| Wed 26 May 2010, 15:58 | | RAC - Racec Group Limited - Trading update |
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RAC
RAC
RAC - Racec Group Limited - Trading update
RACEC GROUP LIMITED
Incorporated in the Republic of South Africa
(Registration number 1998/006153/06)
Share code: RAC ISIN: ZAE000105409
("RACEC" or "the Group")
TRADING UPDATE
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 that of the previous corresponding period.
Accordingly, a review of the financial results for the six months ended 31
March 2010 by management has indicated that the loss per share and the headline
loss per share is expected to be between 1.3 and 2.6 cents compared to the
earnings per share of 6.5 cents and the headline earnings per share of 6.6
cents for the six months ended 31 March 2009.
The difference in financial results can be attributed to a combination of:
* the delays in the expected commencement of two significant contracts to the
value of approximately R120 million in the Electrification division in
2009. Work on these contracts however began during March/April 2010 and
management expects that they will contribute significantly to the results
of the Group in the next six months of trading; and
* significant losses sustained by RACEC`s manufacturing subsidiary, Greenbro
(Proprietary) Limited ("Greenbro"), which produces industrial generators
and electrical kiosks, due in part to the economic downturn and the
"reversal" of Eskom`s inability to supply consistent power. During the last
six months however, RACEC has undertaken a number of initiatives, which
management is confident will ensure a return to profitable operations for
Greenbro. These initiatives include:
* the restructuring of Greenbro`s senior management team, including the
employment of a temporary Managing Director while the incumbent
Managing Director is on sick leave; and
* the completion of a significant cost cutting and retrenchment
programme of both management and staff.
The delays in the commencement of the two contracts and the losses sustained
by Greenbro contributed to a lower level of profitability in the six months
ended 31 March 2010, compared to the six months ended 31 March 2009. However,
with the expected loss per share and the headline loss per share of between
1.3 and 2.6 cents, the performance of the Group in the six months ended 31
March 2010 has shown a significant improvement on the headline loss per share
of 18.9 cents for the six months ended 30 September 2009.
With confirmed projects, representing 85% of this year`s anticipated total
revenue, in comparison to 41% in the previous comparative period, management
is confident that results will continue to improve and that RACEC will return
to profitability by 30 September 2010.
The financial information on which this trading statement is based has not
been reviewed or reported on by RACEC`s auditors. RACEC`s financial results
are expected to be released on SENS on or about 30 June 2010.
Cape Town
26 May 2010
Designated Adviser
Merchantec Capital
Date: 26/05/2010 15:58:01 Produced by the JSE SENS Department.
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