Outgoing Basil Read CEO Marius Heyns
Construction group Basil Read, which has placed improved project selectivity at the heart of its ongoing turnaround strategy, is working on two new airport developments in the hope of capitalising on the airport-related experience it is gaining currently on the remote south Atlantic island of St Helena.
The JSE-listed group was awarded the £254-million contract in late 2011 to build a 1 850 m concrete runway, a 3 500 m² airport terminal building and associated infrastructure, such as access roads and fuel storage, on an island 2 000 km from the nearest mainland and with no harbour.
Outgoing CEO Marius Heyns, who will step down at the end of May, describes the project as “one of the best managed” he has seen in his three decades of industry experience, 20 years of which has been with Basil Read, where he has been CEO for the past ten years. Des Hughes, who is MD of Basil Read Developments, has agreed to delay his own retirement to give the board time to seek a permanent replacement.
There has been some concern about the South African group having taken on “such a large project so far from home”. But Heyns claims that the project is going well, despite it being fraught with logistical complexities.
Basil Read has a dedicated ship, the NP Glory 4, ferrying human and construction resources to the airport-less island from South Africa. To date, 15 voyages have been completed during which over 30 000 t of cargo, including capital equipment, diesel, sand, cement and explosives, have been transported.
But with St Helena scheduled to receive its first flight in early 2016, Basil Read is keen to replenish its project backlog with additional airport-related work and build on the knowledge gained, including its experience in certifying a new airport.
The group’s current order book stands at R12.5-billion and is dominated by mining, energy, property, and roads contracts, including a toll-road project in Senegal, which is expected to reach financial close in the coming months.
“We are also working on one or two airports to replace the St Helena project in the next two years and I believe the company will be successful on those as well.”
But besides the airport prospects, Heyns, who will begin handing over to Hughes from May 1, is also increasingly sanguine about prospects for increased workflow both in South Africa and the rest of Africa.
“We have submitted tenders valued at R10-billion in the first three months of this year, with total awards of R1-billion materialising,” he reports, adding that he anticipates a pick up in activity after South Africa’s May 7 election.
But selective tendering remains a strategic driver for a company that is still recovering from some lossmaking contracts and rebuilding balance-sheet stability, following a high-debt period.
The group managed to reduce its debt to R426.4-million in 2013, from R890.4-million a year earlier. It also returned to profitability for the year to December 31, 2013, reporting a net profit after tax from continuing operations of R100.5-million, up from a net loss of R196.1-million in 2012.
“There are some very exciting projects that we are targeting and we are poised for organic growth throughout the African continent,” Heyns concludes.