Roy Cokayne
construction and engineering group Basil Read continues to scout for work outside South Africa because the recovery in the local construction market is still being hampered by the slow roll-out of projects.
Marius Heyns, Basil Read’s chief executive, said the group was actively exploring niche markets with long-term prospects in infrastructural spending and had secured contracts in Botswana, Namibia, Zimbabwe and the Democratic Republic of Congo (DRC).
Writing in the group’s latest annual report, Heyns said the group’s mining division, a specialist open pit contract mining service provider, had received a letter of intent from Weatherly International to perform contract mining services for the Tschudi copper project in Namibia, subject to Weatherly securing funding.
Heyns said Weatherly had signed a term sheet with a finance provider and mining activities were set to commence early next year.
He said the group’s property development division had also embarked on a growth strategy to look at opportunities across the continent and a range of strategic partnerships had been established with financiers, housing development agencies and other developers with the aim of establishing and growing the group’s footprint “in a measured way”.
Heyns said the division was exploring a range of housing development opportunities in Zambia, Rwanda and Kenya with further possibilities in Ghana and Tanzania.
The group had also made impressive headway during the year in constructing an international airport on the island of St Helena, which was one of the largest projects ever awarded to the group.
The St Helena government and the UK Department for International Development in 2011 allocated R3.5 billion to develop the island’s first airport in a bid to unlock massive economic opportunity for the British overseas territory.
Work on the airport is due to be completed in 2015, with Basil Read and partner Lanseria Airport operating the airport for 10 years thereafter.
Heyns said the local construction sector continued to be hampered by the slow roll-out of projects. Despite a steady improvement in margins, competition remained fierce and many large construction groups were securing the bulk of their order books beyond South Africa’s borders.
He said tender activity in the building division had picked up and the news that SA National Roads Agency’s 2013 budget was approved at more than R10bn was positive.
Heyns said the bitumen supply shortage in the country contributed to the losses incurred by the group’s roads division and highlighted the need to secure consistent supply.
Basil Read’s wholly owned subsidiary, SprayPave, was establishing a bitumen reactor plant in the Western Cape that would enable the group to produce various grades of bitumen for its own sites and to support the sector, he said. The plant was expected to be operational in the second half of this year.
Heyns said the government had reaffirmed its commitment to a large-scale infrastructure investment programme, which boded well for the group’s construction division.
The shares rose 2.08 percent to R9.80 after Basil Read said its special gross dividend of R1.75 a share and all other resolutions had been passed at yesterday’s annual general meeting.