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 percents 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. 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.
