| Thu 15 Mar 2007, 14:10 | | BSR - Basil Read - Reviewed Results For The Twelve |
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BSR
BSR
BSR - Basil Read - Reviewed Results For The Twelve Months Ended 31 December
2006 and dividend declaration
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
- 88% increase in revenue
- 120% increase in net profit
- 110% increase in headline earnings
- 192% increase in cash on hand
- Order book of R2,3 billion
ROADS AND CIVIL ENGINEERING
OPENCAST MINING
BUILDINGS
DEVELOPMENTS
REVIEWED RESULTS FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2006
SUMMARISED CONSOLIDATED INCOME STATEMENT
Reviewed Audited
12 months 12 months
31 December 31 December
2006 2005
R`000 R`000
Revenue 1 162 198 617 332
Operating profit for the year 53 750 36 426
Profit on sale of associate - 877
Net finance income/(costs) 3 479 (13 195)
Profit for the year after net 57 229 24 108
finance income/(costs)
Profit from associates - 158
Profit for the year before taxation 57 229 24 266
Taxation (2 269) 709
Normal and foreign taxation (4 310) (2 142)
Secondary taxation on companies (19) -
Deferred taxation 2 060 2 851
Net profit for the year 54 960 24 975
Net profit for the year attributable
to the following:
Equity shareholders of the company 54 103 24 975
Minority interest 857 -
Net profit for the year 54 960 24 975
Earnings per share (cents) 93,53 45,31
Fully diluted earnings per share 93,05 45,19
(cents)
SUMMARISED CONSOLIDATED BALANCE SHEET
Reviewed Audited
12 months 12 months
31 December 31 December
2006 2005
R`000 R`000
ASSETS
Non-current assets 215 007 106 933
Property, plant and equipment 176 438 82 293
Intangible assets 10 444 -
Investment property - 1 500
Available-for-sale financial assets 650 170
Investments in associates 66 428
Deferred taxation 27 409 22 542
Current assets 415 941 159 896
Inventories 6 659 1 141
Trade and other receivables 138 764 67 506
Cash and cash equivalents 270 518 91 249
630 948 266 829
EQUITY AND LIABILITIES
Capital and reserves 199 463 33 385
Issued capital 164 537 58 550
Accumulated profit / (loss) 24 430 (29 673)
Other reserves 4 264 4 508
Minority interests 6 232 -
Non-current liabilities 55 775 24 045
Interest bearing borrowings 49 982 22 808
Provisions for other liabilities and 2 818 -
charges
Deferred taxation 2 975 1 237
Current liabilities 375 710 209 399
Trade and other payables 286 102 161 466
Provisions for other liabilities and 52 531 24 394
charges
Current portion of interest bearing 32 996 23 539
borrowings
Bank overdraft 4 081 -
630 948 266 829
STATEMENT OF CHANGES IN EQUITY
Reviewed Audited
12 months 12 months
31 December 31 December
2006 2005
R`000 R`000
Issued capital
Ordinary share capital
Balance at the beginning of the year 58 550 58 264
Issued to Share Incentive Scheme 425 286
(nett of treasury shares)
Clawback offer 105 562 -
Balance at the end of the year 164 537 58 550
Accumulated profit/(loss)
Balance at the beginning of the year (29 673) (54 648)
Net profit for the year 54 103 24 975
Balance at the end of the year 24 430 (29 673)
Other reserves 4 264 4 508
Minority interests 6 232 -
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
Reviewed Audited
12 months 12 months
31 December 31 December
2006 2005
R`000 R`000
Operating cash flow 72 776 60 577
Movements in working capital 70 533 56 918
Net cash generated by operations 143 309 117 495
Net finance income/(costs) 3 479 (13 195)
Dividends paid (75) (52)
Taxation paid (6 421) (376)
Cash flow from operating activities 140 292 103 872
Cash flow from investing activities (40 767) 3 746
Cash flow from financing activities 75 663 (22 361)
Movement in cash and cash 175 188 85 257
equivalents
Cash and cash equivalents at the 91 249 5 992
beginning of the year
Cash and cash equivalents at the end 266 437 91 249
of the year
ADDITIONAL INFORMATION TO THE ANNUAL FINANCIAL STATEMENTS
Reviewed Audited
12 months 12 months
31 December 31 December
2006 2005
Number of shares in issue (`000) 70 720 55 304
Headline earnings per share (cents) 89,62 42,71
Fully diluted headline earnings per 89,15 42,60
share (cents)
Reconciliation of basic earnings to R`000 R`000
headline earnings
Basic earnings 54 103 24 975
Adjusted by
- Profit on sale of associate - (877)
- Profit on sale of property, plant (554) (129)
and equipment
- Fair value gain - investment (1 710) (427)
properties
Headline earnings 51 839 23 542
Reconciliation between weighted
average number of shares and
diluted average number of shares
Weighted average number of shares 57 846 55 126
(`000)
Adjusted by - Share Incentive Scheme 300 140
(`000)
Diluted average number of shares 58 146 55 266
(`000)
Net asset value per share (cents) 282,05 60,37
Capital expenditure for the year 98 548 33 024
(R`000)
Depreciation (R`000) 23 484 19 570
Amortisation of intangible asset 735 -
(R`000)
SUMMARISED CONSOLIDATED SEGMENT REPORT
Roads and civil Opencast
Total engineering mining
R`000 R`000 R`000
Revenue 1 162 198 624 187 274 666
Operating profit 53 750 39 677 5 085
SUMMARISED CONSOLIDATED SEGMENT REPORT (continued)
Developments Buildings
R`000 R`000
Revenue 82 588 180 757
Operating profit 4 011 4 977
Entrenched position as leading black-empowered construction group in South
Africa
Employment created in the year - 649 positions
COMMENTARY
Basis of presentation
The abridged annual financial statements have been prepared in terms of
International Financial Reporting Standards. The accounting policies used in the
preparation of these annual financial statements are consistent with those
applied in the annual financial statements for the year ended 31 December 2005.
The results for the year ended 31 December 2006 have been reviewed by the
group`s auditors, PricewaterhouseCoopers Inc, and the unqualified review report
is available for inspection at the company`s registered office.
Overall review
Building on the strong results recorded at the interim stage, Basil Read has
produced record results for the 12 months to 31 December 2006, reflecting the
foundation laid in 2005 and a favourable economic environment.
The board is proud to report an after-tax profit of R55 million (December 2005:
R25 million), a commendable increase of 120%. Turnover increased by 88% to R1,2
billion (December 2005: R617 million), by far the highest in the group`s 54-year
history. Cash on hand rose to R266 million (December 2005: R91 million). Market
support for our performance has seen our share price rise from R3,89 at the
beginning of the year to R12,60 at the end of the year, convincingly
outperforming both the JSE All Share index and our peers in the construction and
materials sector for the second consecutive year.
New contracts secured during the year totalled R2 billion (December 2005: R1
billion) and the order book at the end of the period is strong at R2,3 billion
(December 2005: R1,3 billion), underpinning our forecasts of sustainable growth.
At the reporting date the group is negotiating additional work worth R1,5
billion that is not included in the order book. Importantly, Basil Read
maintained its category 9 grading from the Construction Industry Development
Board during the year. This prime grading is only accorded to companies capable
of managing contracts exceeding R100 million and places our group firmly among
the industry forerunners in tendering for large-scale projects.
Against increased current and projected activity levels, Basil Read invested in
R99 million worth of new plant (December 2005: R33 million). Ongoing plant
acquisition is guided by prudent assessments of expected activity levels and a
comprehensive maintenance programme to ensure the optimal use of existing plant.
The group has budgeted for R150 million of capital expenditure in 2007.
During the year, the group`s issued guarantees amounted to R320 million
(December 2005: R175 million). These guarantees have arisen in the ordinary
course of business and it is not expected that any loss will arise out of their
issue. The group increased all banking facilities to accommodate expected growth
and at year-end had a guarantee facility of R1 billion in place.
The group`s business is concentrated in the South African market, although work
for selected private clients in sub-Saharan Africa will continue for the
foreseeable future. This focus continues to work well for Basil Read, given
buoyant infrastructure spending in the local market. We believe this trend will
continue beyond the immediate focus on infrastructure to meet targets for 2010.
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 annual 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.
To complement its steady organic growth and scope of operations, the group made
two strategic investments during the review period. Basil Read is now a majority
shareholder in Spray Pave (Pty) Limited, a bitumen supplier and sprayer, and
Stone and Allied Industries Limited, a stone-crushing company, effective 1 July
2006. These acquisitions were internally funded and their results consolidated
into the group`s results for the review period.
Black economic empowerment partners, including Amabubesi Investments (Pty)
Limited, Vuwa Investment (Pty) Ltd and Mquanda Trust, hold 41% of Basil Read. In
addition to the long-standing relationship with our international partner,
Bouygues Travaux Publics SA, the group is well placed to compete in the domestic
construction and materials sector, for the benefit of all stakeholders.
In the second half of the year, Basil Read initiated a clawback offer to
existing shareholders, effectively a fully underwritten rights issue. This
increased the group`s capital base by R105,5 million at a time when the number,
scale and average duration of contracts in all divisions had increased
materially, following a period of low activity levels in the construction and
contract-mining sectors. Being well capitalised enables Basil Read to
effectively manage the inherent financial challenges of the construction
industry, pay regular dividends and raise competitive performance bonds when
required.
Operational review
BUILDINGS
The buildings division continued to grow and secured several new contracts
during the year, including the construction of Paarl Hospital, valued at R200
million. The division started and completed, in eight months, the construction
of three schools in Cosmo City. This design-and-construct project included
furnishing the schools, enabling the Gauteng Education Department to open the
schools in the new year. Good progress on the Grayston Apartments and
renovations to Chris Hani Baragwanath Hospital was made during the year. The
division also completed the extension to our own head offices opened in January
2007.
DEVELOPMENTS
Phase two of Cosmo City, the flagship project in partnership with government, is
progressing well. Given the success of this project, the division is
investigating similar property developments with limited property risk, with
particular emphasis on PPP initiatives.
ROADS AND CIVIL ENGINEERING
The roads and civil engineering division produced outstanding results for the
year and secured numerous contracts, ranging from infrastructure development
with the Coega Development Zone in Port Elizabeth, upgrading of Pier 1 in Durban
harbour in KwaZulu/Natal, road-building in most provinces in South Africa to
marine works at Richards Bay harbour. The division, in partnership with
Bouygues Civil Works, was awarded the contract to build the 2010 Soccer World
Cup stadium in Nelspruit. This is a 24-month contract valued at R810 million.
The empowerment companies, BR-Tsima Construction (Pty) Ltd and Newport
Construction (Pty) Ltd posted good results for the year with Newport securing
two new contracts from the Coega Development Corporation starting in March 2007.
Stone and Allied Industries Ltd and Spray Pave (Pty) Ltd returned to
profitability under the leadership of this division and have recorded
significant growth since becoming members of the Basil Read group.
OPENCAST MINING
The opencast mining division recorded acceptable results after a challenging
year following the termination of a major contract with Lonmin Platinum, outside
Brits. The division is currently negotiating additional monies outstanding
relating to escalation and additional claims relating to a change in scope of
works with Lonmin. The division recognised an additional loss of R4,1 million
during the current year (loss recognised in 2005 - R14 million) on the Lonmin
contract.
The contract with Rossing Uranium in Namibia, secured in the first half, is a
pioneering contract on the existing mine and is progressing well. At year end,
the division in joint venture with local partners was awarded contracts for two
Debswana opencast diamond mines, in Botswana, and remains well positioned to
capitalise on a strong resources market.
The performance of contracts in hand is expected to support improved results for
the division.
The group identified the increased risk of owning specialised mining trucks and
excavators and is currently exploring options to mitigate this risk.
Governance
The directors and senior managers endorse the Code of Corporate Practices and
Conduct as set out in King II. Given the size of the group, the board believes
Basil Read substantially complies with this code as well as the Listings
Requirements of the JSE Limited.
Following the disposal of Metallon Ventures (Pty) Limited`s interest 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 on 5 July 2006.
Dividends
Notice is hereby given that the directors have declared a final dividend of 30
cents per share (2005: R Nil) in respect of the year ended 31 December 2006. In
order to comply with the requirements of STRATE the relevant details are as
follows:
Event 2007
Last date to trade cum-dividend Wednesday, 4 April
Share to commence trading ex-dividend Thursday, 5 April
Record date (date shareholders recorded in books) Friday, 13 April
Payment date Monday, 16 April
No share certificates may be dematerialised or rematerialised between Thursday,
5 April 2007 and Friday, 13 April 2007, both dates inclusive.
Post Balance Sheet Events
After the balance sheet date the company issued 2 058 600 shares to the Basil
Read Share Incentive Trust. No other 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.
Prospects
Basil Read has emerged from a challenging period in recent years as a well
capitalised, appropriately structured and managed group, ideally positioned to
capitalise on buoyant conditions in the construction sector, and the accelerated
programme of infrastructural development under way. Results for the year
underscore the solid base now in place to sustain steady organic and acquisitive
growth ahead.
On behalf of the board
ML Heyns
Chief Executive Officer
15 March 2007
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
Website www.basilread.co.za
Transfer secretaries: Link Market Services South Africa
(Pty) Limited
Sponsor: Sasfin Capital
Auditors: PricewaterhouseCoopers Inc
Date: 15/03/2007 14:10:03 Produced by the JSE SENS Department.
