Johannesburg - Basil Read is considering a possible equity raise to fund the group’s growth and to expand its operations to selected African countries.
Neville Nicolau, the chief executive of Basil Read, said yesterday that the group’s liquidity was tight but was being closely managed.
A possible equity raise to fund growth was being considered as one of several opportunities available for the group to stabilise its cash position, Nicolau said in a presentation of last year’s results on the company’s webpage.
Nicolau said these other opportunities included the sale of assets, such as investments and development land; the resolution of claims; negotiation of additional banking facilities following the group’s return to profitability; and external funding through a possible of fresh notes in terms of the group’s domestic medium term not programme.
Basil Read last year told Business Report its major legacy claims related to a more than R500 million claim submitted on the R1.35 billion pipelines contract for the Trans Caledon Tunnel Authority; a R68m claim submitted on the R175m contract to prepare an underground mine for Venetia; and claims worth about R220m submitted related to contracts for Eskom at both the Kusile and Medupi power station projects.
Nicolau said the group’s civils division was core to the company and it would be pursuing growth in the marine, energy, water and sanitation sectors and engineering, procurement and construction projects apart from establishing a presence in select sectors in selected African countries. “We will identify and target projects with reputable clients across the African continent.”
Turning to the developments division, Nicolau said the mixed-used integrated housing development model had become the group’s ”licence to operate” and was directly aligned with government’s intention to accelerate housing delivery.
It also generated work for other group construction related divisions and was a strategically important division for the company’s future order book growth, he said.
However, Nicolau said access to funding was required to bring future projects to implementation phase.
Nicolau added the group was actively seeking new development opportunities this financial year “with a view to securing five large scale mixed use integrated developments in the next 10 years”.
The focus of the mining division in this financial year included exploring the possibility of entering regional markets, such as Lesotho, Zambia and Tanzania, and exploring opportunities in new commodity markets, including coal. Nicolau said there was a strategic drive to grow the roads division as a core competency and strengthen its position in the South African market.
This would provide a strong base for the group to expand into other targeted African countries, he said.
Nicolau said the construction industry continued to face various challenges, with margins under pressure, the tender market was competitive and there were liquidity issues, but the South African and African infrastructure need was real and should support the growth.
Basil Read’s strategic focus would remain on the South African market but it was mindful of the opportunities across the African continent.
Nicolau said the group recognised the importance of sustainability of its earnings and in this financial year aimed a repeat of the performance achieved in its last financial year. Basil Read last month reported a return to profitability in the year to December despite revenue from continuing operations contracting by 12 percent to R5.5bn from R6.3bn.
Headline earnings a share improved to 143.87c from the headline loss a share of 298.08c in the previous year.
Shares in Basil Read rose 2.74 percent yesterday to R3.75.