Construction company Basil Read last week announced that it had crashed to loss of R820.9 million for the year to December compared with a profit of R281.5m in the previous year.
Key factors that hit the firm’s profits was a R603.46m loss related to the Competition Commission, impairment of goodwill and write down of development land.
“A challenging construction sector, difficult contractual environment and poor operational performance have contributed to Basil Read reporting poor results for the 2014 financial year. Loss-making contracts across all construction disciplines, coupled with a struggling engineering division, have overshadowed stable performances by the mining and developments divisions,” Basil Read said in a statement.
The group’s revenue climbed 4.6 percent to R6.5 billion in its latest year up from R6.2bn in the previous year. It reported a headline loss per share of 362.08c compared with headline earnings per share of 86.99c. The firm’s cash at the end of December fell to R836m down from R1.202bn at the end of December 2013.
The fall in Basil Read’s cash balances was attributed to the company having to fund loss-making contracts.
All of Basil Read’s four divisions sustained annual losses. The construction division reported an operating loss of R733m compared with an operating profit of R12m in the previous year. At the mining unit, the operating loss was R6.159m from R58.9m operating profit previously. The firm’s developments division sustained an operating loss of R80.6m from an operating loss of R22.6m in the previous period. The engineering unit took a R103m operating loss compared with a profit of R618 000.
Turning to the outlook, Basil Read said it was of utmost importance that the company completed loss-making contracts as quickly as possible.
“At R10.5bn, the order book is satisfactory and we will focus on at least maintaining the order book at this level. Construction work in excess of R3bn will be realised as the company continues its large-scale integrated housing developments,” the company added.
Basil Read shares ended Friday unchanged at R2.40.