Multidisciplinary construction engineering group Stefanutti Stocks has achieved contract revenue from continuing operations of R6-billion for the year ended February 28, and an improvement in operating profit to R101-million, compared with a restated operating loss of R107-million reported in the prior financial year.

“The group remains focused on progressing its comprehensive restructuring plan, which involves the sale of noncore assets, underutilised plant and equipment and identified operations. The plan aims to ensure a favourable outcome from the processes relating to contractual claims and compensation events on certain projects and includes evaluating the group’s capital structure,” said Stefanutti Stocks CEO Russell Crawford.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) improved from R102-million to R157-million, mainly owing to the reduction of restructuring costs and abnormal legal fees, as well as a net expected credit loss reversal of R61-million compared with R150-million in the 2022 financial year.

“The reversal in expected credit loss is mainly owing to debtors that were previously provided for and subsequently recovered,” Crawford noted.

Earnings a share for total operations is 8.72c a share, compared with a 248.27c loss a share in the 2022 financial year, and headline loss a share was 38.73c a share, down from a headline loss of 97.07c a share in the prior year.

The group’s order book is currently R6.8-billion, of which R1.1-billion arises from work beyond South Africa’s borders.

Further, the group continues to deliver a satisfactory performance on a normalised basis, in what remains a challenging environment in all regions, Crawford said.

“The results were affected by the suspension of a significant mechanical contract in the inland region, and the devasting floods and late award of a significant building contract in the coastal region, resulting in a reduction in contract revenue and an increase in holding costs, impacting operating profit.

“Pleasingly, the arbitration process relating to a mechanical project termination was completed post year-end, with a final award of R90.7-million made to the group. Of this, a capital repayment of approximately R51-million will be made towards funding provided by our lenders,” Crawford said.

From an industry perspective, the group remains negatively impacted by disruptive and unlawful activities by certain communities and informal business forums in several areas of South Africa, he added.

Meanwhile, the group has completed its internal restructuring, with mechanical electrical piping now forming part of the inland region. The group has established a renewable energy discipline, which reports into the inland region. Further, certain African countries previously included with the mechanical electrical piping are now reported as part of the Africa region.

The inland region reported contract revenue from operations of R2.3-billion, which is flat from the restated February 28, 2022 contract revenue of R2.3-billion. The region achieved an operating profit of R84-million, up from the restated R15-million figure achieved at the end of the 2022 financial year. However, excluding fair value adjustments relating to a property and plant and equipment held for sale, operating profit would have been R62-million.

“All disciplines are performing to expectation, except for the mechanical discipline owing to the suspension of a significant contract. The results of the materials handling and tailings management disciplines continues to be negatively impacted by the failed sale process and the group is refocusing these operations and rebuilding their order book.”

The inland region’s order book at the end of February 2023 was R3.1-billion, up from the restated R2.3-billion in the 2022 financial year.

The coastal region’s contract revenue from operations is R1.4-billion, up from R1-billion achieved in the prior financial year, with an operating profit of R5-million, up from R3-million in the previous financial year.

“The results were negatively impacted by the devastating floods in KwaZulu-Natal last year and the late award of a major building contract, with the floods resulting in some property damage and delays on projects.”

The coastal region’s order book at the end of February 2023 was R2.1-billion, up from R1.1-billion in the preceding financial year.

Further, the Western Cape’s contract revenue declined to R702-million from R1.1-billion in its prior financial year, with an operating profit of R30-million, down from R54-million, owing to delayed contract awards.

The Western Cape region’s order book at the end of February 2023 was R621-million, down from R658-million.

The Africa region’s contract revenue is R1.6-billion, which is unchanged from the prior year, and it achieved an operating profit of R74-million, down from the restated R88-million in the prior financial year. All operations performed to expectation.

Africa’s order book at the end of February 2023 was R579-million, down from R1.1-billion in the preceding financial year.