, should each member wish to do so.
• 1. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity (e.g. for a company, close corporation, trust, pension fund, deceased estate, etc.) must be attached to this form of proxy unless previously recorded by the Company's share registrar or waived by the chairman of the General Meeting.
• 1. An alteration or correction made to this form of proxy must be initialled by the signatory/ies.
• 1. A minor must be assisted by the minor's parent or guardian unless the relevant documents establishing the minor's legal capacity are produced or have been registered by the share registrar of the Company.
• 1. Where there are joint holders of shares in the Company, any one of such persons may, alone, sign this form of proxy in respect of such shares as if such person was the sole holder but, if more than one of such joint holders submits a form of proxy, the form of proxy, if accepted by the chairman of the General Meeting, submitted by the holder whose name appears first in the Company's share register will be accepted to the exclusion of any other forms of proxy submitted by any other joint holder(s).
• 1. The chairman of the General Meeting may accept any form of proxy which is completed other than in accordance with these notes if the chairman of the General Meeting is satisfied as to the manner in which the member wishes to vote.
• 1. A proxy need not be a member of the Company.
• 1. On a show of hands every shareholder present in person or every proxy or duly authorised representative representing shareholders shall have only one vote, irrespective of the number of shareholders or shares he/she represents or holds.
• 1. On a poll, every shareholder present in person or represented by proxy or a duly authorised representative shall have one vote for every share held by such shareholder.
• 1. A resolution put to the vote shall be decided on a show of hands unless, before or on the declaration of the results of the show of hands, a poll shall be demanded by any person entitled to vote at the General Meeting. If a poll is demanded, the resolution put to the vote shall be decided on a poll.