Cape Town – Basil Read reported on Friday that it had slipped into a loss for the year to the end of December. The JSE-listed construction group pointed to “challenging trading conditions due to limited public sector infrastructure spend, low business and consumer confidence and increased competition” as it recorded a net loss of R53.6 million, down from a profit of R171.2 million the year before. hat translated into a headline loss per share of 21.79 cents, down from a headline profit per share of 120.28 cents.
The company said turnover had edged down slightly, from R5.5 billion to R5.1 billion, with the reduction coming from eliminating loss-making businesses and projects.
It said operating profit of R63.7 million, down from R226.2 million, “includes the final losses on the last distressed contract in the company, where the losses were at least partially subject to the claims process”.
Basil Read said three of its units, developments, mining and St Helena airport project, produced healthy profits. “Good operating performances combined with profitable newly secured work ensured continued solid performances from these three divisions.”
The construction division had been negatively impacted by a R61 million loss on the Olifants River water resource development project during the year.
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And, it added, losses in the roads division were attributable to the slower than expected startup of new projects, additional costs from historically distressed contracts and the suspension of works on the Zambia project.
The company closed its pipelines division, which had generated revenue of R66 million and an operating loss of R32 million in the 2016 financial year, effective December 31 2016.
The loss of R53.6 million, after the deduction of a tax expense of R25.4 million which was incurred arising mainly from profits generated in subsidiary companies domiciled outside of South Africa, also included a loss of R33 million on the sale of SprayPave.
The company said its order book, which had increased from R10.7 billion to R12.3 billion in the period under review, reflected its ability to trade despite challenging market conditions.
“With the Olifants River water resource development project nearing its final handover, Basil Read's operations will be significantly more efficient as this is the final highly distressed contract in Basil Read. The cash drain caused by this project will finally be over and will result in much needed relief going forward.”
No dividend was declared.