Diversified engineering and infrastructure company, RCR Tomlinson Limited (ASX: RCR) voluntarily suspended their shares on ASX on 14 November 2018 pending an update to the market regarding its earnings for FY 2019 and the associated consequences for its funding. Today (i.e., 20 November 2018) the company requested a further extension of the voluntary suspension of the Company’s shares with immediate effect.
On 19 November 2018, the company was served with a shareholder class action proceeding filed in the Supreme Court of New South Wales on behalf of shareholders who acquired an interest in ordinary shares in the Company in the period between 11 August 2017 and 27 July 2018.
In FY 2018, the Underlying EBIT from Continuing Operations of the company decreased to a loss of $4.2 million which was mainly driven by the cost overruns on the Daydream and Hayman Solar Farm projects resulting in cumulative write-downs of approximately $57 million from the original tendered margin. The company went to into a trading halt on July 30, and after a month-long trading halt, the company announced a $100 million capital raising initiative to strengthen the company’s balance sheet and to address the financial impacts of the Daydream and Hayman Solar Farm projects. The capital raising initiative was well supported by the existing and new institutional shareholders and also by the company’s existing base of retail shareholders due to which the company raised $70 million from its institutional shareholders and approximately $14 million from its retail shareholders, with the shortfall being taken up by five sub-underwriters.
However, when the shares reopened on 30 August after a month-long trading halt, the share prices fell by over 60%. Litigation firm Quinn Emanuel Urquhart & Sullivan who had filed the class action against RCR, has alleged that RCR breached the continuous disclosure laws because its senior management team either knew and hid it or should have known about the solar farm problems before announcing them to the market on 28 August 2018.
Recently, the company announced the resignation of Mr. Andrew Phipps from the role of Chief Financial Officer. Till the board is searching for the new CFO, Mr. Andrew Batch will be fulfilling the CFO responsibilities on a full-time basis, and Mr. Phipps will be assisting in providing a smooth transition for the incoming CFO.
In FY 2018, the Sales Revenue from Continuing Operations of the company increased by 58.2% to $1,998.5 million compared to the prior corresponding period. The increase in revenue was mainly driven by the progress of a number of large-scale solar farms. From Infrastructure business, the company earned revenues of $1,482.4 million which were 81.0% higher than the last year. Due to the commencement of a number of projects and shutdowns during FY18, the performance of the energy business improved in FY 2018. The revenue from the energy business increased by 21.4 percent to $228 million compared to the previous corresponding year.
In recent months, the company has secured new contracts in water, rail, property services, and resources and it has been awarded a number of new rail projects, including the recent Interim Project Alliance Agreement to carry out project services on the Auckland City Rail Project. The Company’s focus on new rail and transport opportunities will be assisted by developing strategic partnerships with leading transport solution providers.
In the last six months, the share price of RCR decreased by 70.24 percent as on 9 November 2018. RCR’s shares were last traded at $0.870 with the market capitalization of circa $232.41 Mn.