Basil Read upbeat about prospects, says CEO
07 June 2013
Posted by: Author: Alistair Anderson
Author: Alistair Anderson (Businessdaylive.co.za)
BASIL Read CEO Marius Heyns said at the group’s annual general meeting on Thursday that the construction group would improve on last year’s poor results.
In a vote of confidence in the group’s 2013 financial year, Basil Read on Thursday declared a special gross dividend of R1.75 per share from income reserves, which after the government’s 15% dividend withholding tax will translate into 148.75c for shareholders.
"We are strengthening our order book and being very careful in dealing with projects which involve reliable partners in terms of paying on time," Mr Heyns said. In the year to December, Basil Read recorded an operating loss from continuing operations of R171m, a plunge from 2011’s R205m profit. Two-loss making contracts harmed the group.
Basil Read was slower than its competitors in its order book growth recovering this year, following a slump in activity between 2010 and 2012.
Basil Read’s share price climbed 2% on Thursday to R9.80
But the special dividend was expected by the market, according to an analyst. "The special dividend had been anticipated, but the large provisions for losses on contracts and a possible deal with the Competition Commission were disappointing," said Dirk Noeth, construction analyst at Avior Research.
Basil Read is waiting to finalise its settlement with the Competition Commission. This relates to the price-collusion investigation into the construction industry.
Competitor Aveng said last week it had reached a settlement with the commission which was within its expected range, but it could not disclose the figure until the competition authorities announced it.
Basil Read has provided for a R75m penalty, which equates to 1.36% of its R5.5bn turnover last year. Settlements the commission has announced so far include Raubex’s R58.8m and Stefanutti’s R323m.
The competition authorities are investigating or have investigated some 40 construction companies. The Competition Commission has said the price collusion involved listed constructors and smaller companies. The alleged tender rigging is estimated to be worth at least R30bn.