Aveng shares rise on settlement of dispute, but then fall on profit warning
Construction group Aveng’s share price initially jumped as much as 9% to R6.37 on Monday after saying it had been awarded A$50.5m (about R508m) to settle a disputed payment for the Queensland Curtis Liquefied Natural Gas (QCLNG) pipeline project.
But the share subsequently fell 4.6% to R5.55 as the market digested that this the group expected its headline loss per share for the year to end-June to worsen by more than 20% from the previous year’s 75.2c loss.
A write-down of the original budgeted value of the QCLNG project would reduce both basic and headline earnings per share by R5.95, Aveng said in Monday’s statement.
Aveng said it would record a noncash write-down of A$234m (about R2.4bn) for the QCLNG project in its coming financial results.
"The QCLNG arbitration award marks an important milestone and brings an end to this protracted legal process. This award allows us to remove substantial risk and uncertainty from the company. I would like to thank our core bankers and other financial institutions for their continued support during this prolonged process," Aveng CEO Kobus Verster said in Monday’s statement.
The company also said negotiations relating to the disposal of Aveng Trident Steel had been terminated because the parties could not agree on an acceptable value.