Basil Read battles cash crunch, falls into the red
The construction company is pursuing a range of fundraising initiatives as cash flow becomes 'critically tight'
Construction company Basil Read fell into a loss in the six months to end-June, and the board flagged a "critical" cash-flow situation making it essential to raise new funding.
The group booked an R88.9m write-down of goodwill in the roads division, and increased its provisions.
Basil Read had R174m in cash at the end of the period, down from R219m a year earlier.
It posted a R474m net loss compared with a R34.4m profit a year earlier.
At the operating level, the loss was R458.8m, from a R73.5m profit in June 2016.
A 295.16c headline loss per share from continuing operations compared with headline earnings per share (HEPS) of 53.39c in first-half 2016.
Revenue from continuing operations dipped to R2.3bn from R2.5bn, while the order book grew slightly, to R10.7bn from R10.4bn.
Total provisions grew to about R507m at the end of the six months, from an opening balance of R299m.
The lion’s share of this was R486m in contract provisions — which included R199m "related to onerous contracts".
"Claims on the Olifantsfontein pipeline contract remain difficult and protracted, requiring further provisions for six months trading," Basil Read said in the results statement on Monday.
Employee provisions rose from R1.3m to R20.6m, mainly for employee bonuses.
Foreign exchange movements were in the group’s favour in the first half, to the tune of R5m and compared with an almost R23m foreign exchange loss in the year-earlier period.
"The board recognises that cash flow is critically tight, and that raising new funding is now essential to stabilise the company in the short term, and to meet future operating commitments over the medium to long term," the board said in the statement.
The company said it had approached "select" funders with "largely positive" results. The Industrial Development Corporation (IDC) provided R90m in funding to the mining division; an initial R61m of a R150m short-term bridging facility was secured; and the company is embarking on a rights issue to raise R200m-R300m for longer-term needs.
Basil Read's share price was unchanged at 80c in early trading on the JSE.