The impact of Covid-19, as well as an adverse market, saw Stefanutti Stocks report an operating loss of R101-million for the six months ended August 31, compared with a R865-million loss in the same period last year.

Contract revenue from continuing operations declined from R2.9-billion to R1.7-billion.

Stefanutti Stocks CEO Russell Crawford said on Thursday that the construction group had started a programme to sell certain operations, which was expected to be concluded by February 2022.

This was in line with the group’s restructuring plan. 

Crawford noted that the difficulties facing the construction industry, the impact of the Covid-19 pandemic, as well as ongoing delays in client payments had all affected the group’s cash position negatively.

Stefanutti Stocks’ order book for continuing operations was currently at R7.4-billion, of which R3.3-billion was outside South Africa. 

Crawford said the group was continuing to pursue a number of contractual and compensation claims on the Kusile power project. 

“Due to the complexity of the claims, these processes remain ongoing, but no further details can be disclosed on the basis that this may prejudice our position in defending the claims brought against the group, and in pursuing those claims brought by the group against Eskom.”

Crawford also provided an update on the group’s restructuring plan.

The aim of this plan was to put in place “an optimal capital structure and [to provide] access to liquidity to position the group for long-term growth”. 

The plan envisaged the sale of noncore assets, underutilised plant and equipment, and certain divisions/subsidiaries; an internal restructuring process to restore optimal operational and financial performance; a process to secure additional short-term funding of R430-million, of which R270-million related to the negative effects of the national lockdown; a favourable outcome on contractual claims on the Kusile power project; the restructuring of the short-term funding received to date from lenders into a term loan; and the evaluation of an optimum business model going forward.

The group could also potentially raise new equity.

“In accordance with the restructuring plan, the lenders have provided the requisite funding and converted the short-term funding agreement into a term loan on July 1, which terminates on February 28, 2022,” said Crawford.

“In addition, they have agreed to provide continued guarantee support for current and future projects being undertaken by the group.”

He added that Stefanutti Stocks’ management had made progress in reconfiguring the group’s organisational structure to improve operational performance and decrease overhead costs.

The restructuring plan was to be implemented over the financial years ending February 2021 and February 2022.

Looking ahead, Crawford said Stefanutti Stocks’ main focus was the successful implementation of the restructuring plan and to achieve a positive outcome on contractual claims at the Kusile project. 

“In addition, we will continue to drive the collection of the slow-paying receivables, focus on reducing loss-making projects and returning the group to profitability.”