RCR - RCR Tomlinson

[luutzu]

As I said before, not an annual report financey expert guy...but I dunno where they are getting $630m from and it isn't really laid out in the article.
If you dig into the footnotes of the September annual report, it sure seems like there is a lot more than $630m in liabilities...

Total trade and other payables (page 69): 465,533,000
Total provisions: 48,892,000
Total borrowings: 35,099,000
Total used financing arrangements: 410,681,000
Total operating lease commitments: 117, 327,000

You don't need a calculator to see that is a lot more than the 581,250,000 reported "Total Liabilities" on the balance sheet.

Anyone who is good at poking the annual reports light the way?

Could be that the Financial Position freeze framed, so to speak, the company's position as at end of 30th June 2018. So it show the debt at that date.

Went into receivership in November... so the debt on top of what's reported could be the net debt incurred since that end of FY18.

Operating leases are, as far as I know, contractual obligation to lease/rent. Since the business goes to heck, they no longer need to pay those yet to incur rental expense. So I don't think it's added in the obligation.

Financing arrangements I think are just credit facilities with this and that debt covenant where the bank will lend you to that amount if certain ratios are met. So maybe it's totalled less 'cause the bankers just got their $100M from the recent equity raising.

 

[luutzu]

Terrible news, probably a few subcontractors will go under with them, running a small business isn't all balloons and lollipops.
It is going to be a terrible Christmas for all those affected, you certainly have to feel for them.

Can't work for people, can't work for yourself working for people. dam it!

Maybe demand money upfront before delivery. Can't do that to the big boys though... most small operators would be too happy to get a contract with them. I guess better check their balance sheets before sending the goods over for a month without pay.

I noticed that a lot of big retailers tend to pay their supplier pretty late in the game. They turn over the inventor/supplies in a matter of days but managed to convinced their suppliers to get paid for those supplies in a couple of months.

I think that's how most of the big retailers survive. Very thin margin, but using free credits borne by suppliers and workers... have enough scale and it's a pretty damn good way to make ends meet (at other people's expense).

There's one in the UK that carried that a bit too far and sent their major supplier broke. Well, maybe it weren't the only cause, but sure play a big part in it.

 

[InsvestoBoy]

Could be that the Financial Position freeze framed, so to speak, the company's position as at end of 30th June 2018. So it show the debt at that date.

Went into receivership in November... so the debt on top of what's reported could be the net debt incurred since that end of FY18.

The annual report I am quoting from is September. Before that, as I mentioned previously, they released a statutory financial report in August while they were in trading halt.

So I don't think this is the case.

Operating leases are, as far as I know, contractual obligation to lease/rent. Since the business goes to heck, they no longer need to pay those yet to incur rental expense. So I don't think it's added in the obligation.

At least in the US, a new accounting standard is just introduced which changes this, the Financial Accounting Standards Board (FASB) introduced a new accounting standard (ASU 2016-02) that requires companies to recognise operating lease assets and liabilities on the balance sheet.

https://www.newconstructs.com/education/impacts-operating-leases-on-balance-sheet/

Financing arrangements I think are just credit facilities with this and that debt covenant where the bank will lend you to that amount if certain ratios are met. So maybe it's totalled less 'cause the bankers just got their $100M from the recent equity raising.

No. I quoted the financing arrangements *used*, not total available financing arrangements.

Anyone else?

 

[luutzu]

The annual report I am quoting from is September. Before that, as I mentioned previously, they released a statutory financial report in August while they were in trading halt.

So I don't think this is the case.

At least in the US, a new accounting standard is just introduced which changes this, the Financial Accounting Standards Board (FASB) introduced a new accounting standard (ASU 2016-02) that requires companies to recognise operating lease assets and liabilities on the balance sheet.

https://www.newconstructs.com/education/impacts-operating-leases-on-balance-sheet/

No. I quoted the financing arrangements *used*, not total available financing arrangements.

Anyone else?

Boy, with attitude like that, good luck getting people to answer you.

Does the new standard require all lease obligations to be recognised in the one hit? No right?

And if the company goes into admin, what debt are they going to pay for those term leases? Not the full term that's for sure.

Both the preliminary and the final report are for the same financial year, so what's the difference? Did they update the figures or what?

Bottom line, you're not going to find that $630m debt from these (now outdated) financial statements. They were referring to the end of June 18, bankruptcy was in late November right?

A fair few millions could be racked up every quarter.

Got to know when to look at the details and when to estimate dude.

 

[rnr]

I found the "Material Risks" section [pages 10 to 15] of the Statutory Financial Report released in August 2018 to be very informative, especially if some the major risk factors discussed came to fruition in the ensuing months.
As I see it, they could certainly account for a reasonable increase in the quantum of total liabilities reported.
[Disclaimer: I am certainly not an expert in this field.]

 

[PeterMTonkin]

After many years away from the market, I was once again in a position to ...dabble...
Did my research using the normal tools and found RCR to have a good history and to be rated as an undervalued stock... Two days later - Administration. My question is simple.

Have I lost my investiment?

 

[sptrawler]

After many years away from the market, I was once again in a position to ...dabble...
Did my research using the normal tools and found RCR to have a good history and to be rated as an undervalued stock... Two days later - Administration. My question is simple.

Have I lost my investiment?

My call would be "yes"

 

[PeterMTonkin]

Rats - not a good start

 

[sptrawler]

Rats - not a good start

Don't worry, we've all done it. lol

 

[sptrawler]

After many years away from the market, I was once again in a position to ...dabble...
Did my research using the normal tools and found RCR to have a good history and to be rated as an undervalued stock... Two days later - Administration. My question is simple.

Have I lost my investiment?

Just a thought, if you are in the position to start investing, the opportunity to purchase top tier Companies at low entry prices is starting to present.
I personally would be picking up undervalued top shelf in this market, rather than second tier engineering companies. Just my thoughts.

 

[luutzu]

Just a thought, if you are in the position to start investing, the opportunity to purchase top tier Companies at low entry prices is starting to present.
I personally would be picking up undervalued top shelf in this market, rather than second tier engineering companies. Just my thoughts.

Yea, engineering/construction is a very risky business. Better get into top quality operators who prefer to build real things and not an empire. Then hope and pray that they don't get too big for their own good and start dreaming.

One or two project blow out... and they tend to never be just one or two as the same idiot who screw up on estimate/pricing tend to also do a similar screw up on those they were managing... and it's all over.

 

[PeterMTonkin]

Naive question if the RCR group of companies are sold of as they seem to be currently successfully doing.
Once debts are cleared is the balance distributed to share holders?

 

[sptrawler]

Naive question if the RCR group of companies are sold of as they seem to be currently successfully doing.
Once debts are cleared is the balance distributed to share holders?

That is correct, but the shareholder is normally at the bottom of the pecking order, and there is seldom anything left after all debts and secured creditors are paid.
But it is always good to think positive.

 

[Knobby22]

That is correct, but the shareholder is normally at the bottom of the pecking order, and there is seldom anything left after all debts and secured creditors are paid.
But it is always good to think positive.

Never heard of a shareholder getting a cent in these situations. Usually the creditors get less than half of what they are owed.

 

[Smurf1976]

Never heard of a shareholder getting a cent in these situations. Usually the creditors get less than half of what they are owed.

Likewise. Not enough money to pay everyone + shareholders are last on the list = shares are almost certainly worthless.

 

[Ann]

After many years away from the market, I was once again in a position to ...dabble...
Did my research using the normal tools and found RCR to have a good history and to be rated as an undervalued stock... Two days later - Administration. My question is simple.

Have I lost my investiment?

Hi Peter, welcome to the forum, sorry it is on such a low note. If you are planning on dabbling again it may pay you to learn how to read charts along with your other research. Just one look at this company's chart and the collapse in the share price should be enough to keep you well away from these sort of companies. If you don't feel up to doing your own charting, I am more than happy to offer you or anyone who would like, my thoughts about a company on a chart. It isn't magic or voodoo just a way to see if a company's price is going up or down...if down it is often wiser to stand clear. This is the chart before it went into administration.

 

[sptrawler]

Never heard of a shareholder getting a cent in these situations. Usually the creditors get less than half of what they are owed.

In was trying to be gentle and compassionate, to a new investor, who is smarting from their first investment.

 

[luutzu]

Naive question if the RCR group of companies are sold of as they seem to be currently successfully doing.
Once debts are cleared is the balance distributed to share holders?

Like Homer was saying... it's going to be jack all after the creditors get paid.

Best case scenario looks about 10c a piece. Seeing how, I reckon, the bankers somehow managed to get shareholders to fork out $100m then close the shop... it's likely all the cash and assets will just be enough to pay them so the likely scenario will be zero for shareholders.

Sorry for the bad news.

 

[luutzu]

Never heard of a shareholder getting a cent in these situations. Usually the creditors get less than half of what they are owed.

Years ago I own a few shares in some bakery business that went broke. I think I got about 12c per share

In another stroke of genius, the shares in ABC Learning Centres.. yea, got nuffing.

 

[Smurf1976]

Rats - not a good start

Don't be deterred by one bad experience.

Add me to the list of those who have "been there, done that" by owning shares in a company that went bust. Pasminco for the record. Their physical mining and smelting business was fine, and I'd been down one of the mines and inside one of the smelters and seen it all with my own eyes, but it was their financial dealings which brought the company unstuck in a big way with huge losses and that was the end of it. The physical assets are still running today under different ownership but the shares have long since been delisted and were ultimately worthless.

And a big welcome to ASF too.