- Revenue: R9,1 billion
- Operating loss: R106 million
- Loss per share: 79,3 cents
- Cash at year-end: R1,1 billion
- Current order book: R14 billion
Johannesburg, 18 May 2017 – Stefanutti Stocks, the multi-disciplinary construction company operating in South Africa, sub-Saharan Africa and the United Arab Emirates, today reported an operating loss of R106 million for the financial year ended 28 February 2017.
Willie Meyburgh, Chief Executive Officer, says the group’s performance reflects the challenging trading environment and includes certain one-off events. During the past year, the operations were further scaled down and restructured in accordance with the availability of work.
Contract revenue from operations decreased by R611 million to R9,1 billion and the operating profit from R392 million in the previous year to an operating loss of R106 million in the current year.
Factors impacting the group’s performance are the one-off present value charge of R139 million relating to the voluntary Settlement Agreement concluded with the South African Government and six other JSE listed construction groups to transform the industry. In addition, goodwill of R155 million relating to the acquisition of Cycad Pipelines had been impaired during the year. The result has also been negatively impacted by a foreign exchange loss of R81 million due to the strengthening of the Rand during the year and the weakening of currencies in the African regions in which Stefanutti Stocks operates.
As a result of these factors, the group reported headline earnings per share of 10,94 cents. Had the one-off charge relating to the Settlement Agreement not been taken into account, the headline earnings per share would have been 89,86 cents which is similar to that reported in the previous year of 89,62 cents.
The group’s order book currently stands at R14 billion of which R4,4 billion arises from work beyond South Africa’s borders.
Capital expenditure for the year amounted to R272 million (Feb 2016: R157 million) of which R156 million relates to the Mining Services operation.
The group continues to experience delayed payments from clients on contracts. However, the increase in excess billings over work done to R1,2 billion (Feb 2016: R740 million) resulted in cash generated from operations increasing to R616 million (Feb 2016: R30 million). This includes an inflow from working capital of R274 million (Feb 2016: R440 million consumed by working capital). As a consequence, the group’s overall cash position has increased to R1,158 billion (Feb 2016: R851 million)
No dividend has been declared for the year.
Owing to a reduction in infrastructure projects and delays in the awarding of contract revenue of the Roads, Pipelines & Mining Services (RPM) business unit declined to R2,2 billion (R2,6 billion) with a reduction in operating profit to R162 million (R213 million).
The Roads & Earthworks, Swaziland and Mining Services divisions have delivered good results with encouraging prospective contract awards in the short term. The group is in ongoing discussions with the Zambian Roads Development Agency and the Nigerian government regarding outstanding payments on projects impacting working capital.
The Mechanical & Electrical (M&E) business unit performed to expectation with the exception of the Mechanical division which was negatively affected by the shortage of work in the traditional mining infrastructure environment. Consequently, contract revenue declined slightly to R1,1 billion from R1,2 billion in the previous year. Operating profit reduced to R40 million (R66 million) with a reduction in operating profit margin to 3,6% from 5,4%.
The continued decline in infrastructure projects emanating from both the government and private sectors resulted in a reduction of both the contract revenue and operating profit of the Structures business. Contract revenue declined to R1,8 billion (R2,1 billion) and operating profit to R26 million (R47 million). The business unit was further scaled down and restructured to align itself to market conditions.
Relative to the comparative period the turnover in the water and sanitation treatment sector has increased and has the potential to grow further. The Marine operation has secured some crossborder projects and has a satisfactory order book.
The Building business unit’s contract revenue increased slightly to R4,0 billion (R3,7 billion), however, it recorded an operating loss of R2 million following the completion and finalisation of loss making projects. The profit of R41 million (R19 million) from the equity accounted United Arab Emirates operation is excluded from the operating loss.
The Mozambique and Housing divisions made a positive contribution to the business unit’s performance with some further contracts expected to be awarded in the short term.
Prospects and strategy
Meyburgh says although the market continues to be competitive there remain potential growth areas in mining surface infrastructure, marine, petrochemical tank farms, water and sanitation treatment plants, and residential and mixed use building projects will provide opportunities for all business units.
The group continues to seek opportunities in Southern Africa and on a more selective basis further afield in sub-Saharan Africa, to diversify the business.
“Our multi-disciplinary and geographically diversified business structure continues to provide a robust platform upon which the group remains as a strong competitor in the Southern African construction market,” concludes Meyburgh.
- Ends -
Contact: Stefanutti Stocks Holdings Limited Willie Meyburgh (CEO) – (011) 571-4367
Issued and released by: Keyter Rech Investor Solutions Lynne Bothma 087 351 3815 / 082 920 4395
Issue date: 18 May 2017
JSE code: SSK