Receivers’ First Report on the State of Affairs of Drymix Cement Limited (in Receivership) Company number: 712922 19 June 2020 Contents Introduction 2 Assets and Liabilities 3 Creditors 4 Appendix A – Assets and Liabilities 6 Receivers First Report Drymix Cement Limited (in Receivership) 19 June 2020 1 Introduction Malcolm Russell Moore and David Ian Ruscoe, of Grant Thornton New Zealand Limited, were appointed jointly and severally as Receivers and Managers (“the Receivers”) of all the assets, property and undertakings of the Company on 21 April 2020. The Receivers were appointed under the powers contained within a General Security Deed dated 25 May 2019 (“the GSD”) issued by ASB Bank Limited. We set out below our first report on the state of the affairs of the abovenamed Company as required by section 23 of the Receiverships Act 1993 (“the Act”). Events leading up to our appointment Following advice that the Company was insolvent, the Company’s shareholders requested that the general security deed holder (“the GSD Holder”) appoint Receivers. Restrictions This report has been prepared by us in accordance with and for the purpose of section 23 of the Act. This report is not intended for general circulation, nor is it to be reproduced or used for any purpose without the liquidators’ written permission in each specific instance. The Receivers, their employees and agents do not assume any responsibility or liability for any losses occasioned to any party for any reason including as a result of the circulation, publication, reproduction or use of this report contrary to the provisions of this paragraph. The Receivers reserve the right (but will be under no obligation) to review this report and, if considered necessary, to revise the report in light of any information existing at the date of this report which becomes known to them after that date. We have not independently verified the accuracy of the information provided to us and have not conducted any form of audit in respect of the Company. We express no opinion on the reliability, accuracy or completeness of the information provided to us and upon which we have relied. Whilst all care and attention has been taken in compiling this report, we do not accept any liability whatsoever arising from this report. The statements and opinions expressed in this report are based on information available and assumptions made as at the date of this report. It is possible that actual outcomes may be significantly different from those disclosed in this report. In addition, the following should be noted:  Certain values included in tables in this report have been rounded and therefore may not add exactly; and  All amounts are stated in New Zealand dollars. Trading on At the date of our appointment the Company operated a bulk cement import and distribution business. The Receivers have continued to trade the business in an effort to realise stock and sell the business as a going concern. Although there are several parties interested in acquiring certain assets, the realisable value is unlikely to be sufficient to cover the indebtedness of the Company. Receivers First Report Drymix Cement Limited (in Receivership) 19 June 2020 2 Assets and Liabilities At the date of our appointment the Company imported and sold bulk cement to concrete companies. The Company operates from a number of leased and third-party storage premises. The Receivers have continued to trade the business in an effort to sell the Company as a going concern. Particulars of Assets and Liabilities The assets of the Company include cement stock, debtors, equipment (debaggers, silos, concrete pads and other equipment) and vehicles (tankers, trucks and forklifts). As at 21 April 2020, the book value of the Company’s assets totalled $9,543,009. We note that $5,822,080 of this balance was owed to the Company by related parties as at 21 April 2020. A significant portion of this debt is owed by Drymix NZ Limited which was placed into Receivership on 8 June 2020 on the basis that it was insolvent. Accordingly, we do not expect the majority of these related party receivables will be collectable. We also note that one of the shareholders of the Company owed the business $173,341 as at 21 April 2020. Several parties have claimed Liens over Company assets held by them at the time of the Receivership. The Receivers are negotiating settlement terms with these creditors to release Company assets held. These settlements will reduce the value of the assets available for realisation. We have attached as Appendix A particulars of the assets and liabilities of the Company as at the date of our appointment. Property Disposed of To Date Since our appointment cement has been sold in the normal course of the business. We have not sold any of the Company’s fixed assets or vehicles at this stage. Proposals for Disposal of Receivership Property We continue to operate the Company with the intention of selling the business as a going concern. We have shared fixed asset and vehicle lists with several interested parties and are hoping to sell these as part of the overall sale process of the Company or to sell these separately. We are not yet in a position to estimate the realisable value of these assets. Discussions and negotiations with interested parties are ongoing. Receivers First Report Drymix Cement Limited (in Receivership) 19 June 2020 3 Creditors Amounts owing to the GSD Holder Set out below are details of the security interests held by the GSD Holder on the Personal Property Security Register: Company Collateral Type ASB Bank Goods – Motor Vehicles, All Present and After Acquired Personal Property Pursuant to the GSD the amount owing at the date of our appointment is $7,329,000 plus default interest. Since our appointment, no repayments have been made and based upon the information available it is unlikely that the GSD Holder will be paid in full. In addition to the amount above the Company guarantees other related party debt with ASB Bank which may be called upon. Other secured creditors Other secured creditors were owed $1,026,253 as at the date of our appointment on 21 April 2020. The following parties had charges registered on the PPSR at the time of our appointment. Company Collateral Type Karcher Limited Goods - Other Heartland Bank Limited Goods - Other Gough Finance Ltd Goods - Other Allied Petroleum Limited Goods - Other BOQ Equipment Finance Ltd Goods - Motor Vehicles TR Group Limited All Present and After Acquired Personal Property; Goods - Motor Vehicles; Goods - Other Oceanbridge Shipping Limited Goods - Other Preferential Creditors The information we have to date indicates that there is an outstanding balance for PAYE totalling $37.5k. We also note that there is likely to be amounts due for GST. Holiday pay entitlements of $30,517 were due to employees. An employee dismissed prior to our appointment, raised a personal grievance claim against the Company in April 2020 for unfair dismissal relating to a pre-appointment dispute with the Company. The investigation meeting is due to take place on 28 July 2020. This could lead to an additional preferential claim against the Company. A dividend to preferential creditors is likely, however, a date has not yet been set for payment. Receivers First Report Drymix Cement Limited (in Receivership) 19 June 2020 4 Unsecured Creditors Based upon information provided to date and advice received from creditors, the amount owed to unsecured creditors as at the date of our appointment was $5,198,968. This is made up of trade creditor balances of $4,832,452 and shareholder current accounts totalling $366,516. Based upon the estimated assets’ realisations, it appears that no funds will be available to meet the claims of unsecured creditors as it is estimated that there will be insufficient funds available to repay the GSD Holder in full. Unsecured creditors may direct their queries and creditors claim forms to the Receivers. Information provided by the Directors The Directors of the Company co-operated fully in making available the information required by the Receivers to complete this report. Should you have any questions about the content of this report, please contact Adele Hicks, on 027 245 6700 or adele.hicks@nz.gt.com. Date: 19 June 2020 Malcolm Russell Moore Receiver Receivers First Report Drymix Cement Limited (in Receivership) 19 June 2020 5 Appendix A – Assets and Liabilities Assets and liabilities as at the date of appointment: 21 April 2020 $ Assets Stock Intercompany receivables Trade debtors Equipment (NBV at 31-Jan-20) Vehicles (NBV at 31-Jan-20) Shareholder current accounts Total assets Liabilities Secured creditors ASB Other secured creditors Total secured creditors Preferential creditors Inland Revenue Holiday pay Court case Total preferential creditors Unsecured creditors Total liabilities Surplus/(deficit) Book value Realisable value 1,411,413 5,822,080 689,049 612,796 834,329 173,341 9,543,009 832,206 Unknown 516,787 Unknown Unknown 173,341 1,522,334 (7,329,000) (1,026,253) (8,355,253) (7,329,000) (1,026,253) (8,355,253) TBC (30,517) TBC (30,517) TBC (30,517) TBC (30,517) (5,198,968) - (13,584,739) (8,385,771) (4,041,730) (6,863,437) Receivers First Report Drymix Cement Limited (in Receivership) 19 June 2020 6 © 2020 Grant Thornton New Zealand Ltd. 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