Johannesburg - Basil Read is making impressive progress with its R4 billion contract to build an international airport on the island of St Helena and is considering opportunities to expand its African operations.

Marius Heyns, the chief executive of the listed construction and engineering group, said yesterday that Basil Read was halfway through the contract and had billed exactly 50 percent of the revenue from the project.

The flagship contract is one of the largest ever awarded to Basil Read. It involves developing the island’s first airport for the St Helena government and the UK Department for International Development in a bid to unlock massive economic opportunity for the British overseas territory.

Work on the airport is due to be completed next year, with Basil Read and partner Lanseria Airport operating the airport for 10 years thereafter.

Heyns said the group’s cargo ship had already made 22 trips between Walvis Bay and St Helena to transport items such as fuel, cement, aggregates, plant and explosives for the project.

He said the project involved a lump sum fixed-price contract, but both Basil Read and the clients had contributed equally to a £10 million (R178m) “risk pot” that they jointly managed. However, Heyns said to date there had not been any claims against it.

Uncertified claims have been a major problem for some of South Africa’s other major listed construction companies on significant projects.

Heyns confirmed that most of the group’s divisions were expanding their operations elsewhere in Africa because of a lack of work and margin compression in South Africa. Many mining and government clients in Africa had approached the company.

The group’s mining division is looking at opportunities in Guinea, Ghana and Mozambique, while fierce competition for fewer tenders at lower margins has resulted in the construction division shifting its focus to other parts of Africa.

The focus on moving into the continent was also starting to bear fruit for the engineering division, with imminent projects and studies for projects in Namibia, Zimbabwe, Mozambique, Guinea, the Democratic Republic of Congo and Zambia.

Yesterday Basil Read reported a significant turnaround to profit in the year to December last year.

Headline earnings a share came in at 88.16c compared with a loss of R1.3084 in the previous year on the back of a 15 percent increase in revenue to R6.3bn.

Operating profit improved to R67.55m from a loss of R170.86m, with net margins from continuing operations improving to 1.6 percent from a negative margin of 3.6 percent.

Group debt was more than halved in the year to R426.4m from R890.4m. This reduced the interest burden, with the group reporting net interest income of R13.7m for the year compared with the R84.7m cost in the previous year.

The cash position improved to R1.2bn from R1bn, largely because of receipt of the R877m proceeds from the disposal of its mining consultancy business TWP to Australian Stock Exchange-listed WorleyParsons.

Heyns said the group’s balance sheet was the strongest it had ever been and its debt to equity ratio had dropped from 18 percent to 13 percent in a single year.

The group’s order book grew by 22 percent to R12.5bn.

Heyns said the past financial year had been one of consolidation and stabilisation.

“With a strong order book, the 52 percent reduction in debt and a substantially stronger balance sheet, we are optimistic the basics are in place for a successful year ahead and the ongoing sustainability and growth of the group,” he said.

Basil Read shares climbed 2.35 percent higher yesterday to close at R8.71, in line with the 2.53 percent rise in the JSE construction index.