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328m penalty

Reply
Not applicable
OMFW - and they have not made any provisions for this! How on earth are they going to pay this? Rights issue here we come. Rather glad u am not a share-holder
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18 REPLIES 18
Rams
Super Contributor
still too early in the morning for this emotional outburst!
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Nkhweti_Mozambi
Contributor
I am also hoping for the rights issue while still sipping my hot choc.
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SimonPB
Valued Contributor
they have a billion in cash .. penality about 19c/share
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THRESHOLD
Super Contributor
Penalty about R1,80 per share and not tax deductible.; AND they are going to need their cash in this environment. Your maths is going the way of mine. My excuse is: Too many years away from the office.
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SimonPB
Valued Contributor
ah yes I looked at market cap not shares in issue, closer to 200c/share .. yip not deductable, but they have a pile of cash, hence didn't provision for it .. but it gonna hurt however ways
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Not applicable
Simon, construction companies are always boasting about their cash reserves. The reality is that the cash is never really free. They need if for site preparation, equipment purchase and project guarantees. Normally, I think, what they refer to as cash, is usually money sitting in an escrow account and is used as a performance bond or project guarantee. Just look at BSR - they also have over R1bn in cash, but it still didn't stop them from having to sell TWP to meet working capital requirement. So no, I don't think they actually have $320m sitting around - but that is my own opinion only.
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SimonPB
Valued Contributor
you right, but SSK much smaller requirement of the cash .. I interviewed the CEO way back once and said it was mostly unencumbered, but that was when it was R2billion if I recalls correct
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THRESHOLD
Super Contributor
They also need to pay their staff during the slow times - (a) it is difficult to get rid of them and (b) they do need to keep a core compliment for when times turn. They need cash for warranties and, more importantly: you need to look at their advance payments on their contract account to see how much of that "CASH" is really theirs in the first place. This information is not meaningfully disclosed. The contra-entry is usually discreetly included under "general provisions" SSK has a total of R1,6 billion + under "provisions."
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CHATTYCHAT
Super Contributor
This "sitting with cash" is equivalent to the reports of "a multi-millionaire". The blokes have all their assets encumbered - look at the nett value, you'll very often find the guys' are worth nothing or a lot less than a million. To me the acid test always apply - not impressed by cash alone.
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Rams
Super Contributor
Dont know about all this talk about cash reserves but my question is: Why did they not make provisions?
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SimonPB
Valued Contributor
that is the question of most of the industry .. no provision - why not ??
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prancing_horse
Super Contributor
Is making a provision, not an admission of guilt? Maybe retain as much cash as possible and hope that the smack is lighter.
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SimonPB
Valued Contributor
not really, and it seems they all coped a plea and are guilty and happy to admit so .. a provision is just a good idea .. their excuse was hey had no idea the size, maybe fair enough ?
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Rams
Super Contributor
they were very cosy with the tribunal, and possibly expected to get away with almost nothing, so why show it and mess up the financials?
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Rams
Super Contributor
they were very cosy with the tribunal, and possibly expected to get away with almost nothing, so why show it and mess up the financials?
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CHATTYCHAT
Super Contributor
Fair enough - however not with the right amount of due diligence on the part of SSK. They should have calculated and COULD have made some form of provision, being a reflection in part. Guilty they were (very much like JZ guilt) and making a provision would not make them look worse than they were anyway. This link makes for enlightening our thoughts - http://www.compcom.co.za/assets/Uploads/events/SIxth-Annual-Competition-Law-Economics-and-Policy-Con... Earlier Sithole and Fizelle were too happy to sell and make a couple of bucks before the company shares duck below 900c.
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THRESHOLD
Super Contributor
Perhaps it is just that certain interests needed time to dispose of their interest before alerting the market to the scale of the potential fines.
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prancing_horse
Super Contributor
Back to where it was pre penalty announcement.
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