Wrap Text
Reviewed Condensed Consolidated Results for the 12 months ended 28 February 2025
STEFANUTTI STOCKS HOLDINGS LIMITED
("Stefanutti Stocks" or "the company" or "the group")
(Registration number: 1996/003767/06)
(Share code: SSK ISIN: ZAE000123766)
(Main Board - General Segment)
REVIEWED CONDENSED
CONSOLIDATED RESULTS
FOR THE 12 MONTHS ENDED 28 FEBRUARY 2025
FINANCIAL RESULTS
REVIEWED AUDITED
28 FEBRUARY 29 FEBRUARY %
2025 2024 CHANGE
Contract revenue - Continuing operations (R'000) 7 657 091 7 084 226 8
Operating profit before investment income - Continuing operations (R'000) 333 370 209 746 59
Profit for the year - Continuing operations (R'000) 209 001 26 139 700
Loss for the year - Discontinued operations (R'000) (77 547) (10 253) (656)
Profit for the year - Total operations (R'000) 131 454 15 886 727
Earnings per share - Total operations (cents) 78,60 9,50 727
Headline earnings per share - Total operations (cents) 109,36 (55,73) 296
AUDITORS' REVIEW
These reviewed condensed consolidated results for the year ended 28 February 2025 have been reviewed by the group's auditors, Forvis Mazars.
Their unmodified review conclusion is included in the full announcement which is available on the company's website on the following link:
https://stefanuttistocks.com/investors/reviewed-condensed-consolidated-results-feb-2025/.It is also available for inspection at the company's
registered office. The auditor's conclusion contained the following emphasis of matter pertaining to a material uncertainty related to going
concern:
We draw attention to the "Going Concern" disclosure note included in these condensed consolidated financial statements, which indicates that at
28 February 2025 the group's current liabilities exceeded its current assets by R1 302 million (2024: R1 136 million), and as of that date,
the group had an accumulated loss of R1 062 million (2024: R1 193 million). As stated in the "Going Concern" note, these events or conditions,
along with other matters as set forth in the note, indicate that a material uncertainty exists that may cast significant doubt on the group's
ability to continue as a going concern. Our conclusion is not qualified in respect of this matter.
RESTRUCTURING PLAN UPDATE
The group hereby provides shareholders with an update on the Restructuring Plan as reported in the Unaudited Condensed Consolidated Results
for the six months ended 31 August 2024 issued on 26 November 2024 and the SENS announcements issued on 24 December 2024, 28 February 2025,
28 March 2025 and 30 April 2025.
The following aspects of the Restructuring Plan remain outstanding:
- concluding the disposal of SS-Construcoes (Mocambique) Limitada and Stefanutti Stocks Construction Limited (the disposal group);
- reaching a favourable outcome from the processes relating to the contractual claims on the Kusile power project;
- concluding the repayment terms with respect to the settlement reached relating to the Kalabo-Sikongo-Angola border gate road in
the Western Province of Zambia (Kalabo settlement); and
- an evaluation of the company's capital structure, including the potential of raising new equity.
The group reached agreement with the Lenders to extend the capital repayment profile of the loan as well as its duration to 30 June 2026.
Capital repayments of R148 million were made during the year reducing the loan to R849 million (Feb 2024: R997 million), with a reduction
in interest paid to R115 million (Feb 2024: R134 million).
The loan bears interest at prime plus 5,1%, including arranging and facility fees, and is secured by special and general notarial bonds over
movable assets, continuous covering mortgage bonds over immovable assets and various cessions. The loan does not contain any financial
covenants but rather imposes certain information sharing and general undertakings.
The Lenders continue to provide guarantee support for current and future projects being undertaken by the group.
The Restructuring Plan is anticipated to be implemented over the period to June 2026 and the group will continue to update shareholders
on the progress of the various aspects of the Restructuring Plan.
The directors consider it appropriate that the group's results for the year be prepared on the going-concern basis, taking into consideration:
- the current order book;
- short-term potential awards;
- identified prospects over the medium- and long-term;
- continuing operations executing the group's order book profitably;
- reaching a favourable outcome on contractual claims on the Kusile power project;
- continued support from the Lenders; and
- successfully implementing the remaining aspects of the Restructuring Plan.
The loan provided by the Lenders has assisted with the group's liquidity, even though at 28 February 2025 the group's current liabilities
exceed its current assets by R1 302 million (Feb 2024: R1 136 million) and as of that date, had an accumulated loss of R1 062 million
(2024: R1 193 million). The matters as noted above including uncertainties surrounding the contingent liabilities as stated in
note 26 of the group's Consolidated Annual Financial Statements for the year ended 29 February 2024, continue to indicate that a material
uncertainty exists that may cast significant doubt on the group's ability to continue as a going concern, and as a consequence could impact
on the group's ability to realise its assets and discharge its liabilities in the ordinary course of business.
KUSILE POWER PROJECT UPDATE
As previously highlighted to shareholders in numerous announcements and updates since late 2018, the group continues to pursue its
contractual claims on the Kusile power project.
Since August 2021, the group has secured payment of a combined total value of R119 million for measured work and
Dispute Adjudication Board (DAB) rulings.
Stefanutti Stocks and Eskom (the parties) entered into an "Interim Arrangement for the Purposes of Agreeing or Determining the Contractor's
Claims and Facilitating the Dispute Resolution Process" in February 2020, for all delay events up to the end of December 2019, referred to as
claim 5. This process involves the appointment by each party of independent experts (the experts) to evaluate the causes, duration and
quantification of delays.
Further to the above, the parties and the DAB have signed a memorandum of understanding (MOU) dealing with the following:
- The DAB will issue decisions confirming entitlements, which entitlements the experts have agreed to, which will then be binding on
the parties;
- The DAB will rely on the experts for the narrowing of the issues and information to be considered in its assessments;
- 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;
- The DAB will issue such interim decisions relating to delay and quantum; and
- At the end of the process the DAB will issue a final binding decision in terms of the contract with respect to duration and
quantification, at which point either party may issue a notice of dissatisfaction and refer the dispute to arbitration.
The parties and their respective experts have filed all submissions, notes and opinions with the DAB. The DAB is expected to issue a
binding decision by mid-2025. Either party may issue a notice of dissatisfaction with the decision and refer the dispute to arbitration.
However, such decision will remain enforceable unless and until overturned in arbitration.
The group submitted claim 6 in May 2025, for delay events after 31 December 2019, through the contractual process. Eskom has
notified Stefanutti Stocks of its intention to deliver a delay damages claim, in June 2025, for late completion. Stefanutti Stocks will
defend this through the contractual process. Should claim 6 and/or the delay damages claim fail in the contractual process, they will
be referred to the DAB for resolution.
Due to the quantum of claim 5 being unknown and the processes relating to claim 6 and the delay damages claim being uncertain,
no claims have been recognised in the financial statements.
OVERVIEW OF RESULTS
Discontinued Operations and Disposal Groups
On 22 November 2022 shareholders approved the disposal of SS-Construcoes (Mocambique) Limitada (SS Mozambique) and Stefanutti Stocks Construction
Ltd (SS Construction) (collectively the Proposed Transaction) by the company's wholly owned subsidiaries, Stefanutti Stocks Mauritius Holdings
Limited and Stefanutti Stocks International Holdings Proprietary Limited to CCG-Compass Consulting Group (Purchaser). The completion of the
Proposed Transaction is subject to the fulfilment or waiver of certain conditions precedent, including that the Purchaser provides alternative
security arrangements to release Stefanutti Stocks from its existing security arrangements. The parties have extended the period for fulfilment
or waiver of the conditions precedent to 31 May 2025.
SS Mozambique holds an 80% interest in a Mauritian company, Stefanutti Stocks Hyvec Partners JV Limited (Hyvec JV), which was established to
execute a contract that was awarded to construct villas for a resort in Mauritius (the Project). The Proposed Transaction envisaged that the
group's interest in Hyvec JV would be (indirectly) transferred to the Purchaser. However, for various commercial reasons, the parties now
intend for the 80% shareholding in Hyvec JV to be excluded from the Proposed Transaction. Consequently, the Hyvec JV has been included as
part of continuing operations, with the project now in its final stages.
The construction sector has been negatively impacted by ongoing security concerns and political instability in northern Mozambique as well as the
political unrest following disputed elections in December 2024. This has led to project delays and operational disruptions negatively impacting
SS Mozambique's operations resulting in the group recognising a fair value adjustment of R51 million. Further to the above, the Purchaser is
renegotiating various aspects of the agreement including the purchase price and payment terms. Shareholders will be updated accordingly in
terms of the progress or changes to the Proposed Transaction.
Due to circumstances beyond the group's control, the classification of the disposal group as held for sale remains appropriate. SS Mozambique has
been held for sale since August 2020.
The disposal group, managed by the Africa Region, reported a loss for the year of R78 million (Feb 2024: loss of R10 million) which includes a
fair value adjustment of R51 million (Feb 2024: R74 million fair value adjustment reversal) and a foreign exchange loss of R5 million
(Feb 2024: a profit of R5 million).
Continuing operations
Contract revenue and operating profit before investment income improved to R7,7 billion (Feb 2024: R7,1 billion) and R333 million
(Feb 2024: R210 million) respectively, and include the Kalabo settlement of R39 million.
With respect to the Kalabo settlement, shareholders are advised that the Zambian Court of Appeal ruled in favour of Stefanutti Stocks
and its joint venture. Following the ruling, the parties have agreed to a settlement amount, however repayment terms still need to
be concluded.
The group has recognised R148 million being its 50% share of the settlement amount less costs. An expected credit loss (ECL) of R109 million
was recognised due to the uncertainty surrounding the recoverability thereof, which will be assessed on an ongoing basis. A tax charge of
R12 million was also recognised.
Profit for the year for total operations is R131 million (Feb 2024: R16 million).
Earnings and headline earnings per share for total operations
is 78,60 cents (Feb 2024: 9,50 cents), and 109,36 cents (Feb 2024: loss per share of 55,73 cents) respectively.
The group's current order book is R8,6 billion (Feb 2024: R8,4 billion) of which R1 billion (Feb 2024: R1,8 billion) arises from work beyond
South Africa's borders.
Safety
Management and staff remain committed to the group's health and safety policies and procedures and together strive to constantly improve
the group's safety performance. The group's Lost Time Injury Frequency Rate at February 2025 was 0,08 (Feb 2024: 0,03) and the
Recordable Case Rate was 0,29 (Feb 2024: 0,24).
Broad-Based Black Economic Empowerment (B-BBEE)
The group is a level 1 B-BBEE contributor measured in terms of the Construction Sector scorecard with a Black Ownership score of 63,73%.
Industry-related matters
The group has experienced less disruption of unlawful activities by certain communities and informal business forums in several areas of South Africa.
Dividend declaration
Notice is hereby given that no dividend will be declared (Feb 2024: Nil).
Subsequent events
Other than the matters noted herein, there were no other material reportable events 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 reviewed 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 and reviewed auditors report is also available at https://senspdf.jse.co.za/documents/2025/jse/isse/ssk/FY2025.pdf
and https://stefanuttistocks.com/investors/reviewed-condensed-consolidated-results-feb-2025/.
Published on 27 May 2025
Corporate advisor and sponsor
Bridge Capital Advisors Proprietary Limited
10 Eastwood Road, Dunkeld, 2196
(PO Box 651010, Benmore, 2010)
Date: 27-05-2025 07:05:00
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