Annual Financial Results

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Multi-disciplinary and geographic diversification bodes well for Stefanutti Stocks 



▪ Revenue R10,5 billion 

▪ Cash at end of year R916 million 

▪ Current order book R14,3 billion 


Johannesburg, 17 May 2018 – JSE-listed multi-disciplinary construction group Stefanutti Stocks, which operates throughout South Africa, sub-Saharan Africa and the United Arab Emirates, today released results for the year ended 28 February 2018. The group reported contract revenue from operations of R10,4 billion, which increased by R1,3 billion compared to the previous year. 

Stefanutti Stocks CEO Willie Meyburgh said that the group’s performance reflected the impact of operating within a demanding local trading environment, and included an impairment charge of R667 million relating to goodwill and intangible assets. Consequently, earnings per share is reported as a loss of 294,94 cents, compared to 79,34 cents loss at the end of the prior year. Should the impairment charge be excluded, the operating profit is R216 million, which is an improvement over the R202 million adjusted operating profit reported in the previous year. Notwithstanding that, 30% of work was executed cross-border, with more than 50% of operating profit derived from these operations. 

Headline earnings per share is 90,35 cents, which is a slight improvement on the adjusted headline earnings per share of 89,86 cents reported in the previous year. 

The group’s order book is currently R14,3 billion, of which R4,9 billion arises from work beyond South Africa’s borders. 

Capital expenditure amounted to R500 million, of which R275 million relates to the Mining Services operation on the back of contract awards. Of the total capital expenditure, R369 million was incurred to expand capacity. 

No dividend was declared for this period. 

Review of operations 

In line with the group’s strategic intent to achieve greater synergy, optimise available resources and reduce costs, a decision was taken to combine the Roads, Pipelines & Mining Services with the Structures business unit, effective 1 January 2018. The new business unit is called Construction & Mining. 

Construction & Mining 

Contract revenue of the newly combined business unit is R5,0 billion (Feb 2017: R4,0 billion), with an operating profit of R175 million (Feb 2017: R188 million) at an operating profit margin of 3,5% (Feb 2017: 4,7%). 

“Whilst the Roads & Earthworks and Swaziland divisions delivered good results, the former Structures business unit continued to underperform, resulting in the reported reduction in operating profit for Construction & Mining compared to the previous year,” said Meyburgh. 

He added that long outstanding amounts due from the governments of Zambia and Nigeria continue to be a source of concern. “However, discussions with the government authorities are ongoing and periodic payments are being received. The outstanding amounts are not in dispute. In Zambia work will only recommence on affected contracts once all outstanding amounts have been received. Limited work has resumed on the road projects in Nigeria.” 

He went on to say that limited infrastructure work has been secured from the public sector. “The number of tender enquiries and awards received from the mining sector has increased.” 


The Building business unit’s contract revenue increased to R4,4 billion (Feb 2017: R4,0 billion), with an improvement in operating profit to R41 million (Feb 2017: loss of R2 million) at an operating profit margin of 1,0%. The profit of the equity accounted United Arab Emirates operation is excluded from the operating profit. 

“The Mozambique and Coastal divisions delivered good results, but with the ongoing reduction in available work in the local building market, emanating from the current negative outlook in the public and private building sector, a significant portion of the goodwill relating to the Stocks Limited acquisition had to be impaired,” said Meyburgh. 

The business unit is also attending to significant contractual claims and compensation events on a large public sector project in South Africa. 

Mechanical & Electrical 

Despite good returns from cross-border operations and recently awarded surface mining related contracts in the Mechanical division, Mechanical & Electrical’s turnover and operating profit reduced to R1,0 billion (Feb 2017: R1,1 billion) and R13 million (Feb 2017: R40 million) respectively. 

The Oil & Gas and Electrical & Instrumentation divisions’ performance was negatively impacted by the cancellation of a significant contract in the petrochemical market. This is being contractually challenged and at this stage the financial impact thereof cannot be quantified. 

Cross-border and local work in the surface mining related environment is gradually improving for both the Mechanical and Electrical & Instrumentation divisions. However, the reduction in opportunities in the petrochemical sector will affect the Mechanical & Electrical’s combined order book and operating margins. 


Meyburgh said that the South African construction market will continue to remain extremely competitive due to an ongoing lack of public infrastructure spend. “Even though business confidence levels seem to be improving in some sectors of the economy, construction activities and margins remain under pressure, which makes growth in this environment challenging.” 

He added that with the increased local requirements relating to Broad-Based Black Economic Empowerment, the group is assessing various options to improve its position in this regard. 

“The group’s order book remains relatively constant at about R14 billion. In the short term there are potential pockets of growth in the local market, which include surface mining related services, selected open pit mining contracts, petrochemical tank farms, water and sanitation treatment plants, as well as residential, warehouses and design and construct opportunities in the building sector. Cross-border opportunities exist in road and bridge construction, marine and mixed-use building projects.” 

Meyburgh concluded by saying that the group’s multi-disciplinary and geographically diversified business structure continues to enable it to remain a strong competitor in the markets in which it operates. “On the back of the good returns from cross-border operations we will continue to seek opportunities, on a selective basis, in the sub-Saharan Africa market.” 


Contact: Stefanutti Stocks Holdings Limited 

Willie Meyburgh (CEO) 

(011) 571-4367 

Issued and released by: Keyter Rech Investor Solutions 

Deborah Chapman 

087 351 3816 

076 650 4150 

Issue date: 17 May 2018 

JSE code: SSK 


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  1. Annual Financial Results 28 February 2018.pdf 5/17/2018 9:25:27 AM