To view the PDF file, sign up for a MySharenet subscription.

SSK - Stefanutti Stocks Holdings Limited - Reviewed condensed consolidated

Release Date: 24/05/2011 07:05
Code(s): SSK
Wrap Text

SSK - Stefanutti Stocks Holdings Limited - Reviewed condensed consolidated results for the year ended 28 February 2011 STEFANUTTI STOCKS HOLDINGS LIMITED ("Stefanutti Stocks" or "the company" or "the group") (Registration number 1996/003767/06) Share code: SSK ISIN:ZAE000123766 REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2011 - Revenue R7,0 billion - Operating profit R442 million - HEPS 192,5 cents - Cash on hand R1,1 billion - Current order book R8,2 billion STATEMENT OF COMPREHENSIVE INCOME Reviewed Audited 12 months 12 months ended ended
28 February 28 February % 2011 2010 decrease R`000 R`000 Revenue (6) 6 998 207 7 471 412 Contract revenue (6) 6 896 418 7 365 023 Earnings before interest, taxation, depreciation and amortisation (EBITDA) (9) 598 185 657 337 Depreciation (147 654) (138 587) Amortisation of intangible assets (8 202) (18 005) Operating profit before investment income (12) 442 329 500 745 Investment income 61 591 85 518 Share of profits from associate companies 2 712 973 Operating profit before finance costs 506 632 587 236 Finance costs (25 270) (25 288) Profit before taxation 481 362 561 948 Taxation (148 351) (172 703) Profit for the year 333 011 389 245 Other comprehensive income (37 372) (42 345) Exchange differences on translating foreign operations (37 372) (42 345) Total comprehensive income for the year 295 639 346 900 Profit attributable to: Equity holders of the company (13) 333 011 384 774 Non-controlling interest - 4 471 (14) 333 011 389 245 Total comprehensive income attributable to: Equity holders of the company 295 639 342 429 Non-controlling interest - 4 471 295 639 346 900 Earnings per share (cents) 193,55 220,14 Diluted earnings per share (cents) 177,06 204,58 Commentary to the statement of comprehensive income Headline earnings reconciliation Profit after taxation attributable to equity holders of the company 333 011 384 774 Adjusted for: Gain on bargain purchase option - (1 154) Loss on disposal of subsidiary - 1 700 (Profit)/loss on disposal of plant and equipment (2 646) 9 243 Goodwill impairment - 1 992 Tax effect of adjustments 741 (2 588) Total minority interest of adjustments - (1 852) Headline earnings (16) 331 106 392 115 Normalised headline earnings reconciliation Headline earnings 331 106 392 115 Adjusted for: Amortisation of intangibles 8 202 16 013 Tax effect of adjustments (2 291) (4 482) Total minority interest of adjustments - (577) Normalised headline earnings (16) 337 017 403 069 Number of weighted average shares in issue 172 051 492 174 787 507 Number of diluted weighted average shares in issue 188 080 746 188 080 746 Earnings per share (cents) (12) 193,55 220,14 Diluted earnings per share (cents) (13) 177,06 204,58 Headline earnings per share (cents) (14) 192,45 224,34 Diluted headline earnings per share (cents) (16) 176,04 208,48 Normalised headline earnings per share (cents) (15) 195,88 230,61 Diluted normalised headline earnings per share (cents) (16) 179,19 214,31 STATEMENT OF FINANCIAL POSITION Reviewed at Audited at
28 February 28 February 2011 2010 R`000 R`000 ASSETS Non-current assets 2 111 249 2 018 076 Property, plant and equipment 901 671 791 865 Investment property 55 422 34 337 Goodwill and intangible assets 1 132 044 1 126 547 Investment in associates 14 539 18 123 Other financial assets - 1 901 Deferred taxation 7 573 45 303 Current assets 2 960 137 3 009 707 Bank balances 1 082 471 1 351 998 Other current assets 1 857 651 1 635 943 Taxation 20 015 21 766 Total assets 5 071 386 5 027 783 EQUITY AND LIABILITIES Capital and reserves 1 853 571 1 683 632 Ordinary shareholders` interest 1 853 571 1 681 457 Non-controlling interest - 2 175 Non-current liabilities 196 644 176 729 Interest-bearing liabilities 133 710 108 477 Non-interest bearing liabilities 9 173 - Deferred taxation 53 761 68 252 Current liabilities 3 021 171 3 167 422 Bank overdraft 4 312 4 394 Other current liabilities 1 812 132 1 658 686 Provisions 1 154 475 1 449 735 Taxation 50 252 54 607 Total equity and liabilities 5 071 386 5 027 783 Total number of net shares in issue 171 700 649 172 476 565 Net asset value per share (cents) 1 079,54 974,89 STATEMENT OF CASH FLOWS Reviewed Audited 12 months 12 months ended ended
28 February 28 February 2011 2010 R`000 R`000 Cash generated from operations 265 416 792 052 Interest received 61 393 83 838 Finance costs (25 270) (25 288) Dividends paid (111 856) (159 409) Dividends received 3 024 1 680 Taxation paid (115 577) (192 930) Secondary tax on companies paid (12 225) (18 936) Cash flows from operating activities 64 905 481 007 Expenditure to maintain operating capacity (36 928) (16 226) Expenditure for expansion (264 012) (310 447) Cash flows from investing activities (300 940) (326 673) Cash flows from financing activities 1 542 (92 611) Net (decrease)/increase in cash for the year (234 493) 61 723 Effect of exchange rate changes on cash and cash equivalents (34 952) (47 996) Cash at beginning of period 1 347 604 1 333 877 Cash and cash equivalents at the end of the year 1 078 159 1 347 604 SEGMENT INFORMATION Roads & Earth-
R`000 Structures Building works 28 February 2011 Contract revenue 2 072 757 3 276 132 845 556 Intersegment contract revenues 127 024 - 156 179 Reportable segment profit/(loss) 146 341 94 472 70 967 Reconcil- Mining ing R`000 Services segments Total 28 February 2011 Contract revenue 701 973 - 6 896 418 Intersegment contract revenues 72 133 32 112 387 448 Reportable segment profit/(loss) 22 811 (1 580) 333 011 Roads & Earth- R`000 Structures Building works 28 February 2010 Contract revenue 2 098 888 3 688 062 1 104 302 Intersegment contract revenues 63 720 - 46 508 Reportable segment profit/(loss) 135 390 136 359 104 713 Reconcil-
Mining ing R`000 Services segments Total 28 February 2010 Contract revenue 473 771 - 7 365 023 Intersegment contract revenues 15 302 66 035 191 565 Reportable segment profit/(loss) 33 135 (20 352) 389 245 The segment information has been amended to reflect the information as presented to the chief operating decision-makers, in compliance with the requirements of IFRS 8: Operating Segments. STATEMENT OF CHANGES IN EQUITY Share Share- Foreign capital based currency Revaluation
and payments translation surplus R`000 premium reserve reserve reserve Balance at 1 March 2009 audited 1 055 997 31 577 42 630 4 997 Treasury shares acquired (35 379) - - - Employee share options - 16 240 - - Realisation of share-based payment reserve - (87) - - Total comprehensive income - - (42 345) - Profit for the year - - - - Translation of foreign subsidiary - - (42 345) - Non-controlling interests acquired - - - - Dividends paid - - - - Balance at 28 February 2010 audited 1 020 618 47 730 285 4 997 Treasury shares acquired (9 423) - - - Employee share options - 8 689 - - Realisation of share-based payment reserve - (113) - - Total comprehensive income - - (37 372) - Profit for the year - - - - Translation of foreign subsidiary - - (37 372) - Non-controlling interests acquired - - - - Dividends paid - - - - Balance at 28 February 2011 reviewed 1 011 195 56 306 (37 087) 4 997 Ordinary Non- Retained shareholders` controlling R`000 earnings interest interest Total Balance at 1 March 2009 audited 438 848 1 574 049 39 209 1 613 258 Treasury shares acquired - (35 379) - (35 379) Employee share options - 16 240 - 16 240 Realisation of share-based payment reserve 87 - - - Total comprehensive income 384 774 342 429 4 471 346 900 Profit for the year 384 774 384 774 4 471 389 245 Translation of foreign subsidiary - (42 345) - (42 345) Non-controlling interests acquired (56 464) (56 464) (41 324) (97 788) Dividends paid (159 418) (159 418) (181) (159 599) Balance at 28 February 2010 audited 607 827 1 681 457 2 175 1 683 632 Treasury shares acquired - (9 423) - (9 423) Employee share options - 8 689 - 8 689 Realisation of share-based payment reserve 113 - - - Total comprehensive income 333 011 295 639 - 295 639 Profit for the year 333 011 333 011 - 333 011 Translation of foreign subsidiary - (37 372) - (37 372) Non-controlling interests acquired (10 804) (10 804) (2 175) (12 979) Dividends paid (111 987) (111 987) - (111 987) Balance at 28 February 2011 reviewed 818 160 1 853 571 - 1 853 571 COMMENTARY The directors are pleased to present the reviewed condensed consolidated results ("reviewed results") for the 12 months ended 28 February 2011 ("the year"). Given the prevailing market conditions the group has delivered a commendable performance in line with the trading statement of 4 April 2011. Reduced top and bottom line growth continues to reflect a market defined by competitive trading conditions, delayed contract awards and contract cancellations. Nonetheless the group`s order book currently stands at a robust R8,2 billion. The group`s financial position remains sound having cash on hand of R1,1 billion (Feb 2010: R1,3 billion) with nil net gearing. Due to existing and future growth opportunities the board has adopted a prudent dividend policy. A final dividend of 25 cents (Feb 2010: 45 cents) has been declared, resulting in a total dividend for the year of 45 cents (Feb 2010: 70 cents). Basis of preparation The reviewed condensed consolidated results have been prepared in accordance with the Framework concepts and the measurement and recognition requirements of the International Financial Reporting Standards and containing information required by the IAS 34 Interim Financial Reporting; the AC 500 standards as issued by the Accounting Practice Board and in compliance with the Listings Requirements of the JSE Limited and in the manner required by the Companies Act. The reviewed results are prepared on the historical cost basis, with the exception of certain financial instruments which are measured at fair value. The accounting policies and method of measurement and recognition applied in preparation of the reviewed results are consistent with those applied in the group`s audited annual financial statements for the previous year ended 28 February 2010. Auditor`s review The results have been reviewed by the group`s auditors, Mazars. Their unqualified review opinion is available for inspection at the company`s registered office. Their review was conducted in accordance with ISRE 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". Group profile Stefanutti Stocks operates throughout South Africa, Southern Africa and the Middle East with multi-disciplinary expertise including concrete structures, marine construction, piling and geotechnical services, all building works, concessions (Public Private Partnerships) roads and earthworks, mine residue disposal facilities (mainly tailings dams), open-pit contract mining, mechanical and electrical installation and construction, as well as power line transmission and distribution construction. These disciplines are formally structured into the following business units: Structures; Building (incorporating International and Concessions); Roads & Earthworks; and Mining Services (incorporating Mechanical, Electrical, Power and Mining). Overview of results The directors present the reviewed results for the year ended 28 February 2011. The group continues to adopt a principle of effective and informative reporting, in line with reporting standards and industry norms. Revenue of R7,0 billion declined by 6,3% from the previous year (R7,5 billion). Operating profit before investment income decreased by 11,7% to R442 million (Feb 2010: R501 million), while profit for the year after tax reduced by 14,4% to R333 million (Feb 2010: R389 million). Earnings per share of 193,6 cents (Feb 2010: 220,1 cents) and headline earnings per share of 192,5 cents (Feb 2010: 224,3 cents) decreased by 12,1% and 14,2%, respectively. Stefanutti Stocks successfully maintained its order book, which at 28 February 2011 stood at R6,4 billion (Feb 2010: R6,2 billion). The group`s interest-bearing non-current liabilities have increased to R133,7 million from R108,5 million due to additional funding required for the expansion of the group`s offices and additional CAPEX mainly by the Roads & Earthworks and Mining Services business units. Review of operations Structures Structures remains the largest contributor to group operating profit with its activities encompassing civil engineering, geotechnical and marine capabilities. The business unit continued to perform well despite tough trading conditions, with a number of sizeable new contract awards during the year. Year-on-year revenue remained constant at R2,1 billion, while the operating margin improved from 7,9% to 8,5%, mainly as a result of the successful finalisation of certain contracts. The cash flow position remained positive and will continue to be focussed on by management in the year ahead. Some of the project highlights included work for Kumba at the Sishen Iron Ore Mine, surface infrastructure for Exxaro on the Grootegeluk Medupi Expansion Project and water pipeline projects including for Trans Caledonian Tunnel Authority ("TCTA"). In Africa Structures expanded into Sierra Leone securing two new projects. Looking ahead the market is expected to remain competitive. However, over the medium to long term, the resources industry is showing some promise of growth with its associated opportunities. Structures held an order book of R2,4 billion at year-end. Building Building services the full scope of building construction from commercial and industrial through to residential and leisure. The business unit overcame a challenging environment to maintain a solid performance, on par with the previous year. Revenue declined from R3,7 billion to R3,3 billion while the operating margin declined only slightly from 3,9% to 3,5%. The business unit`s traditional residential and commercial tender markets remained competitive and although some municipal and national government projects were released during the year, government has not yet become a substantial contributor to the order book. Building continued to pursue cross- border growth. Although highly competitive conditions are expected to continue the business unit is pro-actively marketing its well-developed skills and capacity, while engaging with developers on an ongoing basis in anticipation of their bringing to market large-scale projects in the latter part of 2011. Building is also targeting a number of industrial and commercial projects as well as mass housing for large institutions, and continues to source additional cross-border projects. In addition the business unit is pursuing opportunities on a number of hospital projects for various provincial governments. At year-end Building had an order book of R2,7 billion in hand. International The business unit retains its presence in the Middle East with Stefanutti Stocks continuing to view this region as important for future growth. Concessions The group remains well-positioned to pursue opportunities in the Concessions and Public Private Partnership arena in the Southern African market. Stefanutti Stocks anticipates that projects in the hospital and office accommodation sectors may come to market in the coming year and is pursuing selected opportunities in other sectors. Roads & Earthworks Roads & Earthworks operates in the construction of roads, bulk earthworks, landfill sites, terraces for new developments and municipal services. Although the overall performance for the year was subdued the business unit continued to maintain consistently high profit margins. Revenue decreased year-on-year to R846 million (from R1,1 billion) due to excessive rain, project cancellations and protracted award periods in relation to new projects. Margins remained at a satisfactory level of 12,9% compared to 13,8% in the previous year. New projects secured during the period included road upgrades in the Northern Cape, Mpumalanga and Zambia, work for Kumba at Sishen, and a number of projects in optic fibre infrastructure roll-out. Looking ahead, investment in road infrastructure across South Africa should continue in light of the need for rehabilitation and expansion. SANRAL`s expenditure on Phase II of the Gauteng Freeway Improvement Project ("GFIP") is expected to commence in the next financial year. Roads & Earthworks had already secured an order book of R700 million at year- end. Mining Services This business unit includes: - Mine residue disposal facilities and open pit contract mining across Southern Africa ("Mining"); and - Mechanical, electrical, instrumentation and powerline distribution operations ("MEP"). These businesses experienced a difficult year and performance was constrained by competitive tendering as well as certain problem contracts. Notwithstanding an increase in revenue from R474 million to R702 million, the business unit suffered a reduction in operating margin from 11,8% to 6,1%. There has been an increase in tenders and feasibility studies resulting in a solid order book for mechanical work at the start of the current financial year. Although opportunities for electrical work are currently limited, these are expected to improve in line with developments in the mechanical sector. The business unit has bolstered its capability to position itself on future tenders in the growing power transmission and distribution market. The order book at year-end stood at R600 million. Health and safety During the year the group achieved a Disabling Injury Frequency Rate ("DIFR") of 0,22 (Feb 2010: 0,32). Stefanutti Stocks remains committed to continuously elevate safety standards for all employees across all disciplines. Acquisitions In line with strategy the group acquired the remaining minority interests in S&B Construcoes (Moc) Lda. In addition, the group acquired certain business operations of RGF Power Projects CC ("RGF") and a 100% shareholding in Apollo E&I Construction (Pty) Limited ("Apollo"). The fair values of assets and liabilities approximates the carrying amounts of assets and liabilities before acquisition. RGF Apollo Acquisition date 12 April 2010 1 June 2010 Voting equity % - 100 Fair value Fair value At acquisition values R`000 R`000 Non-current assets 3 688 10 407 Current assets - 47 069 Non-current liabilities - (2 192) Current liabilities - (46 655) Net asset value 3 688 8 629 Cost of acquisition 5 875 19 691 Goodwill arising 2 187 11 062 Cash paid 5 875 19 691 Revenue for the year 1 March 2010 to 28 February 2011 - 165 068 (Loss) for the year 1 March 2010 to 28 February 2011 - (328) Revenue since acquisition - 127 892 Profit since acquisition - 5 074 Acquisition related costs 115 442 The goodwill is attributable to the acquiring of existing relationships with customers as well as the expertise of the workforce. It is impracticable to report any revenue, profit or loss for RGF as its operations were acquired and fully integrated into existing operations from the acquisition date. The acquisitions were concluded to expand the group`s capacity. The net asset value of receivables acquired equals their fair value. Receivables acquired amount to R30 million. All receivables will be recovered. All acquisition related costs were recognised in the statement of comprehensive income as an expense within operating expenses. Other than the acquisition of minorities in S&B Construcoes (Moc) Lda, the group made no other material related party transactions. Directorate Stephen Pell was appointed as Chief Operating Officer with effect from 1 August 2010. Outlook Stefanutti Stocks is well-equipped to successfully navigate the challenging market conditions ahead, with its multi-disciplinary capability, wide geographical spread and diversified client base. The first signs of recovery are becoming evident. The South African economy is forecast to grow by 3,5% in 2011, as predicted by the International Monetary Fund, while general business confidence levels also appear to be gradually improving. However, competition remains tight and consequently profit margins are likely to remain under pressure in the short to medium term. Looking ahead government has committed R1 trillion to infrastructure spend over the next few years. It remains to be seen how much and how soon this will translate into the roll-out of projects to market. However, some fixed investment has commenced and Stefanutti Stocks has secured sizeable projects for TCTA and additional works for Kusile Power Station. Investment in roads, water and sanitation provision and social infrastructure such as schools and hospitals are urgently needed in order to address the overwhelming need for these services. Private sector fixed investment prospects are also expected to continue improving in the short term. The resources industry is starting to show some early signs of recovery. However, the sector`s recovery is still largely dependent on the global economic recovery as well as macro-environmental factors such as infrastructure delivery, regulatory frameworks and political developments. Sub-Saharan Africa offers considerable opportunities with an estimated annual investment of US$93 billion (approximately 15% of the region`s GDP) required to meet conservative development targets to 2015. Of this, approximately US$60 billion comprises capital expenditure on new infrastructure while the remainder is required for maintenance and operation. Competition Commission The investigation by the Competition Commission into anti-competitive behaviour by companies within the construction sector is currently ongoing. Stefanutti Stocks is co-operating fully and has submitted the requisite documentation in this regard, and awaits formal feedback from the Commissioner. Subsequent events No material events have occurred between the reporting date and the date of this announcement. Renewal of cautionary announcement Further to the cautionary announcement published on 6 April 2011, shareholders are advised that the company has entered into negotiations which if successfully concluded may have a material effect on the price of the company`s securities. Accordingly, shareholders are advised to exercise caution when dealing in the company`s securities until a further announcement is released. Dividend declaration Notice is hereby given that a final dividend of 25,0 cents per share (full year: 45,0 cents); (Feb 2010: final dividend of 45,0 cents and a total dividend of 70,0 cents) has been declared. Last day to trade cum dividend Friday, 24 June 2011 Shares trade ex dividend Monday, 27 June 2011 Record date Friday, 1 July 2011 Payment date Monday, 4 July 2011 Share certificates may not be dematerialised or rematerialised between Monday, 27 June 2011 and Friday,1 July 2011, both dates inclusive. Secondary Taxation on Companies is expected to amount to R4,7 million. Appreciation We thank our management and staff for their unwavering commitment and hard work in demanding conditions. We also extend our appreciation to all our customers, suppliers, service providers and shareholders for their continued support. On behalf of the board Gino Stefanutti Willie Meyburgh Chairman Chief Executive Officer 24 May 2011 Directors: B Stefanutti (Chairman)* W Meyburgh (Chief Executive Officer) D Quinn (Chief Financial Officer) S Pell (Chief Operating Officer) S Ackerman N Canca*# K Eborall*# H Mashaba* M Mkwanazi*# B Sithole* J Fizelle* (alternate to B Sithole) *Non-executive director Irish # Independent Registered office: Protec Park Cnr Zuurfontein & Oranjerivier Drive Kempton Park, 1619 (PO Box 12394, Aston Manor, 1630) Corporate adviser and sponsor: Bridge Capital Advisors (Pty) Limited 2nd Floor, 27 Fricker Road Illovo Boulevard, Illovo, 2196 (PO Box 651010, Benmore, 2010) Transfer secretaries: Computershare Investor Services (Pty) Limited 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) Company secretary: W Somerville 20 Lurgan Road Parkview, 2193 www.stefanuttistocks.com Date: 24/05/2011 07:05:08 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

Share This Story