Wrap Text
Condensed Consolidated Reviewed Results for the Six Months Ended 31 March 2013
RACEC GROUP LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1998/006153/06)
Share code: RAC ISIN: ZAE000105409
(“RACEC” or “the Company” or “the Group”)
CONDENSED CONSOLIDATED REVIEWED RESULTS FOR THE SIX MONTHS ENDED 31 MARCH
2013
COMMENTARY
Introduction
RACEC has experienced a particularly frustrating first six months of trading during 2013, following the
high of the significant turnaround in 2012. Our restructuring and capacity building off the back of our
positive outlook at the end of 2012 has seen us attempting to retain scarce resources in anticipation of
our forecasted order book delivery.
There have been significant project delays, both locally and abroad, which have seen RACEC needing to
simultaneously weather a short-term down turn and a protracted and unnecessary contract close-out with
our Sierra Leone client, which has subsequently turned into formal arbitration proceedings.
So as to continue trading during the period under review, the Group secured a short-term mezzanine
funding facility from a financial institution (“Mezzanine Facility”) in order to bridge its working capital
requirements until the aforementioned arbitration proceedings are resolved and payment is received.
Details of the Mezzanine Facility are set out in Note 6 to these condensed consolidated reviewed results.
However, subsequent to the Mezzanine Facility having been secured, RACEC received formal notification
from its commercial bankers, ABSA Bank Limited (“ABSA”) of the event of default on the overdraft
facilities by ABSA relating to a breach of its debt service cover ratio covenant. This breach was as a result
of the slowing order book in South Africa and given the aforementioned arbitration proceedings, the
bank’s reluctance to value the security associated with debtors in Africa. As a result, further drawdown on
the Mezzanine Facility has been suspended save for mission critical expenses.
The financial position of the Group is currently extremely precarious, with RACEC requiring between
R3 million to R5 million in working capital funding for its business and operations per month, with limited
resources to fund these cash outflows in the near future.
Given the seriousness of the short-term situation in which the Group finds itself, negotiations are in
progress with a potential acquiror (“potential acquisition”) 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. However, should the potential acquisition not be
sucessfully implemented, the options available to the Group will be extremely limited and will in all
probability result in significant errosion of value and the inability to fund working capital requirements and
settle debt. Further information on RACEC’s position as a going concern is set out in Notes 3 and 4 to
these condensed consolidated reviewed results.
A non-binding expression of interest letter 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 the potential acquisition of the Group. The facilities are currently in the process of being
renegotiated with the commercial bankers and the financial institution.
Performance
Our local operations continue to trade under capacity as we eagerly await the physical rollout of
Government’s infrastructure upgrade program. Protracted delays in the awarding of numerous bids which
were submitted during the period have left the Group trying to retain scarce core skills in anticipation of
the project awards, and naturally this has had a short-term eroding effect on our current earnings.
Although our cross border operations have continued their success, we have unfortunately also
encountered project start-up delays which were beyond our control. Our awarded project in Ghana, which
was scheduled for commencement in January 2013, has had site handover delays and as a
consequence, commencement is now only scheduled for the end of July 2013.
The anticipated January 2013 award of a significant contract in Central Africa has also unfortunately
experienced delays due to a re-engineering exercise being undertaken. Slower than expected rollout of
identified projects in our Mozambique operations have also been expierenced.
Despite the Group’s Sierra Leone contract-close out dispute, we are proud to report that we successfully
completed and handed over our contract works in February this year. The project in Sierra Leone was
one that we were extremely proud to be involved in and it has reinforced our capabilities of operating in
Africa.
Unfortunately, our client has defaulted against their contractual obligations as they continue to build
competent operational capacity to successfully bring their mining operations on line. Regrettably this
situation has led us, and others, facing challenges in closing out the final contract account.
The board of directors (“Board”) have scrutinised RACEC’s statement of claim and are extremely
confident of our contractual position. However, the aforementioned dispute, together with our current
short-term operational slowdown, necessitated the securing of the Mezzanine Facility in order to bridge
the period until the dispute is resolved.
Financial performance
During the six months ended 31 March 2013, revenue increased by 11.7% from R127.8 million to
R142.8 million compared to the previous corresponding period.
The overall contract profit margin has fallen by 15 percent from 27.6% to 12.6%, with the Group reporting
a headline and diluted headline loss per share of 1.7 cents and 1.2 cents, respectively. In addition, the
overall cash position has deteriorated since September 2012, evidencing the impact on the costs
associated with retaining scarce resources, coupled with the aforementioned project delays and
compounded by the protracted and unnecessary contract close-out with our client in Sierra Leone.
Further to the announcements released on SENS on 4 April 2013, 12 June 2013 and 21 June 2013, and
as mentioned in our “Introduction” paragraph the contractual dispute associated with the final contract
close-out in Sierra Leone continues. Despite numerous attempts to resolve in an amicable fashion
RACEC has been left with no choice but to initiate formal arbitration proceedings in the London
International Court of Arbitration. We are currently awaiting the appointment of an Arbitral Tribunal and a
date for the hearing.
To this end, we have recognised work in progress and receivables of R59.9 million to date in relation to
the Sierra Leone contract, representing the value of work certified, agreed variation orders and value of
the balance of the works completed under the original contracts.
In addition, as part of the contract finalisation there are additional variation orders, contract scope
extensions and plant standing time claims amounting to in excess of USD5 million, which excludes any
interest and damages claims. All material costs associated with this USD5 million have already been
accounted for. We will await the conclusion of the arbitration process and the outcome of any potential
counter claims before assessing the level of any additional profit the Group could recognise in respect of
USD5 million.
Prospects
Despite the difficulties experienced during the first six months of trading, we remain optimistic about the
prospects within the rail infrastructure space.
We recognise the key challenges of securing the ongoing funding required to support RACEC’s working
capital requirements, to be in a financially secure position so as to weather large contract close-outs, to
ensure subsequent working capital investment and the guarantee requirements to allow for the growth of
the Group, particularly in Africa.
In this regard, the Group has been looking for a strategic partner in order to address these issues. The
aforementioned potential acquiror is looking to expand its rail capabilities and capacity so as to enable it
to capture the opportunities presented by the rail industry in Africa and we believe posesses the
necessary qualities to allow the Group to address the challenges and take advance of the prospects in
the rail infrastructure space. However, as referred to in the “Introduction” paragraph, we stress the
importance of the successful conclusion of this potential acquisition to the continued existence of RACEC.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed
(see note 4) Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 September
2013 2012 2012
R’000 R’000 R’000
Revenue 142 758 127 763 355 192
Cost of sales (124 813) (92 485) (252 497)
Gross profit 17 945 35 278 102 695
Other income 358 1 979 2 539
Operating expenses (18 460) (22 522) (61 484)
Net (loss)/profit before investment revenue, finance costs
and taxation (157) 14 735 43 750
Investment revenue 650 953 1 963
Finance costs (3 274) (3 189) (6 020)
(Loss)/Profit before taxation (2 781) 12 499 39 693
Taxation 650 (3 517) (9 942)
(Loss)/Profit for the period (2 131) 8 982 29 751
Attributable to:
Equity holders of the parent (2 131) 8 982 29 751
Other comprehensive (loss)/income:
- Revaluation of property, plant and equipment - - 13 995
- Deferred tax on revaluation of property, plant and equipment - - (3 919)
- Foreign currency translation differences 373 (117) (8)
Total comprehensive (loss)/income for the period (1 758) 8 865 39 819
Reviewed
(see note 4) Unaudited
six months six months Audited
ended ended year ended
31 March 31 March 30 September
2013 2012 2012
R’000 R’000 R’000
Attributable to:
Equity holders of the parent (1 758) 8 865 39 819
(LOSS)/EARNINGS PER SHARE (CENTS) (see note 5)
Basic (1.6) 6.9 22.7
Diluted basic (1.2) 4.9 16.3
Headline (1.7) 6.8 24.3
Diluted headline (1.2) 4.9 17.4
Weighted average number of ordinary shares in issue (‘000)* 130 969 130 969 130 969
Fully diluted weighted average number of ordinary shares in
issue (‘000)** 184 249 182 187 182 778
*Excludes treasury shares
** Treasury shares considered to have dilutive potential
SEGMENTAL REPORT
Administrative
investment and Rail Consolidating
plant hire construction Entries Total
Analysis per reportable segment R'000 R'000 R’000 R'000
Reviewed – six months ended 31 March
2013
Revenue – external - 142 758 - 142 758
Revenue – intersegment 7 275 - (7 275) -
(Loss)/Profit before tax (4 074) 1 293 - (2 781)
Total assets 59 636 141 880 - 201 516
Unaudited – six months ended 31 March
2012
Revenue – external 438 127 325 - 127 763
Revenue – intersegment 8 293 - (8 293) -
(Loss)/Profit before tax (1 260) 13 759 - 12 499
Total assets 57 397 105 536 - 162 933
Audited - year ended 30 September 2012
Revenue – external 507 354 685 - 355 192
Revenue – intersegment 25 204 - (25 204) -
Profit before tax 9 126 30 567 - 39 693
Total assets 61 587 148 046 - 209 633
Outside Consolidating
South Africa South Africa entries Total
Geographical analysis R'000 R'000 R'000 R'000
Reviewed – six months ended 31 March
2013
Revenue – external 88 576 54 182 - 142 758
Revenue – intersegment 2 317 - (2 317) -
(Loss)/Profit before tax (3 263) 482 - (2 781)
Total assets 105 267 96 249 - 201 516
Unaudited - six months ended 31 March
2012
Revenue – external 84 706 43 057 - 127 763
Revenue – intersegment 1 933 - (1 933) -
(Loss)/Profit before tax (3 241) 15 740 - 12 499
Total assets 110 487 52 446 - 162 933
Audited - year ended 30 September 2012
Revenue – external 185 873 169 319 - 355 192
Revenue – intersegment 6 249 - (6 249) -
Profit before tax 12 316 27 377 - 39 693
Total assets 125 908 83 725 - 209 633
An operating segment is a component of the Group that engages in business activities which may earn
revenue and incur expenses and whose operating results are regularly reviewed by the Group’s chief
operating decision makers, being the Group’s Board, in order to allocate resources and assess
performance, and for which limited financial information is available.
Operating segments, which display similar economic characteristics and have similar products, services,
customers, methods of distribution and regulatory environments, are aggregated for reporting purposes.
Segments were identified and grouped together using a combination of the products and services offered
by the segments and the geographical areas in which they operate.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
(see note 4) Unaudited as at
as at as at 30
31 March 31 March September
2013 2012 2012
R’000 R’000 R'000
ASSETS
Non-current assets 73 269 62 540 77 591
- Property, plant and equipment 60 901 50 502 65 920
- Investment property 351 351 351
- Intangible assets 665 926 891
- Loans to shareholders 2 113 1 499 1 806
- Loans and receivables - 9 252 -
- Loans to related parties 8 700 - 8 438
- Deferred tax assets 539 10 185
Current assets 128 247 100 393 132 042
- Inventories 71 536 49 013 52 012
- Trade and other receivables 47 477 43 096 61 847
- Loans and receivables - 194 -
- Cash and cash equivalents 9 234 8 090 18 183
Total assets 201 516 162 933 209 633
EQUITY AND LIABILITIES
Capital and reserves 58 538 29 139 60 182
- Equity attributable to equity holders of the parent 58 538 29 139 60 182
Non-current liabilities 29 914 27 259 32 336
- Other financial liabilities 22 307 21 459 23 268
- Share based payments 797 971 813
- Deferred tax liabilities 6 810 4 829 8 255
Current liabilities 113 064 106 535 117 115
- Loans from shareholders - 3 770 -
- Loans from related parties 2 398 - -
- Other financial liabilities 3 077 4 859 3 072
- Current tax payable 9 478 4 610 11 380
- Trade and other payables 76 698 63 236 78 582
- Bank overdraft 21 413 30 060 24 081
Total equity and liabilities 201 516 162 933 209 633
Net asset value per share (cents) 44.7 22.2 46.0
Net tangible asset value per share (cents) 44.2 21.5 45.3
Total number of ordinary shares in issue (‘000)* 130 969 130 969 130 969
*Excludes treasury shares
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed
(see note
4)
six Unaudited
months six months Audited
ended ended year ended
31 March 31 March 30 September
2013 2012 2012
R’000 R’000 R'000
Cash flows from operating activities (4 155) (6 276) 19 877
- Cash generated from operations 1 200 4 674 30 798
- Interest income 112 654 446
- Finance costs (2 410) (5 019) (4 459)
- Taxation paid (3 057) (6 585) (6 908)
Cash flows from investing activities (609) 3 725 (3 251)
- Purchase of property, plant and equipment (729) (1 643) (9 405)
- Proceeds from disposal of property, plant and equipment 120 5 368 6 322
- Purchase of intangible assets - - (168)
Cash flows from financing activities (1 849) (5 950) (9 144)
- Repayment of other financial liabilities (1 797) (6 994) (3 747)
- Advance of other financial liabilities - - 1 352
- (Repayment)/Advance of loans by related parties (33) 31 -
- Repayment of loans from shareholders - (2 969) (6 743)
- Advance of loans and other receivables - 3 982 -
- Costs incurred from shares issued (19) - (6)
Total cash movement for the period (6 613) (8 501) 7 482
Cash at the beginning of the period (5 898) (13 368) (13 367)
Exchange rate movements on cash and cash equivalents 332 (102) (13)
Total cash at the end of the period (12 179) (21 971) (5 898)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
capital
and share Treasury Other Retained Total
premium shares reserves earnings equity
R'000 R'000 R'000 R'000 R'000
Balance at 30 September 2011 as
previously stated 70 369 (39 158) 6 122 (38 249) (916)
Restatement adjustment (18 583) 28 529 - 11 169 21 115
Restated balance at 30 September
2011 51 786 (10 629) 6 122 (27 080) 20 199
Total comprehensive (loss)/profit - - (471) 9 336 8 865
- Profit for the period - - - 8 982 8 982
- Realised revaluation through
depreciation - - (164) 164 -
- Deferred tax on revaluation
through depreciation - - 46 (46) -
- Realised revaluation through
disposal - - (328) 328 -
- Deferred tax on revaluation
through disposal - - 92 (92) -
- Foreign currency translation
differences - - (117) - (117)
- Share capital issued* 602 (602) - - -
- Share option expenses - - 75 - 75
Balance at 31 March 2012 as
previously stated 70 971 (39 760) 5 726 (30 779) 6 158
Restatement adjustment (18 583) 28 529 - 13 035 22 981
Restated balance at 31 March
2012 52 388 (11 231) 5 726 (17 744) 29 139
Total comprehensive profit - - 10 064 20 890 30 954
- Profit for the period - - - 20 769 20 769
- Realised revaluation through
depreciation - - (168) 168 -
- Deferred tax on revaluation
through depreciation - - 47 (47) -
- Revaluation of property, plant and
equipment - - 13 995 - 13 995
- Deferred tax on revaluation of
property, plant and equipment - - (3 919) - (3 919)
- Foreign currency translation
differences - - 109 - 109
- Share issue expenses (7) - - - (7)
- Share option expenses - - 96 - 96
Balance at 30 September 2012 52 381 (11 231) 15 886 3 146 60 182
Total comprehensive loss - - (1 615) (143) (1 758)
- Loss for the period - - - (2 131) (2 131)
- Realised revaluation through
depreciation - - (2 761) 2 761 -
- Deferred tax on revaluation
through depreciation - - 773 (773) -
- Foreign currency translation
differences - - 373 - 373
- Share capital issued* 3 241 (3 241) - - -
- Share issue expenses (19) - - - (19)
- Share option expenses - - 133 - 133
Balance at 31 March 2013 55 603 (14 472) 14 404 3 003 58 538
* The shares were issued to the RACEC Employee Share Trust (“the Trust”) and RACEC Employee
Share Purchase Scheme (“the Scheme”), being special purpose entities, which are consolidated as part
of the Group.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL RESULTS
1. Statement of compliance
The accounting policies applied in the preparation of these condensed consolidated reviewed results,
which are based on reasonable judgments and estimates, are in accordance with International
Financial Reporting Standards, its interpretations adopted by the International Accounting Standards
Board, AC500 as issued by the Accounting Practices Board and are consistent with those applied in
the annual financial statements for the year ended 30 September 2012. These condensed
consolidated reviewed financial statements as set out in this report have been prepared in terms of
IAS 34 – Interim Financial Reporting, the South African Companies Act (Act 71 of 2008), as amended,
the SAICA Financial Reporting Guides, as issued by the Accounting Practices Committee and
Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, and
the Listings Requirements of JSE Limited (“Listings Requirements”).
These condensed consolidated financial statements have been prepared under the supervision of Mr
Sean Wilkins CA(SA), the chief financial officer of the Group.
As set out in Note 9 below, the condensed consolidated reviewed interim results have been reviewed
by the Group’s auditors.
2. Basis of measurement
These condensed consolidated reviewed financial statements have been prepared on the historical
cost basis, modified for certain items measured at fair value.
3. Going concern
The Group incurred a total comprehensive loss for the 2013 financial period of R1.8 million. This,
together with the Group’s negative liquidity issue, high gearing and depleted net asset value,
highlights a material going concern issue. The Group is also in breach of its covenants with ABSA as
it has not been able to reduce the level of overdraft in line with ABSA’s requirements
The Group is currently solvent with net asset value of R58.5 million or 44.7 cents per share. Current
liabilities (R76.7 million) exceed trade and other receivables (R47.5 million) by R29.2 million.
Shareholders are referred to the announcement released on SENS on 21 June 2013 wherein they
were advised that despite the Group experiencing severe cashflow pressure, negotiations are in
progress with a potential acquiror, which if successfully concluded will facilitate the on-going support
of the Group’s working capital requirements, the resolution process of the contractual disputes and
growth of the Group.
The aforementioned SENS announcement further advised shareholders that the Group’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 the negotiations pertaining to
the potential acquisition of the Group, which ensures that the going concern is still appropriate.
4. Review conclusion
Grant Thornton, the Group’s independent auditors, have reviewed the condensed consolidated
financial results for the six months ended 31 March 2013 and have issued an unqualified review
conclusion with the following emphasis of matter paragraph: “Without qualifying our conclusion, we
draw attention to the fact that the Group incurred a total comprehensive loss of R1.8 million for the
period ended 31 March 2013 and as of that date, the Group’s current liabilities exceeds its current
assets excluding inventory by R56.3 million. These conditions indicate the existence of a material
uncertainty that may cast doubt about the Group’s ability to continue as a going concern”. The report
is available for inspection at the Company’s registered office.
5. Reconciliation of (loss)/earnings to headline (loss)/earnings
Reviewed
(see note 4) Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 September
2013 2012 2012
R’000 R’000 R’000
Reconciliation between (loss)/earnings and
headline (loss)/earnings:
- (Loss)/Profit after tax (2 131) 8 982 29 751
- Impairment losses on property, plant and equipment - - 526
- Impairment loss on related party loans - - 1 423
- Loss on disposal of property, plant and equipment - 455 463
- Profit on disposal of property, plant and equipment (111) (458) -
- Tax effect of adjustments 31 (63) (277)
Headline (loss)/earnings (2 211) 8 916 31 886
6. Retrospective restatement adjustment
Solethu Civils Holdings Proprietary Limited (“Solethu Civils”) was treated as a special purpose entity
in the Group’s financial statements for the six month period ended 31 March 2012. This treatment
was based on SIC 12 - Consolidation - Special purpose entities. It has come to light that SIC 12
should only be considered as a guideline where there is control under IFRS 3 - Business
combinations. It was concluded that there is no control over Solethu Civils and therefore the
guidelines per SIC 12 do not need to be considered. The Group has therefore retrospectively
adjusted the financial statements and has deconsolidated Solethu Civils.
Below are the impacts of the restatements:
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Adjustment
period ended
31 March
2012
R’000
ASSETS
Non-current assets
Increase in Loans to shareholders 1 499
(Decrease) in Loans to related parties (15 666)
(14 167)
Current assets
(Decrease in Trade and other receivables (1)
(Decrease) in Loans and receivables (1 498)
(Decrease) in Cash and cash equivalents (1)
(1500)
(Decrease) in Total assets (15 667)
EQUITY AND LIABILITIES
Equity
(Decrease) in Share premium (18 583)
Decrease in Treasury shares 28 529
Decrease in (Accumulated deficit) 13 035
Increase in Total equity 22 981
Non-current liabilities
Increase in Loan from shareholders
(Decrease) in Loans from related parties (30 066)
Increase in Other financial liabilities 14 899
(15 167)
Current liabilities
Increase in loans from shareholders 3 770
Decrease in loans from related parties (27 192)
Decrease in current tax payable (59)
(23 481)
Total liabilities (38 648)
Total equity and liabilities (15 667)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Adjustment
period ended
31 March
2012
R’000
Increase in Investment revenue 299
Decrease in Finance costs 1 567
Increase in Profit before taxation 1 866
Taxation -
Increase in Profit 1 866
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Adjustment
period ended
31 March
2012
R’000
Cash flows from operating activities
(Increase) in Finance costs (263)
(Decrease) in Net cash utilised by operating activities (263)
Cash flows from financing activities
Decrease in Repayments of loans to related parties 3 232
(Increase) in Repayment of loans from shareholders (2 969)
Increase in Net cash from financing activities 263
Total cash movement for the period -
(Decrease) in Cash at the beginning of the period (1)
(Decrease) in Total cash at end of the period (1)
EARNINGS PER SHARE (CENTS)
Restated unaudited Adjustment Previous unaudited
period ended period ended period ended
31 March 31 March 31 March
Loss per ordinary share (cents) 2012 2012 2012
Earnings per share (cents)
- Basic earnings per share 6.9 0.2 6.7
- Headline earnings per share 6.8 0.2 6.6
Diluted earnings per share (cents)
- Diluted basic earnings per share 4.9 1.0 3.9
- Diluted headline earnings per share 4.9 1.0 3.9
7. Mezzanine Facility
The first advance of R25 million was received on 4 April 2013 and the second advance of R6 million
was received on 30 April 2013. Access to the facility was withheld from 15 June 2013 as a result of
the Group being notified of the event of default on the overdraft facilities by ABSA, however in light of
the progress made in respect of the aforementioned potential acquisition, a third advance of R2.75
million was permitted and received on 24 June 2013.
The repayment date is six months from the first advance date. The structure of the facility is as
follows:
- R40 million available for the financing of working capital;
- R1 million for the capitalisation of structuring and facility costs; and
- R4 million for the capitalisation of interest.
Interest will be charged at prime plus 10.75% (nominal annual compounded monthly) and will be
payable on the repayment date. A commitment fee of 1% of the undrawn loan amount per annum will
accrue daily and be payable on the repayment date or when the Mezzanine Facility is cancelled. A
settlement fee of 1% will be payable on amounts repaid to the lender.
RACEC has granted an irrevocable option to the lender to convert any portion of the loan into
ordinary shares of RACEC up to a maximum of 50% of RACEC’s current ordinary shares in issue.
The number of shares will be determined by the conversion amount and the shares will be issued at
90% of the 30 volume weighted average price. The option is exercisable at the lender’s election upon
or after the occurrence of an event of default on the Mezzanine Facility, until the date when RACEC
has discharged all of its obligations under the facility agreement. Should the option become
exercisable, a 5% termination fee is payable on the portion of the loan which is not settled by the
option.
RACEC has pledged the shares in its subsidiaries, ceded its rights and interest to or arising from
shares in subsidiaries, insurance policies, intellectual property owned and reversionary rights in bank
accounts, book debts and claims to the lender. The lender shall also be entitled to request a notarial
general covering bond over moveable assets and a first covering bond over certain properties.
8. Contingencies
There are contingent liabilities with respect to outstanding performance, retention and prepayment
guarantees provided by Lombards Insurance Company totalling R25 922 710 for work done by the
subsidiary companies. Included is R17 317 496 of USD based guarantees which represents
USD1 877 215.
9. Subsequent events
There are no subsequent events after the reporting period that require disclosure save for as set out
in the announcement released on SENS on 21 June 2013 and the “Introduction” paragraph, wherein
shareholders were advised that negotiations with a potential acquiror are in progress, which if
successfully concluded, will facilitate on-going support of RACEC’s working capital requirements, the
resolution process of the aforementioned contractual disputes and the growth of the Group. The
Group has signed a non-binding expression of interest which is subject to conditions precedent, that
may result in an offer being made to shareholders of RACEC and the subsequent delisting of the
Group from the JSE.
DIVIDENDS
It is the policy of the Group to declare dividends up to a maximum of one-third of annual profits after tax,
subject to working capital requirements and acquisition activities.
In addition, it is the intention of the Group to periodically consider this dividend policy, taking into account
the prevailing market conditions, the particular circumstances of the Group and future cash requirements
in determining if it is appropriate to pay dividends.
No dividends have been declared for the period ended 31 March 2013.
DIRECTORATE
During the period under review, as from 28 March 2013, Mr JA Bester was appointed as an independent
non-executive director of the Board and member of the Audit and Risk Committee.
By order of the Board
M Uys G Harrod
Non-Executive Chairman Chief Executive Officer
10 July 2013
Directors:
M Uys* (Chairman), G Harrod (Chief Executive Transfer secretaries:
Officer), C Harrod*, C Gooden*, S Wilkins (Chief Computershare Investor Services (Proprietary)
Financial Officer), B Petersen*, Q Zulu*, JA Limited (PO Box 61763, Marshalltown, 2107)
Bester*
* Non-executive Designated Adviser:
Merchantec Capital (PO Box 41480, Craighall,
Company secretary: 2024)
C van Rensburg
Auditors:
Registered office: Grant Thornton. (Docex 169 Randburg)
8 Hawkins Avenue, Epping 1, 7460 (PO Box 61,
Eppindust, 7475)
These condensed consolidated reviewed results are available on the Company’s website, www.racec.co.za.
Date: 10/07/2013 04:38:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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