The directors present their twenty-fifth annual report, which forms part of the audited financial statements of the company and of the group for
the year ended 31 December 2009.
NATURE OF BUSINESS
Basil Read is one of the top construction companies in South Africa. The company is listed on the JSE Limited and its subsidiary companies are
active in the areas of civil engineering, road construction, building, mixed integrated housing developments, property development, bitumen
distribution, opencast mining, blasting and engineering and project management solutions. These subsidiaries operate throughout Africa and
internationally.
DIVIDENDS
A dividend of 58 cents per share was declared and paid during the year under review, in respect of the year ended 31 December 2008. On
11 March 2010, the directors declared a final dividend of 42 cents per share in respect of the year ended 31 December 2009. This will result in a
dividend paid of R52 000 638 and a secondary taxation on companies tax charge of R5 200 064 being recognised in the 2010 financial year.
SHARE CAPITAL
During the year under review, the company issued 37 318 140 shares at R13,00 per share, to the shareholders of TWP Holdings Limited as part
of the purchase consideration for the acquisition of the company.
OPERATING RESULTS
The financial position, results of operations and cash flows of the company and that of the group for the year ended 31 December 2009 are set
out from here.
The group made a profit after taxation of R271 million (2008: R206 million) during the year under review.
PROPERTY, PLANT AND EQUIPMENT
The group acquired property, plant and equipment to the amount of R171 million (2008: R388 million) during the year.
SUBSIDIARIES AND JOINT VENTURES
On 1 March 2009, the group increased its shareholding in Sunset Bay Trading 282 (Pty) Limited to 100% (2008: 33,33%) for RNil. The company is
a property development company, currently responsible for the development of the St Micheil’s golf and leisure estate, outside Dullstroom.
On 1 July 2009, the group increased its shareholding in Newport Construction (Pty) Limited to 70% (2008: 55%) for a purchase consideration of
R977 442. The company is a roads and civil engineering construction company.
On 1 July 2009, the group disposed of 100% of its shareholding in Stone and Allied Industries Limited for a sale consideration of R20,8 million.
The company is a stone crushing company.
On 1 September 2009, the group acquired 100% of the share capital of P. Gerolemou Construction (Pty) Limited, Mvela Phanda Construction
(Pty) Limited and Contract Plumbing and Sanitation (Pty) Limited, collectively referred to as the Gerolemou/Mvela group, for R351,5 million. The
company specialises in the construction of buildings.
On 21 December 2009, the group acquired 100% of the share capital of TWP Holdings Limited for a purchase consideration of R661,4 million.
TWP Holdings Limited provides a full range of innovative engineering and project management solutions to the mining and minerals industries,
and general industrial and commercial concerns.
The information relating to the company’s financial interest in its subsidiaries and joint ventures is set out in notes 16, 39, 41, 42, 43 and 46 to
the financial statements.
INVESTMENTS IN ASSOCIATES
On 1 January 2009, the group disposed of 80% of its shareholding in BR-Tsima Construction (Pty) Limited for RNil, as part of its commitment
to enterprise development. As the group continues to exercise significant influence over the operations of BR-Tsima, it has been reclassified
from a subsidiary to an associate. BR-Tsima Construction (Pty) Limited specialises in the construction of roads, civil engineering and buildings.
For more information on the group’s investments in associates refer to notes 17, 40 and 43 to the financial statements.
OTHER INVESTMENTS
Through the acquisition of the Gerolemou/Mvela group, Basil Read acquired a 10,34% interest in Desbel Sewe (Pty) Limited, a hotel management
company.
Through the acquisition of the TWP group, Basil Read acquired a 4,48% interest in African Eagle Resources plc, a UK-listed mineral exploration
and development company.
BORROWINGS
Interest-bearing borrowings comprise bank borrowings, instalment sale agreements and a domestic medium-term note programme. Other
borrowings comprise the amount due to former shareholders relating to companies the group has acquired over the last few years. During the
year borrowings increased due to banking loans and new instalment sale agreements entered into to fund capital expenditure and property
developments that the group is involved with. The group raised funding for the acquisition of the Gerolemou/Mvela group through the issuing of
a domestic medium-term note programme. The increase in borrowings was partly offset by the repayment of banking loans and other instalment
sale agreements.
For more information on the group’s borrowings, refer to notes 27 and 28 to the financial statements.
EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
No material events have occurred between the balance sheet date and the date of these results that would have a material effect on the
financial statements of the group.
SHAREHOLDER SPREAD
Details of shareholder categories are set out here in this report.
DIRECTORATE
The following were directors of the company during the year under review:
Sindile Lester Leslie Peteni
Bulelani Thandabantu Ngcuka
Marius Lodewucus Heyns
Manuel Donnell Grota Gouveia
Nigel John Townshend
Lungisa Brian Dyosi
Sango Siviwe Ntsaluba
Alexander Thabiso Tlelai
Charles Peter Davies
Ntombekaya Yvonne September
Given Refilwe Sibiya |
Independent non-executive director, chairman
Non-executive director, chairman
Chief executive officer, managing director
Chief financial officer, financial director
Executive director
Non-executive director
Non-executive director
Non-executive director
Independent non-executive director
Independent non-executive director
Independent non-executive director |
Appointed as chairman on 7 May 2009
Resigned 7 May 2009
Appointed 7 May 2009
Appointed 1 January 2010
Appointed 1 July 2009 |
DIRECTORS’ EMOLUMENTS
| |
Cash portion
of package
R |
Benefits*
R |
Incentive
bonus
R |
Gain on
share options
exercised
R |
Total
R |
| Executive directors |
|
|
|
|
|
| 2009 |
|
|
|
|
|
| Paid by Basil Read (Pty) Limited |
|
|
|
|
|
| Marius Lodewucus Heyns |
2 877 410 |
422 251 |
8 726 142 |
– |
12 025 803 |
| Manuel Donnell Grota Gouveia† |
836 595 |
149 732 |
1 333 333 |
– |
2 319 660 |
| |
3 714 005 |
571 983 |
10 059 475 |
– |
14 345 463 |
| † Appointed 7 May 2009 |
|
|
|
|
|
| |
|
|
|
|
|
| 2008 |
|
|
|
|
|
| Paid by Basil Read (Pty) Limited |
|
|
|
|
|
| Marius Lodewucus Heyns |
2 685 945 |
334 217 |
8 333 333 |
– |
11 353 495 |
| * Benefits include the group’s contribution towards medical aid and provident fund. |
In addition to the above remuneration, Marius Lodewucus Heyns has an agreement with the group that should he meet certain annual criteria, an additional deferred bonus will accrue to him.
The aggregate base amount of the deferred bonus which will accrue and be paid on 31 March 2014 will be R50 million plus accrued interest and shall be calculated by the group’s remuneration committee in five equal annual tranches in accordance with the following criteria, applied annually:
- Headline earnings per share increasing by at least a percentage equal to the spot rate as at 30 September of each year of the RSA Five Year Retail Bond rate plus 50%. The spot rate applicable to the 2009 results was 11,0%. The spot rate that applies to the 2010 financial year is 9,75%.
- Cash flow from operating activities to be cash generative in each year.
- The criteria will carry equal weight in the determination of the amount of the deferred bonus.
- Should the criteria not be met in any one financial year, the deferred bonus will be reduced by an amount equal to that year’s tranche.
- The remuneration committee may recommend to the board and the board may, in their discretion, relax the criteria in any given year should they deem it necessary and appropriate.
- Mr Heyns must remain in the employ of the group for the five-year period covered by the deferred bonus. If he leaves, unless for reasons of ill health, at any time during this period, none of the deferred bonus becomes due and payable.
Mr Heyns met the criteria for the 2009 financial year and accordingly a provision of R10 million was created in the 2009 financial year for payment of this deferred bonus. This amount has not been included in the remuneration disclosed in the table above.
|
Services
as director
R |
Total
R |
| Non-executive directors |
|
|
| 2009 |
|
|
| Sindile Lester Leslie Peteni |
533 500 |
533 500 |
| Bulelani Thandabantu Ngcuka† * |
319 000 |
319 000 |
| Lungisa Brian Dyosi† |
278 500 |
278 500 |
| Sango Siviwe Ntsaluba† |
190 000 |
190 000 |
| Alexander Thabiso Tlelai† |
261 000 |
261 000 |
| Charles Peter Davies |
557 500 |
557 500 |
| Ntombekaya Yvonne September† |
311 000 |
311 000 |
| Given Refilwe Sibiya |
134 000 |
134 000 |
| |
2 584 500 |
2 584 500 |
| 2008 |
|
|
| Sindile Lester Leslie Peteni |
252 750 |
252 750 |
| Bulelani Thandabantu Ngcuka† |
540 000 |
540 000 |
| Lungisa Brian Dyosi† |
215 000 |
215 000 |
| Sango Siviwe Ntsaluba† |
257 000 |
257 000 |
| Alexander Thabiso Tlelai† |
239 000 |
239 000 |
| Charles Peter Davies |
424 750 |
424 750 |
| Ntombekaya Yvonne September† |
248 000 |
248 000 |
| |
2 176 500 |
2 176 500 |
| * Resigned 7 May 2009. |
|
|
| †Paid to the companies that these directors represent. |
|
|
| Directors’ fees for the 2009 financial year were paid according to the following table: |
| With effect from 1 January 2009 |
Member
R |
Chairman
R |
| Board – retainer |
120 000 |
440 000 |
| Board – per meeting |
17 500 |
33 000 |
| Audit/risk committee – retainer |
50 000 |
110 000 |
| Audit/risk committee – per meeting |
7 000 |
14 000 |
| Remuneration committee – retainer |
50 000 |
110 000 |
| Remuneration committee – per meeting |
7 000 |
14 000 |
| Ad hoc meetings – per day |
17 500 |
– |
Directors’ fees are reviewed annually. It is proposed that directors’ fees be increased as follows:
| With effect from 1 January 2010 |
Member
R |
Chairman
R |
| Board – retainer |
140 000 |
500 000 |
| Board – per meeting |
17 500 |
33 000 |
| Audit/risk committee – retainer |
70 000 |
140 000 |
| Audit/risk committee – per meeting |
7 000 |
14 000 |
| Remuneration committee – retainer |
70 000 |
130 000 |
| Remuneration committee – per meeting |
7 000 |
14 000 |
| Ad hoc meetings – per day |
17 500 |
– |
| These fees have been waived by the executive directors. Fees are paid quarterly in arrears. |
|
|
DIRECTORS’ EQUITY-SETTLED INSTRUMENTS
The directors held the following equity-settled instruments at 31 December 2009:
| |
Number |
Average
strike price |
Average
exercise price |
| Marius Lodewucus Heyns |
|
|
|
| Equity-settled instruments at 1 January 2009 |
250 000 |
13,95 |
– |
| Equity-settled instruments granted during the year |
130 000 |
13,95 |
– |
| Equity-settled instruments exercised during the year |
– |
– |
– |
| Equity-settled instruments at 31 December 2009 |
380 000 |
13,95 |
|
| Manuel Donnell Grota Gouveia |
|
|
|
| Equity-settled instruments at 1 January 2009 |
60 000 |
13,95 |
– |
| Equity-settled instruments granted during the year |
45 000 |
13,95 |
– |
| Equity-settled instruments exercised during the year |
– |
– |
– |
| Equity-settled instruments at 31 December 2009 |
105 000 |
13,95 |
|
The directors held the following equity-settled instruments at 31 December 2008:
| |
Number |
Average
strike price |
Average
exercise price |
| Marius Lodewucus Heyns |
|
|
|
| Equity-settled instruments at 1 January 2008 |
250 000 |
13,95 |
– |
| Equity-settled instruments granted during the year |
– |
– |
– |
| Equity-settled instruments exercised during the year |
– |
– |
– |
| Equity-settled instruments at 31 December 2008 |
250 000 |
13,95 |
|
The equity-settled instruments terms are detailed in note 36.
INTERESTS OF DIRECTORS AND OFFICERS IN SHARE CAPITAL
The interests, direct and indirect, of the directors and officers at the date of this report are as follows:
| |
Direct |
|
Indirect |
| |
2009 |
2008 |
|
2009 |
2008 |
| Beneficial |
|
|
|
|
|
| Manuel Donnell Grota Gouveia |
32 070 |
– |
|
– |
– |
| Nigel John Townshend |
– |
– |
|
9 096 580 |
– |
| Sango Siviwe Ntsaluba |
6 986 |
5 000 |
|
3 068 760 |
3 673 803 |
| Alexander Thabiso Tlelai |
– |
– |
|
3 068 760 |
3 673 803 |
| Bulelani Thandabantu Ngcuka |
– |
– |
|
– |
500 978 |
| Lungisa Brian Dyosi |
– |
– |
|
169 152 |
166 993 |
| |
39 056 |
5 000 |
|
15 403 252 |
8 015 577 |
| Non-beneficial |
– |
– |
|
– |
– |
| |
39 056 |
5 000 |
|
15 403 252 |
8 015 577 |
The company’s directors did not trade in shares between year end and the date the financial statements were authorised for issue.
INTERESTS OF DIRECTORS AND OFFICERS IN SHARE INCENTIVE SCHEME
The direct interests of the directors and officers at the date of this report are as follows:
| |
Number of
unissued shares |
% of
unissued shares |
% held once
shares issued |
| 2009 |
|
|
|
| Direct |
|
|
|
| Marius Lodewucus Heyns |
380 000 |
18,25 |
0,31 |
| Manuel Donnell Grota Gouveia |
105 000 |
5,04 |
0,08 |
| Enna Kruger (company secretary) |
20 000 |
0,96 |
0,02 |
| |
|
|
|
| 2008 |
|
|
|
| Direct |
|
|
|
| Marius Lodewucus Heyns |
250 000 |
11,32 |
0,29 |
| Enna Kruger (company secretary) |
10 000 |
0,45 |
0,01 |
The right to the unissued shares are in terms of the Basil Read Share Incentive Scheme. For further details, refer to note 36(e).
AUDITORS
PricewaterhouseCoopers Inc will continue in office in accordance with section 270(2) of the Companies Act of South Africa.
COMPANY SECRETARY
The company secretary is Enna Kruger.
REGISTERED OFFICE
7 Brook Road
Lilianton
Boksburg
1459
POSTAL ADDRESS
Private Bag X170
Bedfordview
2008 |
