| Wed 16 Aug 2006, 16:26 | | Basil Read - Unaudited Results For The Six Months |
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BSR
BSR
Basil Read - Unaudited Results For The Six Months Ended 30 June 2006
Basil Read Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 1984/007758/06)
("Basil Read" or "the group")
ISIN: ZAE000029781
Share code: BSR
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2006
www.basilread.co.za
- 239% Increase in earnings per share
- 99% Increase in revenue
- 443% Increase in cash resources
Summarised consolidated income statement
Unaudited Unaudited Audited
6 months 6 months 12 months
30 June 30 June 31 Dec
2006 2005 2005
R"000 R"000 R"000
Revenue 505 675 254 435 617 332
Operating profit for the
period 19 630 12 155 36 426
Profit on sale of associate - - 877
Amortisation of intangible
asset (568) - -
Net finance income/(costs) 4 384 (6 145) (13 195)
Profit for the period after
net finance income/(costs) 23 446 6 010 24 108
Profit from associates - 148 158
Profit for the period before
taxation 23 446 6 158 24 266
Taxation (2 817) (224) 709
Normal and foreign taxation (2 739) (224) (2 142)
Deferred taxation (78) - 2 851
Profit for the period after
taxation 20 629 5 934 24 975
Profit for the period
attributable to the following:
Equity shareholders of the
company 20 233 5 934 24 975
Minority interest 396 - -
Net profit for the period 20 629 5 934 24 975
Ordinary dividends
per share (cents) - - -
Earnings per share (cents) 36,54 10,77 45,31
Fully diluted earnings
per share (cents) 36,27 10,77 45,19
Summarised consolidated balance sheet
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2006 2005 2005
R"000 R"000 R"000
ASSETS
Non-current assets 137 868 114 483 106 933
Property, plant and equipment 111 783 79 162 82 293
Investment property 1 500 1 000 1 500
Investments 170 180 170
Investments in associates - 15 397 428
Contract-based intangible
asset 1 873 - -
Deferred taxation 22 542 18 744 22 542
Current assets 250 093 83 819 159 896
Inventories 4 929 464 1 141
Trade and receivables 142 443 64 433 67 506
Cash and cash equivalents 102 721 18 922 91 249
387 961 198 302 266 829
EQUITY AND LIABILITIES
Capital and reserves 55 341 13 086 33 385
Issued capital 58 746 58 264 58 550
Accumulated loss (9 440) (48 714) (29 673)
Other reserves 5 172 3 536 4 508
Minority interest 863 - -
Non-current liabilities 31 115 24 657 24 045
Interest-bearing borrowings 29 516 24 285 22 808
Deferred taxation 1 599 372 1 237
Current liabilities 301 505 160 559 209 399
Trade and accounts payable 245 704 123 616 161 466
Provisions 24 891 18 362 24 394
Current portion of
interest-bearing borrowings 30 910 18 581 23 539
387 961 198 302 266 829
Statement of changes in equity
Unaudited Unaudited Audited
6 months 6 months 12 months
30 June 30 June 31 Dec
2006 2005 2005
R"000 R"000 R"000
Issued capital
Balance at the beginning of
the period 58 894 58 264 58 264
Issued during the year to
Share Incentive Scheme - - 630
58 894 58 264 58,894
Shares held as treasury stock (148) - (344)
Balance at the end of the
period 58 746 58 264 58 550
Accumulated loss
Balance at the beginning of
the period (29 673) (54 648) (54 648)
Net profit for the period 20 233 5 934 24 975
Balance at the end of the
period (9 440) (48 714) (29 673)
Other reserves
Foreign currency translation
reserve
Balance at the beginning
of the year 4 508 2 917 2 917
Movement for the period 664 619 1 591
Balance at the end of the
period 5 172 3 536 4 508
Minority interest
Balance at the beginning of
the period - - -
Acquisition of subsidiary 467 - -
Net profit for the period 396 - -
Balance at the end of the
period 863 - -
Additional information to the annual financial statements
Unaudited Unaudited Audited
6 months 6 months 12 months
30 June 30 June 31 Dec
2006 2005 2005
Number of shares in
issue ("000) 55 444 55 100 55 304
Headline earnings per
share (cents) 36,54 10,79 42,71
Fully diluted headline
earnings per share (cents) 36,27 10,79 42,60
Reconciliation of basic
earnings to headline
earnings (R"000)
Basic earnings 20 233 5 934 24 975
Adjusted by
- Profit on sale of property,
plant and equipment - (160) (129)
- Profit on sale of associates - - (877)
- Fair value gain - investment
property - - (427)
- Other items - 170 -
Headline earnings 20 233 5 944 23 542
Reconciliation between weighted
average number of shares and
diluted average number of
shares ("000)
Weighted average number of
shares 55 374 55 100 55 126
Adjusted by - Share Incentive
Scheme 407 - 140
Diluted average number of
shares 55 781 55 100 55 266
Net asset value per
share (cents) 99,81 23,75 60,37
Capital expenditure for
the period (R"000) 36 185 26 981 33 024
Depreciation for the
period (R"000) 9 042 10 133 19 570
Summarised consolidated cash flow statement
Unaudited Unaudited Audited
6 months 6 months 12 months
30 June 30 June 31 Dec
2006 2005 2005
R"000 R"000 R"000
Operating cash flow 28 672 22 063 54 315
Movements in working capital (1 343) 16 268 56 918
Net cash generated by
operations 27 329 38 331 111 233
Net finance income/(costs) 4 384 (6 145) (13 195)
Dividends paid - - (52)
Taxation paid (3 563) (224) (376)
Cash flow from operating
activities 28 150 31 962 97 610
Cash flow from investing
activities (30 953) (10 817) (7 905)
Cash flow from financing
activities 14 275 (8 215) (4 448)
Movement in cash and cash
equivalents 11 472 12 930 85 257
Cash and cash equivalents at
the beginning of the period 91 249 5 992 5 992
Cash and cash equivalents at
the end of the period 102 721 18 922 91 249
Summarised consolidated segment report
Civil
engineering Building
and opencast and
Total mining structures
R"000 R"000 R"000
Revenue 505 675 396 633 109 042
Operating profit 19 630 17 588 2 042
Commentary
These condensed consolidated interim financial statements have been prepared
in accordance with International Financial Reporting Standards ("IFRS"),
IAS34: "Interim Financial Reporting", the South African Companies Act, as
amended, and the JSE Listings Requirements. The principal accounting
policies used in the preparation of the unaudited results for the period
ended 30 June 2006 are consistent with those applied for the year ended 31
December 2005 and for the unaudited results for the six months ended 30 June
2005 in terms of IFRS.
Overall review
The group has experienced good growth in the six months ended 30 June 2006
largely as a result of the foundations laid in 2005 and the encouraging
economic environment it operates in. The restructuring undertaken in 2005
has been satisfactorily bedded down leaving the group well positioned to
focus on its core business and strengths, clearly demonstrated by the highly
satisfactory results.
The board is proud to report an after-tax profit of R20,2 million (June
2005: R5,9 million), a healthy increase of 241%. Turnover almost doubled to
R505,7 million (June 2005: R254,4 million), a record level for Basil Read.
Cash on hand grew to R102,7 million (June 2005: R18,9 million).
The group was awarded new contracts during the period under review in the
amount of R1,5 billion (June 2005: R280 million) and the order book is
currently at a sound level of R2 billion (June 2005: R865 million).
As a result of the increased business activity and in support of new awards,
new plant to the value of R36,2 million (June 2005: R27,0 million) was
invested in. As the group expands and in anticipation of increased future
activity, further plant will be sought. The group continued with its
preventative maintenance programme which has contributed positively to the
optimal use of plant.
At the end of the period under review the group had issued guarantees in the
amount of R275 million (June 2005: R131 million). These guarantees have
arisen in the ordinary course of business and it is not expected that any
loss will arise out of the issue of these guarantees.
The group continues to focus on the South African market, although work for
selected private clients in sub-Saharan Africa will continue for the
foreseeable future. This strategy has worked extremely well for Basil Read,
especially given the increased level of infrastructure spend in the local
market. This trend is set to continue as government expenditure is gaining
momentum.
Despite the high level of organic growth being experienced, the group
monitors opportunities for expansion through acquisition. In light of this,
Basil Read increased its shareholding in two associate companies, BR-Tsima
Construction (Pty) Limited and Newport Construction (Pty) Limited, to 51%.
These subsidiaries have been consolidated into the interim results, giving
rise to a contract-based intangible asset, which will be amortised over the
period of the longest existing contract at date of acquisition.
The group has also made strategic purchases of majority shareholdings in
Spray Pave (Pty) Limited, a bitumen supplier and sprayer, and Stone and
Allied Industries (Pty) Limited, a stone crushing company, effective 1 July
2006. These acquisitions were funded out of cash resources on hand. The
results of these two businesses will be consolidated into the group"s
results for the year ended 31 December 2006. The acquisition of these two
companies is expected to further enhance and complement the Basil Read
operations.
Following the departure of Metallon Ventures (Pty) Limited as a shareholder
and the subsequent increase in shareholding by Amabubesi Investments (Pty)
Limited, as well as the acquisition of approximately 5% of the issued share
capital by Mquanda Trust, the group is currently 41% held by Black Economic
Empowerment partners. Basil Read considers this a satisfactory level of
investment at this stage of the group"s development.
Clawback offer
Shareholders are hereby notified that the board of directors has resolved to
proceed with a clawback offer to existing shareholders ("clawback offer").
A clawback offer effectively amounts to a fully underwritten rights offer.
The clawback offer proceeds are paid to the company by certain subscribers
against the conditional allotment of new shares in the company. The clawback
offer then affords Basil Read shareholders the opportunity to "claw back"
shares thus allocated through an entitlement to subscribe for such shares
from the company in proportion to their existing shareholding or to sell or
renounce such rights. Shares not acquired pursuant to the clawback are
issued to the subscribers. The directors are expecting to increase
shareholders" funds by more than R100 million.
The purpose of the clawback offer is to increase the shareholder funds of
the group at a time during which the number, scale and average duration of
contracts in all of Basil Read"s divisions have increased materially,
following a previous cycle of low activity levels in the construction and
contract mining sectors. Details of the claw back offer will be announced
in due course.
Operational review
Buildings
The buildings division continued to prosper and secured a number of new
contracts in the period under review. The new contracts include the
construction of Paarl Hospital, valued at R200 million, and Vredenburg
Shopping Centre, valued at R179 million.
Cosmo City, the flag ship project in partnership with government, is
progressing well. Work on phase two is currently well under way. Given the
success of this project, the division is currently investigating similar
property developments with limited property risk.
Roads and civils
The roads and civils division continued to produce outstanding results and
secured numerous new awards. Of these, the significant contracts include the
construction of MR435 in the Coega Development Zone in Port Elizabeth with a
value of R150 million as well as the Musina contract, valued at R65 million.
The expansion to Berth 306 Richards Bay Coal Terminal is progressing well
and the division recently secured the contract at Pier 1 Durban Harbour at a
value of R227 million.
June saw the launch of Amakosi Stadium for Kaiser Chiefs in Krugersdorp.
Basil Read is the appointed contractor and work is expected to commence in
the latter part of 2006. This award is currently not included in the group"s
order book.
Opencast mining
The contract with Lonmin Platinum, outside Brits, has come to an end. The
contract with Gallery Gold, the Australian mining house, in Botswana
continues to perform well. In addition, the division secured the contract
with Rossing Uranium in Namibia and work commenced in May 2006.
Prospects
The favourable economic environment has translated into real growth for
Basil Read and this is expected to continue for the foreseeable future.
Government is delivering on its promise of increased infrastructure
spending, evidenced by the increased volume of tenders.
The increased cash holding as a result of the clawback offer will support
the group"s expansion programme and enable it to make full use of the
opportunities in the construction industry. The strong growth experienced by
Basil Read in the last few months is expected to continue in the mid- to
long-term.
The group feels that the high level of investment by Black Economic
Empowerment partners not only shows confidence in the group"s future, but
also ensures that the group is well positioned to take advantage of the
current upswing in the construction industry.
Governance
The directors and senior managers of the group endorse the Code of Corporate
Practices and Conduct as set out in the King II Report on Corporate
Governance. Having regard for the size of the group, the board is of the
opinion that the group substantially complies with the Code as well as the
Listings Requirements of the JSE Limited.
Following the disposal by Metallon Ventures (Pty) Limited of its
shareholding in the group, non-executive directors Mr A J Reve and Mrs N H
Maliza resigned from the board and were replaced by Messrs S Ntsaluba and T
Tlelai. Messrs C Davies and L Peteni were appointed as independent non-
executive directors with effect from 5 July 2006.
Dividends
The board has reviewed the current period"s results together with the
forecasts for 2006/7 and has decided not to declare a dividend for the
period under review but rather retain the cash reserves for future growth
and expansion.
Post-balance sheet events
No material events have occurred between the balance sheet date and the date
of these results that would have a material effect on the financial
statements of the group.
On behalf of the board
M L Heyns
16 August 2006
Chief Executive Officer
Directors: B T Ngcuka* (Chairman), M L Heyns (Chief Executive Officer), L B
Dyosi*, S Ntsaluba*, T Tlelai*, C Davies*#, L Peteni*#
*Non-executive #Independent
Group Secretary: E Kruger
Registered office: 388 Gild Road, Lilianton, Boksburg, 1459
Transfer secretaries: Link Market Services South Africa (Pty) Limited
Sponsor: Bridge Capital Services (Pty) Limited
Auditors: PricewaterhouseCoopers Inc
Date: 16/08/2006 04:26:15 PM Produced by the JSE SENS Department
