Finweek English Edition - - INVESTMENT - Si­mon Brown

Racec seems to have run into se­ri­ous trou­ble with re­gard to get­ting paid for work com­pleted in Sierra Leone. Back in April it in­formed the mar­ket that some $11m was be­ing dis­puted and it had se­cured a short-term loan of R40m to tide it over. Now it has in­formed the mar­ket that it’s talk­ing to lawyers so now the sit­u­a­tion has truly be­come messy. This dis­pute will no doubt have a sig­nif­i­cant neg­a­tive im­pact on Racec’s re­sults and maybe even the go­ing con­cern of the com­pany. I have of­ten ques­tioned the sta­tus of or­der books touted by con­struc­tion com­pa­nies and it seems that this re­ally is one in­dus­try that prof­its should only be counted when they’re ac­tu­ally in the bank. This also il­lus­trates the risks in­her­ent within smaller listed com­pa­nies: just one client not pay­ing or a trou­bled con­tract can se­ri­ously dam­age, if not sink, a stock. si­monb@fin­


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