Audit Opinion from Deloitte Touche Tohmatsu from AGCollinson,...

Audit Opinion from Deloitte Touche Tohmatsu from AGCollinson, Partner

Dated 28^th August 2018

 

We have audited the financial report of RCR TomlinsonLimited (the “Company”) and its subsidiaries (the “Group”) which comprises theconsolidated statement of financial position as at 30 June 2018, theconsolidated statement of comprehensive income, consolidated statement ofchanges in equity and consolidated statement of cash flows for the year thenended, and notes to the financial statements, including a summary ofsignificant accounting policies, and the directors’ declaration.

 

In our opinion, the accompanying financial report of theGroup is in accordance with the Corporations Act 2001, including:

 

(i) giving a true and fair view of the Group’s financial positionas at 30 June 2018 and of its financial performance for the year then ended;and

 

(ii) complying with Australian Accounting Standards and theCorporations Regulations 2001.

------------------------------------------

Thereafter there is a Clause about Material UncertaintyRelated to Going Concern. We draw attention to Note 1.3 ‘Basis of Preparation’to the financial report, which indicates that, as at 30 June 2018, the Companyrecorded a loss of $16.1m. This condition, along with other matters as setforth in Note 1.3 and Note 5.3 ‘Financial Risk Management’, indicate that amaterial uncertainty exists that may cast significant doubt on the Group’sability to continue as a going concern. Our opinion is not modified in respectof this matter.

--------------------------------------------

Then 5 or 6 pages of close print follow on how theAuditors did some tests on the Solar contracts, interviewed a few people andare happy that the position is OK.

 

1. This Audit opinion is blatantly absurd and wrong. The Accounts did not show a true and fair view. The correct liabilities on Solar (and maybe other) contracts were not provided for. The auditors need to be sued.
2. Steps need to be taken to recover the $40 million that the ex CEO has taken out of RCR over the last 9 years.
3. The other Directors and certain Senior Executives also need to be sued and remuneration/bonuses recovered, particularly after the recent capital raising.
4. A few years ago I wrote a comment on this website about the fact that the ex CEO had sold off all the assets and that the Balance Sheet comprised mostly Intangibles (which are basically worthless). This state of affairs still existed at 30^th June 2018. Net Assets were $381 million of which Intangibles were $271 million or 71%! This leaves $110 million or 47 cents per share.
5. The fact is that this type of business is inherently risky, particularly when fixed price contracts are involved. You are only ever one contract away from disaster. To mitigate this you need tight cost controls, cost plus contracts (if possible) and a broad range of niche products such as the RCR Apron Feeders.