Stefanutti Stocks Holdings, the construction group being restructured, saw its share price rise more than 17% at one stage yesterday after it reported a turnaround to R100.69 million operating profit for the year to February 28, compared with a R106.61m operating loss the year before.
Contract revenue from continuing operations was flat at R5.98 billion from R5.97bn the year before. The loss from continuing operations improved markedly to R37.5m from a R271.43m loss previously. Profit from total operations came to R14.50m from a loss of R415.21m in 2022.
Headline earnings a share improved 60% from a loss of 38.73 cents a share. The order book is at R6.8bn, with R1.1bn from beyond South Africa's borders.
The group said certain communities and informal business forums continued to negatively impact its operations in several areas of South Africa.
Despite the better results, the auditors said there remained a material uncertainty about the group’s future as its current liabilities exceeded current assets by R1.14bn and liabilities exceed assets by R66m. The accumulated loss is R1.21bn.
“The group believes it remains commercially solvent based on the cash-flow projections included in the restructuring plan,” the directors said.
The restructuring plan includes the sale of non-core assets; of underutilised plant and equipment; of certain operations; a favourable outcome from contractual claims and compensation events on certain projects; and the evaluation of the capital structure, including the potential of raising new equity.
Agreement was reached with the lenders to extend a loan to February 29, 2024. Regarding a final award of R90.7m with regard to the Mechanical project termination, R51m was repaid to the loan.
The restructuring plan is expected to be implemented over the year to February 2024 .
A number of claims and compensation events on the Kusile Power Project were being pursued, and the group had, since August 2021, received R110m for work and Dispute Adjudication Board (DAB) rulings.
Variations were still being agreed with Eskom.
Stefanutti Stocks and Eskom had entered into an "Interim Arrangement for the Purposes of Agreeing or Determining the Contractor's Claims and Facilitating the Dispute Resolution Process" in February 2020, for all delay events up to the end of December 2019. This process involved the appointment of independent experts to evaluate and quantify the delays.
Provisional claims of R1.14bn had been submitted to the experts including an overarching preliminary and general cost claim of R337m; a subcontractor overarching cost claim of R194m; a R438m construction cost claim; and a R171m finance cost claim.
The provisional claims were not recognised in the financial statements as the outcome of the process remained uncertain.
BUSINESS REPORT