Basil Read rounds off a bad year with a loss

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Basil Read rounds off a bad year with a loss

Published Date: 2018-03-28 | Source: Stephen Gunnion | Author: Stephen Gunnion

Basil Read rounds off a bad year with a loss

The construction and engineering group is restructuring, with a planned rights offer and corporate reorganisation

Basil Read expects to report a large loss for 2017 due to impairments, bad debts and losses on some of its projects.

In a trading statement yesterday, the engineering and construction group said its loss per share for the year ended December would widen from 48.7c in 2016 to as much as 775c. It expects to report a headline loss per share of between 768c and 772c, from headline earnings per share of 21.79c the previous year.

Basil Read has faced challenging conditions at its roads and construction divisions due to poor contract margins, limited spending on public-sector infrastructure, low consumer confidence and increased competition.

It said a number of non-recurring items had also impacted earnings, including an impairment of R172 million relating to a deferred tax asset; a goodwill impairment of R88.9 million relating to its roads cash-generating unit; a bad-debt write off of R77 million for defaulting clients; R116 million of losses incurred on its Olifant's River water resource development project; and losses of R152 million at the Port of Ngqura.

In December, the group said it had executed a debt standstill agreement with creditors and guarantors as it restructures the group with a rights offer and corporate reorganisation. The creditors include Aluwani Capital Partners, Credit Guarantee, the Industrial Development Corporation, Investec, Lombard Insurance and Standard Chartered Bank. It committed to implementing its rights offer before the end of May and will set up an insolvency special purpose vehicle as security. If it reneges on its commitments, it said the creditors had the right to cancel the agreement.

Basil Read's shares rose 10% to 22c yesterday. Its results are due for release today.



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