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Stefanutti Stocks reports improved interim revenue, operating profit

An image of Stefanutti Stocks CEO Russell Crawford

CEO Russell Crawford

28th November 2023

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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JSE-listed Stefanutti Stocks’ contract revenue and operating profit from continuing operations for the six months ended August 31 improved to R3.3-billion and R69-million, respectively, with the group’s overall cash position increased to R687-million.

CEO Russell Crawford says the group continues to deliver a satisfactory performance and is focused on the successful completion of outstanding items in the restructuring plan.

This includes the sale of noncore assets, underused plant and equipment and identified operations.

“The restructuring plan also aims to ensure a favourable outcome from contractual claims and compensation events on the Kusile power project, the closing out of all legacy arbitration matters and evaluating the group’s capital structure.

“With respect to the Kusile power project, the group envisages that the Dispute Adjudication Board (DAB) will issue its binding decision during the first half of 2024,” he points out.

Crawford informs that the disposal of the SS Mozambique has unfortunately been delayed.

“The completion of the transaction is subject to the fulfilment or waiver of certain conditions precedent, of which one remains outstanding.”

Crawford says that, with respect to the Mechanical project termination arbitration award and the disposal of Al Tayer Stocks, a total of R106-million and R59-million, respectively, had been received from March to date.

“Capital repayments of R51-million and R43-million were made in May and October, respectively, reducing the loan to R1.07-million.”

In respect of the trading environment, Crawford says macroeconomic conditions remain challenging across all regions. From an industry perspective, the group says it continues to be negatively affected by disruptive and unlawful activities by certain communities and informal business forums in South Africa.

Earnings before interest, taxes, depreciation and amortisation improved from R74-million to R97-million, owing to improved operating performance and a reduction in restructuring costs.

Earnings and headline earnings a share for total operations are a loss of 1.21c a share and 22.41c a share, respectively.

The group’s order book is currently R6.5-billion, of which R1.2-billion arises from work beyond South Africa’s borders.

OPERATIONAL REVIEW

Inland’s contract revenue and operating profit increased to R1.5-billion from R1-billion and R74-million from R37-million respectively, with an order book as at August 31 of R3-billion.

Crawford says that all disciplines are performing to expectation except for the Mechanical discipline, which was impacted on by the termination of a significant contract.

“This also negatively impacted on the order book at the end of August.”

He adds that, with respect to a contract mining project termination, a settlement agreement has been signed, in terms of which the group will receive R20-million and R10-million by the end of February 2024 and April 2024, respectively.

The Coastal region’s contract revenue from operations is R544-million, with an operating profit of R300 000.

“These results were negatively impacted on by late contract awards and delayed commencement of projects, deferring revenue to the next reporting period,” says Crawford.

Coastal’s order book as at August 31 was R2.1-billion.

Western Cape’s contract revenue is R508-million, with an operating profit of R15-million.

Disciplines are performing to expectation. The order book as at August 31 was R1-billion.

For the Africa region, contract revenue is R817-million with a reduced operating profit of R29-million owing to the majority of work executed being of a building nature.

All operations performed to expectation. The order book as at August 31 was R653-million compared with R1-billion in the comparative prior period.

With respect to the arbitration award in Zambia, which has subsequently been registered with the court, Crawford explains that the client has submitted leave to appeal against the judgment.

“However, discussions with the client have commenced, with respect to an amicable settlement. The settlement discussions are on a ‘without prejudice’ basis, and all legal rights are reserved,” he notes.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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