RACEC GROUP LIMITED - Further Cautionary Announcement and Trading Statement

Further Cautionary Announcement and Trading Statement

RACEC GROUP LIMITED
Incorporated in the Republic of South Africa
(Registration number 1998/006153/06)
Share code: RAC ISIN: ZAE000105409
(“RACEC” or “the Group”)


FURTHER CAUTIONARY ANNOUNCEMENT AND TRADING STATEMENT



Further to the cautionary announcement released on SENS on 12 June 2013, shareholders are advised
that the protracted contractual disputes associated with the final contract close-out in Sierra Leone and
delays in significant contract awards have resulted in severe cashflow pressure being experienced by the
Group.

The arbitration process pertaining to the final contract close-out disputes on the contract in Sierra Leone
has commenced and while the board of directors of RACEC (“the Board”) is confident with the Group’s
case position and prospect of success, this process is only likely to be concluded in October 2013, which
is post the repayment date of the short-term mezzanine funding facility referred to below.

The Board had anticipated the award of significant contracts, both in South Africa and Africa to have
occurred during the first six months of RACEC’s 2013 financial year. To date the award of these contracts
is still outstanding.

RACEC has been in discussions with its commercial bankers as the Group has been formally notified of
the breach of its debt service cover ratio covenant and as a consequence, further drawdown on the
R40 million short-term mezzanine funding facility which the Group secured from a financial institution, as
referred to in the announcement released on SENS on 4 April 2013, has also been halted. The cash
position of the Group is currently at a critical juncture and RACEC will be unable to meet its short-term
working capital requirements.

Shareholders are further advised that negotiations are in progress with a potential acquiror, which, if
successfully concluded, will facilitate on-going support of RACEC’s working capital requirements, the
resolution process of the aforementioned contractual disputes and growth of the Group. A non-binding
expression of interest has been submitted to the Group which is subject to conditions precedent, including
a due diligence investigation, that may result in an offer being made to shareholders of RACEC and the
subsequent delisting of the Group from the JSE.

Both RACEC’s commercial bankers and the financial institution have indicated their intention to support
the Group in the short-term however, such support is subject to the successful conclusion of negotiations
pertaining to a potential acquisition of the Group. The facilities are currently in the process of being
renegotiated with the commercial bankers and the financial institution.

Negotiations pertaining to a potential acquisition of the Group, if successfully concluded, may have a
material effect on the price of the Group’s securities and accordingly, shareholders are advised to
continue exercising caution when dealing in RACEC securities until a further announcement is made.

Furthermore, in terms of the Listings Requirements of JSE Limited, companies are required to publish a
trading statement as soon as they become reasonably certain that the financial results for the period to
be reported on will differ by more than 20% from the previous corresponding period.

Accordingly, a review of the interim results by management has indicated that the earnings per share and
headline earnings per share for the six months ended 31 March 2013 (“interim results”) are expected to
be at least 120% lower compared to the six months ended 31 March 2012. A further trading statement will
be published once RACEC has a greater degree of certainty with regards to its interim results.

The financial information on which this trading statement is based has not been reviewed or reported on
by RACEC’s auditors. RACEC's interim results are expected to be released on SENS on or about
28 June 2013.



Cape Town
21 June 2013

Designated Adviser
Merchantec Capital

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