Basil Read


On the ball
Chris Erasmus tells Gay Sutton how Basil Read is bucking the trend and going through a period of expansion, boosted by work for the 2010 World Cup and South AfricaÔÇÖs investment in infrastructure.
With the Football World Cup only a year away, individual players, national teams, football fans, businesses and communications companies around the globe are gearing up for the 2010 extravaganza celebration. In South Africa, however, the preparations to host the worldÔÇÖs biggest single-sport event have been under way for almost five years, more or less since the moment on 15 May 2004 that FIFAÔÇÖs president, Sepp Blatter, announced that the aptly named ÔÇ£Rainbow NationÔÇØ had won the bid to host the games.

Pressure has been mounting on South African authorities and businesses tasked with providing the all-important infrastructure for the games. Nine cities around the country were chosen as venues, and they began preparing a total of 10 international-sized football stadiums. Five of these are to be complete new builds, while the remaining five are existing stadiums that are being upgraded.
One of the companies feeling the pressure is Basil Read, a construction company contracted to build Mbombela (a SiSwati word meaning ÔÇ£many people together in a small spaceÔÇØ) Stadium, in Nelspruit, Mpumalanga (ÔÇ£where the sun risesÔÇØ) Province. Under time constraints from the start, the R809 million construction project broke ground in February 2007 and looks set to be completed by the end of September. The project has not progressed without incident, though: a freak storm in 2008 resulted in the collapse of a tower crane. But in spite of the setback, the massive 46,000-seat stadium is on schedule, under budget and will be handed over well ahead of the event.
Headquartered in Boksburg, Gauteng Province, Basil Read is a well-established South African construction company with a history dating back to 1952, operating through three divisions: Construction, Development and Mining.
The Development Division is involved in the construction, development and project management of integrated housing schemes and other property-related developments, while the Mining Division undertakes contract open-cast mining, mine spoils rehabilitation, bulk earthmoving, seam mining, hard-rock selective mining and materials handling. The Mining section currently operates one contract in Botswana and one in Namibia.
The Construction Division, which is responsible for delivering Mbombela Stadium, is divided into three subdivisions engaged in civil engineering, road construction and building. ÔÇ£We are involved in the development and implementation of technical and financial engineering for private and public sector clients covering projects such as bridges, pipelines, harbour and marine works, industrial plants, stadiums, roads, highways, airports, retail and office complexes, apartment blocks, educational facilities, hospitals, prisons and residential housing,ÔÇØ explains executive director Chris Erasmus.
Like most in the construction industry, Basil Read has seen a general slowdown in activity as the global recession has bitten into investment capacity and confidence, but the slowdown has largely been confined to the building and civil project areas. Road construction remains remarkably buoyant and has enabled the company to continue increasing its profit margin.
For the financial year to December 2008 the company has experienced a 73 per cent increase in revenue and an increase in net profit after tax in excess of 70 per cent, while earnings per share increased by 67 per cent. ÔÇ£Our order book is good at R6 billion, with turnover expected to show growth in excess of 45 per cent to December 2009,ÔÇØ Erasmus says. ÔÇ£I believe we are ideally positioned to capitalise on these market conditions, despite current economic uncertainty.ÔÇØ
The reason for the buoyancy in the road building market is that the government of South Africa is investing heavily in improving the countryÔÇÖs infrastructure with the express intention of building the nationÔÇÖs capacity to grow. Having promised R787 billion for infrastructure projects, the government has reaffirmed its commitment to investing in road improvements as well as power generation, transport networks and telecommunications.
While the construction industry has traditionally suffered from a shortage of skilled and experienced personnel at all levels, the recent economic downturn has led many companies to lay off staff. ÔÇ£At a time when many industries are reporting the need for retrenchments,ÔÇØ Erasmus says, ÔÇ£we are continuing to employ. In fact, we are recruiting at a rate of around 30 new posts per month, and this recruitment is complemented by an increased focus on bursaries and initiatives to attract black women to our industry.ÔÇØ
These initiatives are all part of a recruitment strategy that will enable the company to meet its current operational commitments and will provide capacity for growth in response to the increased spending on national infrastructure projects.
Looking to the future, the company has a three-pronged growth strategy in place: global expansion, larger technically challenging projects, and public-private partnerships. ÔÇ£This is the basis on which we have achieved consistent growth in recent years, and it continues to pay off,ÔÇØ Erasmus says. ÔÇ£Meanwhile, forging long-term relationships with international construction conglomerates and turnkey contractors such as Bouygues, Kalyx and Alstom has also served us well, and we will continue to build on this type of relationship.ÔÇØ
The company is increasingly looking beyond the boundaries of South Africa for growth opportunities, primarily to lessen the risks inherent in geographic concentration. ÔÇ£While we remain positive about the pipeline of work in the South African market, we acknowledge that uncertainty is inherent in any economy. To mitigate the risk of a possible future drop-off in local work and to position ourselves to ensure that we are well placed to take advantage of the global economic recovery when it comes, the group is considering opportunities in other countries.ÔÇØ
Working internationally, however, particularly in other African countries, also carries significantly more risk than working on local contracts. ÔÇ£We will therefore give careful consideration to these opportunities before committing to a contract,ÔÇØ Erasmus comments.
Meanwhile, the company is currently working on a number of high-profile national infrastructure projects, including a R430 million contract to build 14 hectares of container space at Durban Harbour, which will be completed in August 2009, and two projects that are part of the Gauteng Freeway Improvement scheme, which are scheduled for completion in October 2010. The larger of the improvement scheme projects is the Brakfontein Flying Saucer interchange, which is valued to R1.2 billion and includes widening the freeway to four lanes, constructing four new bridges and widening six existing ones. The smaller of the projects is a R679 million upgrade of section 21 of the N1 between Atterbury and Scientia, and it includes widening the freeway to four lanes and providing additional collector/distributor lanes. Basil Read has a 25 per cent stake in the joint venture for the construction of the R3 billion Kusile Power Station for Eskom, situated in Mpumulanga.
So, with plenty of work on the order books and more to look forward to, the future looks bright for Basil Read.