Construction company Stefanutti Stocks has swung to an operating loss of R106-million for the financial year ended February 28, compared with a profit of R392-million the year before, “reflecting the challenging trading environment”.

Contract revenue from operations decreased by R611-million to R9.1-billion.

The group further cited the one-off present value charge of R139-million relating to the voluntary settlement agreement concluded by it, and six other JSE-listed construction groups, with the government to transform the industry, as a reason for the loss.

In addition, goodwill of R155-million relating to the acquisition of Cycad Pipelines had been impaired during the year. The results were also negatively impacted on by a foreign exchange loss of R81-million owing to the strengthening of the rand during the year and the weakening of currencies in the African regions in which Stefanutti operates.

As a result of these factors, the group reported headline earnings per share (HEPS) of 10.94c. Had the one-off charge relating to the settlement agreement not been taken into account, HEPS would have been 89.86c, which is similar to the 89.62c reported in the previous year.

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 of which R156-million related to the group’s mining services operation.

Meanwhile, Stefanutti noted that it continued to experience delayed payments from clients on contracts. However, the increase in excess billings over work done, to R1.2-billion, resulted in cash generated from operations increasing to R616-million from last year’s R30-million.

This includes an inflow from working capital of R274-million. As a consequence, the group’s overall cash position has increased to R1.15-billion, up from the prior year’s R851-million.

CEO Willie Meyburgh said that although the market continued to be competitive, potential growth areas in mining surface infrastructure, marine, petrochemical tank farms, and water and sanitation treatment plants remained, while residential and mixed-use building projects would 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,” he added.