Basil Read CEO quits af­ter earn­ings plunge

The Star Early Edition - - COMPANIES - Roy Cokayne

THE CON­TIN­U­ING tough op­er­at­ing en­vi­ron­ment in the con­struc­tion sec­tor yes­ter­day claimed an­other ca­su­alty, with Basil Read chief ex­ec­u­tive and ex­ec­u­tive di­rec­tor Neville Ni­co­lau re­sign­ing from his po­si­tions with im­me­di­ate ef­fect.

The listed con­struc­tion group said yes­ter­day that Ni­co­lau had de­cided to leave the group for per­sonal rea­sons.

How­ever, the res­ig­na­tion an­nounce­ment co­in­cided with Basil Read re­port­ing that it ex­pected a more than 100 per­cent de­crease in earn­ings a share and head­line earn­ings a share for the six months to June.

Basil Read re­ported earn­ings a share of 29.75 cents and head­line earn­ings a share of 48.92c for the six months to June 2016.

The group at­trib­uted the loss in earn­ings to con­tin­ued weak mar­ket con­di­tions for the in­dus­try, op­er­a­tional un­der per­for­mance in its roads di­vi­sion to­gether with con­tin­ued dif­fi­cul­ties in the res­o­lu­tion of claims on an uniden­ti­fied legacy project.

It added that the board had de­cided to re­view the busi­ness with a view to un­der­tak­ing sig­nif­i­cant re­struc­tur­ing of the group to pre­serve share­holder value and that it had en­gaged the ser­vices of a cor­po­rate fi­nance ad­vi­sory firm to as­sist the group in this process.

The group said it would pro­vide fur­ther guid­ance once more cer­tainty was ob­tained.

Most of the ma­jor listed con­struc­tion com­pa­nies re­ported poor fi­nan­cial re­sults in re­cent times be­cause of a tough trad­ing en­vi­ron­ment typ­i­fied by in­tense com­pe­ti­tion and a scarcity of ma­jor con­tracts.

This tur­moil in the con­struc­tion sec­tor has con­trib­uted to­wards the de­ci­sion by listed con­struc­tion and en­gi­neer­ing group Mur­ray & Roberts last year to sell its South African in­fra­struc­ture and build­ing plat­form to the wholly black-owned South­ern Palace Group for R314 mil­lion and listed Group Five an­nounc­ing in Fe­bru­ary that chief ex­ec­u­tive Eric Ve­mer would be leav­ing the com­pany within the next few weeks.

Basil Read has been in dis­cus­sions since July last year about the po­ten­tial pri­vate place­ment of shares that it said would re­sult in the group be­com­ing a black owned com­pany. Its shares dropped 5.42 per­cent on the JSE yes­ter­day to close at R1.57.

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