RCR Tomlinson

Sep 15, 2023

that one reason the class action had taken so long to resolve was because the company had “operated two sets of books”. Engineering group RCR Tomlinson had two sets of books showing different pictures of the company’s finances. “I’m not sure that is quite kosher,” he said. The disparity in information that was publicly provided had “implications” for RCR’s insurance policies, Mr Scattini added. Lawyers also had to sort through two million documents. The lawsuit, which was filed in the NSW Supreme Court in 2018 alleging breaches of continuous disclosure laws and misleading and deceptive conduct shortly before the engineering group went into administration, was settled this week. The Pendal Group, Perpetual and Allan Gray were RCR’s top three shareholders at the time of collapse, collectively owning more than 30 per cent of the company. Advertisement The class action alleged that while RCR had systems to monitor the financial performance of solar contracts, which were supposed to be reviewed and reported on monthly, information relating to the contracts was not consistently recorded. It claimed that forecast costs for projects recorded in RCR’s software system, monthly project reports and monthly management accounts did not match the forecast costs recorded in spreadsheets compiled by project managers. The lawsuit cited emails from RCR project managers discussing solar projects. One email sent on January 16, 2018 relating to “Project Gretel” (which included the company’s troubled Daydream and Hayman solar projects) said: “The report shows full 10 per cent margin – this is produced this way as instructed. The cost to complete sheets show significantly different picture, with significant margin loss.” The lawsuit alleged that RCR should have known by late 2017 that it was not on track to achieve budgeted profit margins on several solar projects and that there was a material risk its full-year earnings would be much lower than expected. RCR went into a trading halt in July 2018 that lasted a month. In August 2018 it reported a $57 million write-down on its Daydream and Hayman solar farm projects in northern Queensland (which are now owned by First Sentier Investors ) and launched a $100 million capital raising at $1 a share. When its shares reopened for trading on August 30, 2018, RCR’s stock price fell by more than 60 per cent, dropping to $1.05 from $2.80. It went into a second trading halt on November 12, 2018, following the sudden resignation of its chief financial officer, and filed for administration just over a week later on November 22. It subsequently went into liquidation. Advertisement Mr Scattini said the settlement had been signed this week after long negotiations and “robust” discussions following mediation in August. RCR’s insurers, which have not been disclosed, will pay the settlement costs. A deed of settlement has been signed but still needs to be ratified in court. Jenny Wiggins writes on business, specialising in infrastructure and transport. Connect with Jenny on Twitter . Email Jenny at jwiggins@afr.com Save