News

Stefanutti reports increased contract revenue to R6bn

The Horizon Towers in Mozambique. Stefanutti was awarded the contract for the project which included bulk earthworks.

Stefanutti Stocks has released its results for the year ended February 2022, reporting an increase in contract revenue from continuing operations to R6 billion from R4.7 billion with an operating loss of R99 million (restated February 2021: R55 million operating loss).

The normalised operating profit of R198 million excludes abnormal and non-operational items such as restructuring costs, legal fees, fair value adjustments and impairments of assets as well as a provision to the City of Cape Town claim settlement.

Earnings and headline earnings per share for total operations reported a loss of 248.27 cents (February 2021: 171.62 cents) and a loss of 97.07 cents (February 2021: 155.13 cents) respectively.

The group’s order book is currently R5.3 billion, R1.7 billion of which arises from work outside of South Africa.

Cash consumed from operations is R253 million, negatively impacted by the restructuring costs, abnormal legal fees, and the repayment of excess billings over work done (February 2021: R209 million). As a result, the group’s total cash position has decreased to R409 million (February 2021: R756 million).

The group recognised its operations into regions with the exception of its mechanical and electrical business, effective 1st March 2021. The regions are reported as inland, coastal, Western Cape, and Africa. The mechanical and electrical business has been renamed to Mechanical Electrical Piping (MEP).

Inland region (building, civils, geotechnical, material handling, tailings management, roads, and earthworks)

Inland’s contract revenue from operations is R2 billion (restated February 2021: R1.7 billion) with an operating profit of R86 million (restated February 2021: R26 million). Included within the operating profit is an impairment of R21 million (February 2021: nil) and fair value adjustments of R11 million (February 2021: R8 million) relating to the revaluation of land and buildings and plant and equipment, respectively. Excluding these, the operating profit is R118 million (restated February 2021: R34 million).

CEO Russell Crawford said that the civils, roads, and earthworks disciplines are profitable and performing to expectation. “The former Gauteng division, now forming part of the inland region, has been rightsized due to a declining order book”, adding that the results of the materials handlings and tailings management disciplines were negatively impacted by the sale process. As reported, this sale did not materialise, and we are refocusing these operations and rebuilding their order book”.

The contract mining discipline was wound down in October 2021 and is disclosed as part of discontinued operations.

Opportunities exist for this region in transport infrastructure, water, and wastewater treatment plants, mine infrastructure, renewable energy, and geotechnical sectors.

Inland’s order book as at February 2022 was R2.2 billion (restated February 2021: R2 billion).

Coastal region (building, civils, roads, and earthworks)

The coastal region’s contract revenue from operations is R1 billion (restated February 2021: R935 million) with an operating profit of R3 million, negatively impacted by the civil unrest during July 2021 (restated February 2021: R7 million operating loss).

Opportunities continue to exist for this region in transport infrastructure, water and wastewater treatment plants, and in the private sector commercial, retail and industrial projects,” said Crawford.

Coastal’s order book as at February 2022 was R1.1 billion (restated Feb 2021: R741 million).

Western Cape region (building, civils)

Western Cape’s contract revenue is R1.1 billion (restated Feb 2021: R535 million) with an operating profit of R54 million (restated Feb 2021: R4 million).

The building discipline outperformed, exceeding expectation,” said Crawford, adding that opportunities continue to exist for this region in water and wastewater treatment plants, framework agreements, and in the private sector commercial, residential, retail, industrial plants, warehouses, and data centres.

Western Cape’s order book as at February 2022 was R658 million (restated Feb 2021: R910 million).

Africa region (multi-disciplinary services in Botswana, Eswatini, Zambia)

The Africa region’s contract revenue is R1.6 billion (restated Feb 2021: R1.2 billion) with an operating profit of R102 million (restated Feb 2021: R73 million). The Eswatini operation outperformed and exceeded expectation, with Zambia and Botswana operating profitably.

Opportunities continue to exist for this region in transport infrastructure, water and wastewater treatment plants, pipelines, dams, strategic fuel farms, and in the private sector commercial, retail, office, leisure, warehouses, mine infrastructure, renewable energy and industrial projects.”

Africa’s order book as at February 2022 was R1.1 billion (restated Feb 2021: R2 billion).

Mechanical Electrical Piping (MEP) (mechanical, electrical & instrumentation, oil, and gas)

MEP’s contract revenue is R307 million (Feb 2021: R270 million) with an operating loss of R78 million (Feb 2021: R64 million). Included in this result is a fair value adjustment of R15 million relating to a property held for sale.

This business has been severely impacted by the effects the pandemic had on global commodity prices, resulting in major plant maintenance and upgrade projects being delayed. However, opportunities in the traditional petrochemical sector for the Oil & Gas discipline are showing signs of improvement,” said Crawford. He added that “opportunities for this business as a whole exist in renewable energy, industrial projects, clean fuels, tank farms, data centres, mining infrastructure and plant upgrades, shutdowns, and maintenance”.

MEP’s total order book as at February 2022 was R93 million (Feb 2021: R136 million).

As communicated in the group’s recent trading update, the civil claim relating to the Green Point Stadium has been amicably settled by the parties involved, and we look forward to future positive engagements with the City of Cape Town,” said Crawford.

Subsequent to year-end, the group received a non-binding offer of USD$13.5 million to purchase a foreign entity. Negotiations are ongoing and no terms have been agreed.

Crawford said that the focus remains on the successful implementation of the Restructuring Plan, achieving favourable outcomes from the processes being undertaken on the Kusile Power projects and returning the group to profitability.