Basil Read declares headline profit up despite tough trading

Basil Read CEO Marius Heyns said the pleasing results have been achieved despite the tough trading environment in the South African construction sector and the continued slow roll-out of projects.

JSE-listed construction and engineering group Basil Read Holdings (BSR), last week Thursday reported a 196% rise in headline earnings per share to 43.69c for the six months ended June 30 2013.

The company showed return to profitability despite a tough trading environment in the local construction sector‚ Basil Read said in a statement.

The company said operating margins improved to 2.7%‚ the order book increased by 20% to R12.2bn and revenue increased by 10% to R3bn. Total debt decreased by 27% to R639.1m.

This was a marked improvement in the financial results of the group’s operations‚ the company said.

“Despite the prevailing negative sentiment in the South African construction sector‚ the group’s order book increased by 20% to R12.2bn from R10.2bn in the prior six months‚ bolstered by new awards across all the divisions‚” it said.

“Basil Read’s pleasing results have been achieved despite the tough trading environment in the South African construction sector and the continued slow roll-out of projects‚ endemic labour unrest and difficult contractual environment which have proven challenging and have contributed to margins remaining compressed‚” CEO Marius Heyns said.

“Margins in the group’s construction division remained under pressure as loss-making contracts neared completion‚” he said.

“The volatile labour environment in the South African mining industry led to several unprotected strike actions at the group’s mining division sites‚ resulting in decreased productivity. Labour relations continue to be fragile and are being managed on an ongoing basis‚” Heyns said.

“Contractual risk continues to be a concern as routine claims take longer to be resolved which places pressure on cash flows. Liquidity is being further affected by delayed or nonpayment of debtors which is‚ in turn‚ hampering growth‚” he said.