Construction and engineering group Basil Read has announced a R458.8-million operating loss for the six months ended June 30, compared with a R73.4-million profit for the same period last year.
Revenue from continuing operations declined from R2.5-billion to R2.27-billion.
The Mining and Development divisions delivered a good performance in the six months under review, offset by a significant underperformance in the Construction and Roads divisions.
Acting CEO Khathutshelo (K2) Mapasa said continuing poor trading conditions for the local construction sector and difficulties in claims resolution on distressed legacy projects further impacted the group’s performance.
Mapasa says Basil Read is continuing with an extensive restructuring and capital raising programme, announced in May, in an effort to turn the company around.
Cash flow is of particular concern.
The Industrial Development Corporation (IDC) has approved short-term bridge funding of R61-million as part of a loan of around R150-million to assist the company in meeting existing commitments and implementing a long-term funding strategy, says Mapasa.
It is expected that the balance of the loan will be released in September.
The IDC also granted R90-million in funding support for a new mining contract in Namibia.
Basil Read intends to raise between R200-million and R300-million in gross proceeds through a proposed rights offer and has started with the sale of noncore assets aimed at securing cash of more than R150-million.
Going forward, Basil Read will reposition itself to focus on the divisions that have a consistent history of good margins and strong cash flows, says Mapasa. The group will also tender selectively for projects that allow it to remain competitive and profitable.
Another focus area will be the closing out of remaining distressed projects to reduce overhead costs and improve liquidity.
The Basil Read order book was at R10.7-billion at June 30.
