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REVIEWED CONDENSED
CONSOLIDATED RESULTS
FOR THE 12 MONTHS ENDED 28 FEBRUARY 2022
STEFANUTTI STOCKS HOLDINGS LIMITED
(“Stefanutti Stocks” or “the company” or “the group”)
(Registration number 1996/003767/06)
(Share code: SSK ISIN: ZAE000123766)
FINANCIAL RESULTS
REVIEWED RESTATED
28 FEBRUARY 28 FEBRUARY %
2022 2021 CHANGE
Contract revenue – Continuing operations (R’000) 5 968 484 4 691 759 27
Operating loss before investment income – Continuing operations (R’000) (98 906) (54 853) (80)
Loss for the period – Continuing operations (R’000) (263 742) (236 422) (12)
Loss for the period – Discontinued operations (R’000) (151 466) (53 760) (182)
Loss for the period – Total operations (R’000) (415 208) (290 182) (43)
Earnings per share – Total operations (cents) (248.27) (171.62) (45)
Headline earnings per share – Total operations (cents) (97.07) (155.13) 37
BASIS OF PREPARATION AND ACCOUNTING POLICIES Lenders to extend the capital repayments of the loan to January and February
The reviewed condensed consolidated results for the year ended 28 February 2023, with the residual loan balance remaining at approximately R420 million.
2022 (results and/or reporting period) have been prepared in accordance with
framework concepts and the measurement and recognition requirements The Lenders have agreed to provide continued guarantee support for current
of International Financial Reporting Standard (IFRS), the SAICA Financial and future projects being undertaken by the group. Management has made
Reporting Guides, as issued by the Accounting Practices Committee and considerable progress in reconfiguring the group’s organisational structure to
the Financial Reporting Pronouncements issued by the Financial Reporting improve operational performance and decrease overhead costs, including the
Standards Council. The report contains the information required by International reduction of the group’s overall headcount. This is an ongoing process which
Accounting Standard IAS 34: Interim Financial Reporting and is in compliance continues as the various aspects of the Restructuring Plan are being implemented.
with the Listings Requirements of the JSE Limited and the requirements of the The purpose of the Restructuring Plan is to put in place an optimal capital structure
South African Companies Act 71 of 2008. The accounting policies as well as the and access to liquidity to position the group for long-term growth.
methods of computation used in the preparation of the results for the period ended
The Restructuring Plan is anticipated to be implemented over the financial year
28 February 2022 are in terms of IFRS and are consistent with those applied in the
ending February 2023 and, to the extent required, shareholder approval will be
audited annual financial statements for the year ended 28 February 2021.
sought for certain aspects of the Restructuring Plan. The group will continue to
There is no significant difference between the carrying amounts of financial update shareholders on the progress of the various aspects of the Restructuring Plan.
assets and liabilities and their fair values. The fair value measurement for land
and buildings are categorised as a level 3, based on the valuation method of The directors consider it appropriate that the group’s results for the reporting
income capitalisation using unobservable inputs such as market capitalisation period be prepared on the going-concern basis, taking into consideration:
rates and income/expenditure ratio. Plant and equipment and transport and motor • the current order book;
vehicles included within non-current assets held for sale have been categorised • imminent project awards;
as a Level 3 fair value based on significant unobservable inputs to the valuation • continuing operations executing the group’s order book profitably;
technique used. These assets are measured using the comparable sales method.
• the availability of short- and mid-term projects;
This entails the use of quoted prices for identical or similar assets in the market.
The results are presented in Rand, which is Stefanutti Stocks’ functional currency. • reaching a favourable outcome on contractual claims and compensation
events on certain projects;
The company’s directors are responsible for the preparation and fair presentation
• having converted the short-term funding agreement with the Lenders to a loan
of the results which have been compiled under the supervision of the Chief
Financial Officer, Y du Plessis, CA(SA). terminating on 28 February 2023;
• the assumption of a successful completion of current negotiations with the
AUDITORS’ REVIEW Lenders relating to the extension of capital repayments of the loan to January
These reviewed condensed consolidated results for the year ended 28 February and February 2023;
2022 have been reviewed by the group’s auditors, Mazars. Their unmodified • continued support from the Lenders; and
review conclusion is available for inspection at the company’s registered office. • successfully implementing the Restructuring Plan.
The auditor’s conclusion contained the following emphases of matter: We draw
attention to the disclosure included in this announcement, which indicates that The funding provided by the Lenders has assisted with the group’s liquidity,
the group incurred a net loss of R415 million for the year ended 28 February even though total liabilities continue to exceed total assets at 28 February 2022.
2022 and, as of that date, the group’s current liabilities exceeded its current assets The group believes it remains commercially solvent based on the cashflow
by R1 462 million, and as of that date, the group’s total liabilities exceed its total projections included in the Restructuring Plan. However, uncertainties surrounding
assets by R90 million. The group had an accumulated loss of R1 225 million. the contingent liabilities as noted in note 26 of the group’s Consolidated Annual
Financial Statements for the year ended 28 February 2021, continue to indicate
As disclosed, these events and conditions, along with other matters as noted, that a material uncertainty exists that may cast doubt on the group’s ability to
including uncertainties surrounding the contingent liabilities, indicate that a continue as a going concern in the short term.
material uncertainty exists that may cast significant doubt with respect to the
group’s ability to continue as a going concern. In order to address these issues, OVERVIEW OF RESULTS
the group has implemented a restructuring plan of which further details regarding As previously highlighted to shareholders in numerous announcements and
its implementation are disclosed in the “Restructuring Plan Update” section. updates since late 2018, the group continues to pursue a number of contractual
Based on the successful implementation of the restructuring plan, the directors claims and compensation events on the Kusile power project. Due to the
consider it appropriate that the group’s condensed consolidated results be
complexity of the claims, the processes remain ongoing. No further details of the
prepared on the going-concern basis. Therefore, our opinion is not modified in
claims have been disclosed on the basis that it may prejudice the group’s position
respect of this matter.
in defending the claims brought against it and in pursuing those claims brought
COVID-19, JULY 2021 CIVIL UNREST, RUSSIAN AND UKRAINE CONFLICT against Eskom by the group.
Stefanutti Stocks’ priority continues to be the health and safety of its employees. A number of non-core assets, underutilised plant and equipment and identified
The management of the group remains committed to supporting the initiatives operations earmarked for sale have been reclassified in terms of IFRS 5:
that the governments have implemented with respect to the COVID-19 pandemic Non-current Assets Held for Sale and Discontinued Operations. Current market
in the various countries in which the group operates. Importantly, Stefanutti conditions, impacted by COVID-19, resulted in the delay of these disposals.
Stocks continues to adhere to the required protocols and maintains a close The group remains committed to the sale processes as envisaged in the
working relationship with clients and key stakeholders to mitigate the impact of Restructuring Plan.
COVID-19 and reduce the long-term effects on its business. Contract revenue from continuing operations increased to R6,0 billion (restated
The July 2021 civil unrest in Gauteng and KwaZulu-Natal negatively impacted Feb 2021: R4,7 billion) with an operating loss of R99 million (restated Feb 2021:
the Inland and Coastal Regions, resulting in some property damage and time R55 million operating loss).
delays on 17 projects where work had to be stopped. The total value amounted
The after tax loss for continuing operations is R264 million (restated Feb 2021:
to R22 million, of which 70% was recovered from the group’s insurers and
R236 million loss). Earnings and headline earnings per share for total operations
11% from clients.
are reported as a loss of 248,27 cents (Feb 2021: 171,62 cents) and a loss of
The impact the Russian and Ukraine conflict will have on global growth and 97,07 cents (Feb 2021: 155,13 cents) respectively.
investor confidence, indirectly impacting the group’s operations, will be closely
monitored. The direct impact of the conflict on the group is deemed immaterial as The group’s order book is currently R5,3 billion of which R1,7 billion arises from
its projects and clients are based within South Africa and Southern Africa. work beyond South Africa’s borders.
RESTRUCTURING PLAN UPDATE Safety
The group hereby provides shareholders with an update on the Restructuring Management and staff remain committed to the group’s health and safety policies
Plan as reported in the Unaudited Condensed Consolidated Results of Stefanutti and procedures, and together strive to constantly improve the group’s safety
Stocks for the six months ended 31 August 2021 issued on 25 November 2021 and performance. The group’s Lost Time Injury Frequency Rate (LTIFR) at February
the SENS announcement issued on 1 March 2022. 2022 was 0,03 (Feb 2021: 0,03) and the Recordable Case Rate (RCR) was 0,28
(Feb 2021: 0,35).
As previously reported, the Restructuring Plan has been approved by both the
company’s board of directors and the Lenders and envisages, inter alia: Broad-Based Black Economic Empowerment (B-BBEE)
• the sale of non-core assets; The group is a level 1 B-BBEE contributor measured in terms of the Construction
• the sale of underutilised plant and equipment; Sector scorecard with a Black Economic Interest score of 64,28%.
• the sale of certain operations;
Industry related matters
• internal restructuring initiatives required to restore optimal operational and
financial performance; The group continues to be negatively affected through disruptive and unlawful
activities by certain communities and informal business forums in several areas
• the securing of additional short-term funding of R430 million, of which of South Africa.
R270 million related to the negative effects of the national lockdown in
March/April 2020; Dividend declaration
• a favourable outcome from the processes relating to the contractual claims and Notice is hereby given that no dividend will be declared (Feb 2021: Nil).
compensation events on the Kusile power project;
• the restructuring of the short-term funding received to date from the Lenders Subsequent events
into a loan; and With respect to the civil claim received from the City of Cape Town
• evaluation of an optimal business model going forward and associated capital (Green Point Stadium), the parties to the civil claim being the City of Cape Town
structure analysis including the potential of raising new equity. and WBHO Construction (Pty) Ltd, Aveng Africa (Pty) Ltd and Stefanutti Stocks
(“the Contractors”) remain confident of their respective legal positions. However,
In accordance with the Restructuring Plan, the Lenders had provided the requisite
the parties have mutually agreed that it is in the best interests of all to amicably
funding and converted the short-term funding agreement into a short-term loan
on 1 July 2020. The group, on 21 February 2022, reached an agreement with the settle the matter rather than prolong an extended and costly arbitration and court
Lenders to extend the current capital repayment profile of the loan as well as its process. This will allow for future positive engagements between the City of Cape
duration to 28 February 2023. Town and the Contractors.
The settlement includes an annual payment of R10,5 million by each Contractor
The loan bears interest at prime plus 5,4%, including arranging and facility fees, over the next three years, and a commitment to Corporate Social Investment
and is secured by special and general notarial bonds over movable assets, projects in the Cape Town district by WBHO Construction (Pty) Ltd and Stefanutti
continuous covering mortgage bonds over immovable assets and various Stocks.
cessions. The short-term and funding loans do not contain any financial covenants
but rather impose certain information and general undertakings. Subsequent to year-end, the group received a non-binding offer of USD13,5 million
to purchase a foreign entity. Negotiations are ongoing and no terms have
Following the receipt of the initial purchase consideration of R92 million relating to been agreed. The foreign entity is classified as held for sale, and the fair value
the disposal of Al Tayer Stocks LLC, a capital repayment of R45 million was made of its assets and liabilities is based on an orderly transaction between market
on 15 November 2021. participants at the reporting date under current market conditions.
The recent flooding in KwaZulu-Natal impacted one project in the Coastal Region.
The slower than anticipated sale of certain operations, the non-implementation
of the Material Handling and Tailings Management sub-divisions transaction An insurance claim will be submitted for damages incurred of approximately
and further delays in resolving contractual claims and compensation events on R20 million.
certain projects, resulted in capital loan repayments envisaged to commence Other than the matters noted herein, there were no other material reportable events
from April 2022 not materialising. The group is currently in negotiations with the 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/2022/jse/isse/ssk/FY2022.pdf
Published on 26 May 2022
Corporate advisor and sponsor
Bridge Capital Advisors Proprietary Limited
10 Eastwood Road, Dunkeld, 2196
(PO Box 651010, Benmore, 2010)
www.stefanuttistocks.com
