Strategic objectives Sustain steady organic and acquisitive growth Committed to being a responsible corporate citizen in the communities and environment in which we operate Continue to be a leading black-empowered construction group in South Africa.
		WITH ALL ITS CHALLENGES, 2009 ALSO BROUGHT TRIUMPHS

With all its challenges, 2009 also brought triumphs. On balance, it has been a very positive year for the Basil Read group with highlights including the completion of the Mbombela Stadium and successful expansion through organic growth and acquisition as detailed by the chief executive officer.

This expansion process is a constructive move for the group and will contribute to an even better operating environment as we move towards bigger and more complex projects in future.

In June 2009, following the resignation of the previous chairman, I was elected independent non-executive chairman of the group, having served as a member of the board since July 2006. I regard this appointment as a very exciting and valuable opportunity, given my confidence in the future of this group and particularly as it begins its international expansion.

Business environment

The prevailing theme for 2009 was change, commencing with the elections in April that resulted in significant changes in parliament to the way the global recession has forced many people to transform their lifestyle. South Africa was no exception, and the country officially entered into a recession in May 2009. In our industry, this was evident in the decreased availability of work in the construction sector, and increased competition coupled with the accompanying pressure on margins across the board.

A solid order book and strong relationships with clients, suppliers and subcontractors enabled the Basil Read group to manage these conditions as effectively as possible.

Financial performance

Against this background, Basil Read’s results for the year were solid with revenue growth of 34,2% which translated into earnings growth of 19,5%. The balance sheet of the group has grown substantially, largely driven by the incorporation of the two new acquisitions, the Gerolemou/Mvela and TWP groups. As a result of these acquisitions, Basil Read has established a critical mass which will allow the group to successfully pursue its strategy of international expansion and the undertaking of larger, more technical projects.

Leading the Top 100 companies – again

This stellar performance earned Basil Read its second win in the Sunday Times Business Times Top 100 Companies survey. This prestigious annual survey acknowledges listed companies that have achieved a significantly high increase in shareholder value over the past five years.

At 81% compounded growth over the period, Basil Read was more than 13 percentage points ahead of the second-placed company, and almost double the growth rate of the second-best performing construction company.

The share price increased from 88 cents at the start of the assessment period, 1 September 2004, to R15,80 on 31 August 2009. We have again convincingly disproved those critics who said in 2004 that our empowerment partners were making a bad investment. Today our empowerment partners, including some 2 000 employees, have reaped the benefits of the group’s success.

Construction charter

The construction industry, considered by some to have a poor record of transformation and to be plagued by fronting, was the first sector to have its charter legislated. In June 2009, the Minister of Trade and Industry finally signed the Construction Code of Good Practice, making it an official code of good practice in terms of section 9 of the Broad-Based Black Economic Empowerment Act 53 of 2003 (BBBEE) with equal status to any other code. Basil Read has now formalised many of its long-standing practices and reports against the code’s targets found here. Notably, the introduction of the code required very little change in the way this group conducts its business.

Broad-based black economic empowerment

Basil Read has maintained its rating as a level 4 BBBEE contributor, meaning that companies are entitled to recognise 100% of the amount spent with our group in calculating their procurement spend. We will continue to maintain this rating as we integrate our most recent acquisitions and ensure that the data is of high integrity. This may result in a delay in our intention of achieving level 3 status in 2010.

We still face some obstacles in the quest to attain our goals of real, sustainable economic empowerment, with specific emphasis on management control, employment equity and skills development. Several initiatives are under way to address these shortcomings.

Directorate and governance

The directors and senior managers of Basil Read endorse the principles of King II. Considering the group’s size, we believe we do substantially comply with this code and the Listings Requirements of the JSE Limited (“JSE”). Regular review of our corporate governance policies and practices ensures continuous improvement. In addition, we have integrated these with our triple bottom-line approach to managing our business for the benefit of all stakeholders.

Donny Gouveia, the group chief financial officer, was appointed to the board as financial director. We welcome Donny and look forward to his input to our deliberations.

We further welcome Ms Given Refilwe Sibiya as an independent non-executive director. She is a qualified chartered accountant and in addition to her board responsibilities, her expertise will be put to good use through her appointment to the audit/risk committee. Following the acquisition of the TWP group, Nigel Townshend, chief executive officer of TWP, was appointed as an executive director. The board welcomes his experience and expertise.

Appreciation

The board has provided the leadership for a strategically focused organisation, which has proven its ability to deliver on its objectives. Today Basil Read houses an exceptional group of people, so capably led by Marius Heyns and his management teams, whose commitment makes all the challenges worthwhile. However, in today’s business world, strategic focus is merely one element of a successful organisation; simultaneously, we need to ensure that all operations are above board and that our shareholders remain satisfied with our accomplishments. It is through the sheer hard work and dedication of this extraordinary team, and the constant support and counsel of my fellow board members, that this success will continue to be attainable.

Lester Peteni

Chairman