RCR Tomlinson 

 
Loss reported for FY18:RCR Tomlinson Limited (ASX: RCR) stock has fallen 57.21% in three months as on September 03, 2018 after the company for FY 18 reported statutory net loss after tax of $16.1 million on the back of cost overruns experienced on the Daydream and Hayman Solar Farms project. The Underlying EBIT loss for the period is of $4.2 million (from $41.2 million in FY 17), that includes $57 million in cumulative write-downs on the Project. As a result, RCR declared that there will be no final dividend compared to 6.0 cents per share in FY 17.
 
Entitlement Offer:The company lately undertook 1 for 1.65 pro-rata accelerated non-renounceable entitlement offer (‘Entitlement Offer’) to raise fund of approximately $100 million. In addition, RCR secured an increase in its working capital facilities of $25M. The funds raised through Entitlement Offer and additional working capital facilities are strengthening the balance sheet and are needed to combat the financial impacts of cost overruns at key Project. The Entitlement Offer is undertaken at an offer price of $1.00 per new RCR share. The offer price represents 52.8% discount to the Theoretical Ex-Rights Price and 64.3% discount to last close price on the ASX of $2.80 on 27 July 2018. Meanwhile, RCR has already raised approximately $70 million under the Institutional Entitlement Offer, with existing shareholders taking up approximately 88% of New Shares available to them.
 
The Retail Entitlement Offer opened on 3rd September 2018 and closes on 19 September 2018, for which the eligible retail shareholders may subscribe for up to 1 New Share for every 1.65 fully paid ordinary share at an offer price of A$1.00 per New Share (same as the Institutional Entitlement Offer). After the completion of institutional entitlement offer RCR stock started trading. On the other hand, the company expects FY19 guidance of Underlying EBIT to be in the range of $40 million to $48 million (reflecting the adoption of AASB 15, which is estimated to reduce Underlying EBIT by $8 million to $10 million on a comparable basis with AASB 111 - no impact to cash flows though).
 
It is to be noted that the group lodged the prospectus with ASX on 28 August 2018, which got released without the Investigating Accountant’s Report (by Deloitte Corporate Finance Pty Limited) and then RCR submitted a corrected version including the the same, while the terms of the prospectus remained as before. The report concluded that the Pro forma Historical Financial Information has been presented fairly in all material respects, in accordance with the Prospectus.

We have a watch on the stock as RCR has near term focus on rail, transport and renewable sectors with project portfolio now shifting to alliance style contracting models; while the group is raising the the capital to manage risks relating to breaching of financial covenants and project write-downs as well as towards working capital.



Sources and uses of funds (Source: Company Reports)
 
 

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