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UNAUDITED CONDENSED
CONSOLIDATED RESULTS
FOR THE 6 MONTHS ENDED 31 AUGUST 2023
STEFANUTTI STOCKS HOLDINGS LIMITED
(“Stefanutti Stocks” or “the company” or “the group”)
(Registration number: 1996/003767/06)
(Share code: SSK ISIN: ZAE000123766)
FINANCIAL RESULTS
UNAUDITED UNAUDITED
31 AUGUST 31 AUGUST %
2023 2022 CHANGE
Contract revenue – Continuing operations (R’000) 3 335 007 2 870 570 16
Operating profit before investment income – Continuing operations (R’000) 68 751 54 029 27
Loss for the period – Continuing operations (R’000) (5 722) (33 503) 83
Profit for the period – Discontinued operations (R’000) 3 701 42 752 (91)
(Loss)/profit for the period – Total operations (R’000) (2 021) 9 249 (122)
Earnings per share – Total operations (cents) (1,21) 5,53 (122)
Headline earnings per share – Total operations (cents) (22,41) (25,02) 10
BASIS OF PREPARATION AND ACCOUNTING POLICIES projections included in the Restructuring Plan and the continued support of
The unaudited condensed consolidated results for the 6 months ended the Lenders. However, the matters as noted above including uncertainties
31 August 2023 (the period) have been prepared in accordance with framework surrounding the contingent liabilities as stated in note 26 of the group’s
concepts and the measurement and recognition requirements of International Consolidated Annual Financial Statements for the year ended 28 February
Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides, 2023, continue to indicate that a material uncertainty exists that may cast doubt
as issued by the Accounting Practices Committee and the Financial Reporting on the group’s ability to continue as a going concern, and as a consequence
Pronouncements issued by the Financial Reporting Standards Council. could impact on the group’s ability to realise its assets and discharge its liabilities
The report contains the information required by International Accounting in the ordinary course of business.
Standard IAS 34: Interim Financial Reporting and is in compliance with KUSILE POWER PROJECT UPDATE
the Listings Requirements of the JSE Limited and the requirements of the
South African Companies Act 71 of 2008. The accounting policies as well As previously highlighted to shareholders in numerous announcements and
as the methods of computation used in the preparation of the results for the updates since late 2018, the group continues to pursue a number of contractual
period ended 31 August 2023 are in terms of IFRS and are consistent with claims and compensation events on the Kusile power project.
those applied in the audited annual financial statements for the year ended Since August 2021, the group has secured payment of a combined total of
28 February 2023. R116 million for measured work and after the Dispute Adjudication Board (DAB)
There is no significant difference between the carrying amounts of financial rulings.
assets and liabilities and their fair values. The fair value measurement for land Stefanutti Stocks and Eskom (the parties) have entered into an “Interim
and buildings are categorised as a level 3, based on the valuation method of Arrangement for the Purposes of Agreeing or Determining the Contractor’s
income capitalisation using unobservable inputs such as market capitalisation Claims and Facilitating the Dispute Resolution Process” in February 2020,
rates and income/expenditure ratio. Plant and equipment included within for all delay events up to the end of December 2019. This process involves
non-current assets held for sale have been categorised as a Level 3 fair value the appointment of independent experts (the experts) to evaluate the causes,
based on significant unobservable inputs to the valuation technique used. duration and quantification of delays.
These assets are measured using the comparable sales method. This entails
Further to the above, the parties and the DAB have signed a memorandum of
the use of quoted prices for identical or similar assets in the market. The results
understanding (MOU) as set out below:
are presented in Rand, which is Stefanutti Stocks’ functional currency and are
rounded off to the nearest thousand. • The DAB will issue decisions confirming entitlements, which entitlements the
experts have agreed to, which will then be binding on the parties;
The company’s directors are responsible for the preparation and fair
presentation of the results which have been compiled under the supervision of • The DAB will rely on the experts for the narrowing of the issues and information to
the Chief Financial Officer, Y du Plessis, CA(SA). These results have not been be considered in its assessments;
audited or reviewed by the company‘s independent external auditor. • The DAB will continue to make interim decisions on the narrowed issues and
information, in a progressive manner which will be binding on the parties;
RESTRUCTURING PLAN UPDATE
• The DAB will issue such interim decisions relating to delay and quantum; and
The group hereby provides shareholders with an update on the Restructuring
Plan as reported in the Consolidated Annual Financial Statements of Stefanutti • At the end of the process the DAB will issue a final binding decision in terms of the
Stocks for the year ended 28 February 2023, issued on 28 June 2023 and contract with respect to duration and quantification, at which point either party may
the SENS announcements issued on 31 July 2023, 12 September 2023 and issue a notice of dissatisfaction and refer the dispute to arbitration.
4 October 2023. As noted in the SENS announcement dated 12 September 2023, the following
As previously reported, the Restructuring Plan has been approved by both the consolidated and updated claims were submitted to the experts:
company’s board of directors and the Lenders and envisages, inter alia: 1. a quantum claim of R1 344 million;
• the sale of non-core assets; 2. a finance cost claim of R270 million; and
• the sale of underutilised plant and equipment; 3. interest to be calculated in terms of the DAB’s ruling.
• the sale of identified operations; Therefore, the total of all consolidated and updated claims submitted, excluding
• a favourable outcome from the processes relating to the contractual claims and interest, amounts to R1 614 million. In terms of the process as outlined above the
compensation events on certain projects; and experts will review all claims, draft agreements and narrow issues of difference
for referral to the DAB for a decision.
• an evaluation of the capital structure, including the potential of raising new equity.
The group envisages that the DAB will issue its binding decision during the first
The group is currently in negotiations with the Lenders to extend the capital
half of 2024.
repayment profile of the loan, as well as its duration to June 2025 due to further
delays, beyond the group’s control, in resolving a number of contractual claims At this stage the claims must follow due process, therefore, the group’s
and compensation events on the Kusile power project and a delay with respect claims team cannot express a view on the value of any potential award nor
to the disposal of SS–Construções (Moçambique) Limitada and Stefanutti the exact timing thereof. As the outcome of this process remains uncertain,
Stocks Construction Limited (collectively SS Mozambique). these consolidated and updated claims have not been recognised in the
financial statements.
With respect to the Mechanical project termination arbitration award and
the disposal of Al Tayer Stocks LLC, a total of R106 million and R59 million OVERVIEW OF RESULTS
respectively has been received from March 2023 to date. Capital repayments
of R51 million and R43 million were made in May 2023 and October Certain underutilised plant and equipment and SS Mozambique have been
2023 respectively, reducing the loan to R1 066 million. The final purchase earmarked for sale and accordingly been reclassified in terms of IFRS 5:
consideration relating to the disposal of Al Tayer Stocks LLC of approximately Non-current Assets Held for Sale and Discontinued Operations. Due to current
R29 million, included in other current assets, is expected to be received in due market conditions, the disposal of these assets is taking longer than anticipated.
course. The group remains committed to the sale processes as envisaged in the
Restructuring Plan.
The loan bears interest at prime plus 3,6%, including arranging and facility fees,
and is secured by special and general notarial bonds over movable assets, Contract revenue and operating profit from continuing operations
continuous covering mortgage bonds over immovable assets and various improved to R3,3 billion (Aug 2022: R2,9 billion) and R69 million (Aug 2022:
cessions. The loan does not contain any financial covenants, but rather imposes R54 million) respectively.
certain information and general undertakings. Earnings and headline earnings per share for total operations is a loss of
The Lenders continue to provide guarantee support for current and future 1,21 cents (Aug 2022: 5,53 cents earnings per share) and 22,41 cents per share
projects being undertaken by the group. (Aug 2022: 25,02 cents loss per share) respectively.
The Restructuring Plan is anticipated to be implemented over the period up to The group’s order book is currently R6,5 billion of which R1,2 billion arises from
June 2025 and, to the extent required, shareholder approval will be sought for work beyond South Africa’s borders.
certain aspects of the Restructuring Plan. The group will continue to update Safety
shareholders on the progress of the various aspects of the Restructuring Plan. Management and staff remain committed to the group’s health and safety
The directors consider it appropriate that the group’s results for the period be policies and procedures, and together strive to constantly improve the group’s
prepared on the going-concern basis, taking into consideration: safety performance. The group’s Lost Time Injury Frequency Rate (LTIFR) at
Aug 2023 was 0,08 (Feb 2023: 0,05) and the Recordable Case Rate (RCR) was
• the current order book;
0,37 (Feb 2023: 0,44).
• imminent project awards;
Broad-Based Black Economic Empowerment (B-BBEE)
• continuing operations executing the group’s order book profitably; The group is a level 1 B-BBEE contributor measured in terms of the Construction
• the availability of short-, medium- and long-term projects; Sector scorecard with a Black Economic Interest score of 70,49%.
• reaching a favourable outcome on contractual claims and compensation events on Industry related matters
the Kusile power project; The group continues to be negatively affected by disruptive and unlawful
• continued support from the Lenders and a successful completion of current activities by certain communities and informal business forums in several areas
negotiations with the Lenders relating to the extension of the loan and capital of South Africa.
repayments to June 2025; and Dividend declaration
• successfully implementing the Restructuring Plan. Notice is hereby given that no dividend will be declared (Aug 2022: Nil).
The funding provided by the Lenders has assisted with the group’s liquidity, Subsequent events
even though total liabilities continue to exceed total assets at 31 August 2023. Other than the matters noted herein, there are no other material reportable events
The group believes it remains commercially solvent based on the cash flow which occurred between the reporting date and the date of this announcement.
Further information
These results have been compiled under the supervision of the Chief Financial Officer, Y du Plessis, CA(SA).
This announcement is an extract of the full unaudited condensed consolidated announcement. This extract has not been reviewed by the auditors.
This extract, which is the responsibility of the directors, does not contain full or complete details and any investment decision by investors and/or shareholders
should be based on the consideration of the full announcement, the webcast together with the investor presentation which is available on the company’s
website at www.stefstocks.com.
The full announcement is available for inspection, at no charge at the registered office of the company and at the office of Bridge Capital Advisors
(Pty) Ltd, during normal business hours. Copies of the full announcement may also be requested by contacting the company secretary, William Somerville
at w.somerville@mweb.co.za.
The full announcement is also available at https://senspdf.jse.co.za/documents/2023/JSE/ISSE/SSK/FY2024H1.pdf
Published on 28 November 2023
Corporate advisor and sponsor
Bridge Capital Advisors Proprietary Limited
10 Eastwood Road, Dunkeld, 2196
(PO Box 651010, Benmore, 2010)
www.stefanuttistocks.com
