Developments

The review period was arguably one of the worst for the residential market in recent memory. Given the protracted effect of the National Credit Act and dearth of mortgage finance in the wake of global economic turmoil, lower interest rates had almost no effect on the housing market. In the last months of the year, the housing market started to improve as banks relaxed their lending criteria and consumers began to feel the pressure on disposable income lessen. Government has reaffirmed its commitment to eradicating informal settlements, with a concomitant effect on job creation and poverty reduction. 

Performance

Given the long lead times for development projects in general, the division recorded acceptable performance for the review period. Revenue was R68,3 million (2008: R77,4 million), with operating profit of R6,2 million (2008: R13,5 million). Operating margins dropped to 9,1% (2008: 17,5%). This contraction of margins is largely due to professional fees paid to technical advisors for work performed relating to existing developments that are yet to break ground. Preliminary expenses are typical to this type of project due to the long lead times to bring the project to fruition. 

While being the smallest of Basil Read’s divisions it has the largest socio-economic impact of all the divisions with a direct investment of R21 billion, and a total economic impact of R68 billion between current projects and developments in the planning stages. It is strategically significant given the focus on sustainable development and the secondary work the division creates for the group. Some R3 billion in work, which is not yet included in the group’s order book, will be created for other Basil Read divisions over the life of current projects. 

Management

Des Hughes, Brian Mulherron, Tshiwo Yenana

	Employees 19
	Contribution to revenue 1,5%