JSE-listed Basil Read’s share price fell by more than 9% on Friday morning as it warned that its earnings for the year ended December 31, 2012, would likely be between 215% and 225% lower than the previous comparable period.
Headline earnings for the year were predicted to be between 185% and 195% lower than in the previous financial year.
The group’s share price fell to a low of R10.75 in early morning trade, but recovered somewhat, trading at R10.99 by 15:30, down 7.26% on Thursday’s close of R11.85.
The group attributed its disappointing performance to several factors, including a nonrecurring noncash charge relating to a recently concluded broad-based black economic-empowerment transaction with SIOC CDT Investment Holdings for an amount of R60.5-million.
In addition, a noncash write-down of R27-million for development land relating to the group’s investment in the Rolling Hills Estate, in Mpumalanga, as well as a charge of R65-million raised in relation to the Competition Commission’s investigation into the construction industry, contributed to the contraction in margin.
“Moreover, difficult trading conditions, particularly in the construction sector, have led to the group incurring substantial losses on certain contracts,” the company said.
During the year, the group’s roads and civils business was challenged by labour unrest, unrealised production targets and unseasonal rain.
Meanwhile, despite having a signed settlement agreement and the receipt of a part payment relating to the outstanding amounts owing by the Free State Provincial Government (FSPG), Basil Read said it was still due payments totalling some R80-million.
“However, the FSPG has confirmed that the outstanding monies will be paid in the province’s next financial year and the group’s expectation is that this will be in May,” it reported.
The group’s order book remained steady at a level of R10.1-billion, adjusted for the sale of subsidiary TWP Holdings to WorleyParsons for a cash consideration of R900-million.
Meanwhile, a special dividend to shareholders for the period equating to R230-million had been approved, with the company declaring a special gross dividend of 175c a share, or 148.75c a share net of 15% dividend withholding tax.
The group’s full-year results would be published on or about March 27.