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Basil Read Holdings Limited - Audited Results For The Year Ended 31 December
2003
Basil Read Holdings Limited
Share Code: BSR
ISIN: ZAE000029781
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2003
SUMMARISED Audited 2003 Audited 2002
CONSOLIDATED INCOME R"000 R"000
STATEMENT
Revenue 540,674 612,128
Operating profit for 10,440 31,291
the year
Profit on sale of 28,412 -
unlisted investment
Dividends received 1,007 1,043
Net finance income / 14,109 (11,191)
(costs)
Profit for the year 53,968 21,143
after net finance
income / (cost)
Losses from (3,261) (1,116)
associates
Profit for the year 50,707 20,027
before taxation
Taxation (10,597) (8,392)
Normal and Foreign (3,190) (1,440)
Taxation
Deferred taxation (7,407) (6,952)
Profit for the year 40,110 11,635
after taxation
Minority interests 219 (1)
Net profit for the 40,329 11,634
year
Depreciation for the 36,291 24,116
year (R"000)
Number of shares in 55,100 55,100
issue (`000)
Earnings per share 73.19 21.11
(cents)
Headline earnings per 18.08 8.74
share (cents)
Fully diluted 69.71 20.11
earnings per share
(cents)
Fully diluted 17.22 8.32
headline earnings per
share (cents)
Reconciliation of
basic earnings to
headline earnings
Basic earnings 40,329 11,634
Adjusted by - Profit (3,981) (6,821)
on sale of property,
plant and equipment
- Profit on sale of (26,385) -
unlisted investment
Headline earnings 9,963 4,813
Reconciliation between weighted average number of shares and
diluted average number of shares:
Weighted average 55,100 55,100
number of shares
Adjusted by - Share 2,755 2,755
Incentive Scheme
Diluted average 57,855 57,855
number of shares
STATEMENT OF CHANGES Audited 2003 Audited 2002
IN EQUITY R"000 R"000
Issued capital
Ordinary share 58,264 58,264
capital at beginning
and end of year
Other reserves
Foreign currency
translation reserve
Balance at end of 2,671 (4,586)
year
Balance at beginning (4,586) (16,390)
of year
Movement for the year 7,257 11,804
Cash flow hedge
reserve
Balance at end of - 15,363
year
Balance at beginning 15,363 -
of year
Movement for the year 15,363 15,363
2,671 10,777
Accumulated profit /
(loss)
Balance at beginning (10,551) (22,185)
of year
Movement for the year 40,329 11,634
Balance at end of 29,778 (10,551)
year
SUMMARISED Audited 2003 Audited 2002
CONSOLIDATED BALANCE R"000 R"000
SHEET
ASSETS
Non-current assets 160,851 210,828
Property, plant and 126,072 125,395
equipment
Investment property 2,516 5,116
Investments 180 47,327
Investments in 18,035 11,535
associates
Deferred taxation 14,048 21,455
Current assets 188,720 275,620
Inventories 923 2,972
Contract debtors and 103,600 204,890
other receivables
Cash and cash 84,197 67,758
equivalents
349,571 486,448
EQUITY & LIABILITIES
Capital & reserves 90,713 58,490
Issued capital 58,264 58,264
Accumulated profit / 29,778 (10,551)
(loss)
Other reserves 2,671 10,777
Minority interests (723) (504)
Non-current
liabilities
Interest bearing 12,098 72,913
borrowings
Current liabilities 247,483 355,549
Trade and other 145,768 282,192
accounts payable
Provisions 8,103 12,754
Current portion of 93,612 56,288
interest bearing
borrowings
Bank overdraft - 4,315
349,571 486,448
Net tangible asset 164.63 106.15
value per share
(cents)
Capital expenditure 47,838 73,674
for the year (R"000)
SUMMARISED Audited 2003 Audited 2002
CONSOLIDATED CASH R"000 R"000
FLOW STATEMENT
Net cash (utilised) / (12,904) 62,178
generated by
operations
Taxation received / 5,034 (1,706)
(paid)
Investment income 1,007 1,043
Net finance income / 14,109 (11,191)
(costs)
Cash flow from 7,246 50,324
operating activities
Cash flow from 36,999 (58,416)
investing activities
Cash flow from (23,491) 12,913
financing activities
Movement in cash & 20,754 4,821
cash equivalents
Cash & cash 63,443 58,622
equivalents at the
beginning of the year
Cash & cash 84,197 63,443
equivalents at the
end of the year
SUMMARISED Audited 2003 Audited 2002
CONSOLIDATED SEGMENT R"000 R"000
REPORT
TotalR"00 LocalR"000 InternationalR"00
0 0
Revenue 540,674 370,206 170,468
Operating profit 38,852 26,722 12,130
after profit on sale
of unlisted
investments
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2003
COMMENTARY
These preliminary results have been compiled in accordance with statements of
Generally Accepted Accounting Practice and in the manner required by the fourth
schedule of the Companies Act of South Africa. PricewaterhouseCoopers Inc"s
unmodified independent audit report on the 31 December 2003 preliminary results,
is available for inspection at the group"s registered office.
The same policies and methods of computation have been used in the preparation
of these preliminary audited results as were used in the preparation of the
audited financial statements for the year ended 31 December 2002. Certain
comparative figures have been restated to bring them in line with AC 135
Investment Properties and the reclassification of bank overdraft. The
calculation of headline earnings presented is based on the interpretation of
Circular 7/2002, Headline Earnings, issued by the South African Institute of
Chartered Accountants.
OVERALL REVIEW
As per the Trading Statement and Cautionary Announcement published on 5 February
2004, the group"s results are better than expected with an increase of R30.7
million in pre-tax profit when compared to the same period last year. This is
primarily due to the profit of R28.4 million realised on the sale of the group"s
investment in TRAC (Trans African Concessions (Pty) Ltd) and a gain on forward
exchange contracts of R28.1 million included in net finance income of R14.1
million.
In 2003, Basil Read did not escape the trend of challenging cross border
contracts. On 2 October 2003, the group was reluctantly compelled to terminate a
road contract in Mozambique due to lengthy payment delays by the employer. These
have subsequently largely been settled with the full financial impact of this
termination having been provided for in the period under review. This courageous
action served to protect the shareholders interests and has mitigated the
potential negative impact on the group"s trading results.
Similarly as reported in the audited results published for 31 December 2002,
Basil Read"s activity was low in relation to its overheads for the period under
review. A strategic decision to reposition the group was taken during 2003,
resulting in the overhead structure being addressed in the last quarter of the
year. This decision has resulted in the group being able to improve its
competitiveness, the benefit of which is evident by the group"s improved result
during tendering.
We have continued to invest in plant and equipment in support of new contracts.
Since year-end, Basil Read has secured contracts in the amount of R413 million.
At the reporting date, Basil Read had issued guarantees in the amount of R275.6
million (2002: R217.5 million). It is not expected that any loss will arise out
of the issue of these guarantees.
BORROWINGS
Included in the current portion of interest bearing borrowings is a loan with
the group"s holding company of R45 million. The loan was settled in full in
January 2004.
OPERATIONAL REVIEW
The Opencast Mining Division continues its satisfactory performance. Highlights
for 2003 include having secured its fourth contract for the open pit mining of
the UG2 reef for Lonmin Platinum, and the conclusion of the ramp-scavenging
contract for Palabora Mining Company in December 2003.
The Roads Division continues to operate successfully with two of its contracts,
namely N3 Hilton Rehabilitation and Bethal P30-1 Portion D concluding in the
latter part of 2003. Operations continue on the upgrade of a section of the N4
Toll Road in Mozambique, as well as the rehabilitation of a 116 kilometres of
road in the Caprivi Strip near Katimo Mulilo in Namibia.
The Building Division completed the next phase of a housing development in
Alexandra in the second half of 2003, and is currently, along with our
empowerment partners, active on the construction of a hospital in the Eastern
Cape.
Basil Read continues its empowerment initiatives with the group"s empowerment
partners enjoying steady growth. There are a number of contracts in operation
with the group"s partners, namely: four road projects of which three are in the
Eastern Cape and one in the Limpopo Province and the construction of the
aforementioned hospital in the Eastern Cape.
Highlights regarding accolades for 2003 are as follows:
- OHSAS 18001:1999 Certification for Safety, accredited by SGS
- Gauteng Master Builders Association (GMBA) Five Star Safety Ratings for
Palabora and Eastern Platinum mining projects
- First Place in the GMBA"s Safety Competition for Palabora Mining Company
- Palabora Mining Company"s General Manager"s Safety Award
- BHP Biliton Award for Highest Safety Rating (amongst 40 contractors), Hillside
Aluminium Smelter project.
PROSPECTS
The 2004 year has had a promising start with the group"s Roads Division having
secured projects in the Limpopo Province and in Uganda, and with further
prospects nearing finalisation for the Opencast Mining Division in Botswana. On
the Civil Engineering side, the group is a member of a consortium (Odebrecht,
Basil Read, Ceccon) who has been pre-qualified as one of three tenderers on the
Berg River Dam project in the Western Cape. The Building Division has enjoyed
success in penetrating the KwaZulu Natal market having secured its position on a
design-and-build basis for a number of residential estates. The Division has
also achieved co-developer status for a large shopping centre currently in the
financial closure phase.
The group continues its strategic drive into Africa, with prospects currently
being pursued in Kenya, the Democratic Republic of Congo, Botswana, Mozambique
and Angola.
GOVERNANCE
Basil Read endorses the recommendations of the King Commission and strives to
comply with the recommendations in a manner which is appropriate having regard
to the size of the group. The board comprises of two executive directors and six
non-executive directors who are all employed by the group"s holding company.
Non-executive directors, Ms N Canca and Mr PAR Marien, and an executive director
Mr AJ Coy resigned from the board during the period under review. Non-executive
appointments to the board were Mr JM Kiviatkowski and Mr O Montfort. On 1 April
2003, Mr CJ Gazaignes (chief operating officer, Bouygues Travaux Publics) was
appointed as chairman to align Basil Read with the King II Report
recommendations regarding the functions of chairman and chief executive.
DIVIDENDS
A dividend of 80 cents per share has been declared. In order to comply with the
requirements of STRATE the relevant dates are:
Event Date
Date of declaration Thursday, 4 March 2004
Last day to trade cum-dividend Thursday, 10 June 2004
Shares to commence trading ex-dividend Friday, 11 June 2004
Record date (date shareholders
recorded in books) Friday, 18 June 2004
Payment date Monday, 21 June 2004
No share certificates may be dematerialised or rematerialised between Friday, 11
June 2004 and Friday, 18 June 2004, both dates inclusive.
POST BALANCE SHEET EVENT
No material events have occurred between the balance sheet and the date of the
preliminary results that would have an effect on the financial statements.
By order of the Board
A Bernardo
4 March 2004
Directors: CJ Gazaignes * (Chairman), A Bernardo (Chief Executive Officer); A
Brunet *; BEG Johansson; JM Kiviatkowski *; O Montfort *, HP Maury *; OM Racine
*; ( French; * Non-executive)
Group Secretary: HJ Power
Registered office: Block D, Gillooly"s View Office Park, 5 Osborne Road,
Bedfordview, 2008
Transfer Secretaries: Computershare Limited
Sponsor: Bridge Capital Services (Pty) Limited
Auditors: PricewaterhouseCoopers Inc
Date: 05/03/2004 07:00:18 AM Produced by the JSE SENS Department
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