JSE-listed construction group Stefanutti Stocks reported a profit of R9.25 million for the six months ended August 31, compared with a loss of R188.48 million for the six months ended August 31, 2021.
Contract income from continuing operations declined to Rs 2.87 crore in the interim period from Rs 3.15 crore in the previous comparable period, but operating profit improved to Rs 54.03 crore of Rs., compared to Rs.8.93 crores in the previous year. period
Earnings on total trading were 5.53c, compared with a loss of 112.69c in the previous period, while the overall loss per share narrowed to 25.02c from 67.12c in the previous period.
Stefanutti’s order book ended the period at R6.3 billion, of which R1.6 billion came from work outside South Africa’s borders.
“We continue to see numerous opportunities across a number of sectors including mining, transport and civil infrastructure, water and wastewater treatment plants, renewable energy, industrial plants, oil and gas, pipelines and dams, to name but a few.
“We are ready to take advantage of these opportunities as they present themselves,” said CEO Stefanutti Russell Crawford he says
Regarding its restructuring plan, the group is currently in negotiations with its lenders to extend the capital repayment profile of the loan, as well as its duration until February 2024 due to further delays beyond the control of the group in the resolution of contractual claims and compensation events in certain projects.
These include the slower-than-expected sale of identified operations and the non-implementation of the material handling and waste management subdivision transaction.
“The benefit of the extended restructuring period [is that it] it provides a greater degree of confidence in the forecasted cash flows, which will ultimately result in a reduction in the residual loan balance of the R420 million previously indicated,” says Crawford.
In addition, the transaction related to the disposal of the group’s 49% stake in the UAE operation became unconditional on 18 July.
Regarding the sale of the Mozambique operation, the required shareholder approval was obtained on 22 November. The operation remains conditional and is subject to compliance with the rest of the suspensive conditions.
CONTRACT TERMINATES
Meanwhile, Stefanutti continues to pursue a number of contractual claims and compensation events in connection with the Kusile Power Project.
Since August 2021, the group has secured payment of a total of R110 million for metered works and Dispute Adjudication Board (DAB) rulings.
Substantial variations are still being agreed with state power company Eskom. The outcome of this will determine whether further certification will be secured for the measured works or whether the variances will be referred to the DAB, says Crawford.
Stefanutti and Eskom have signed an interim agreement with the aim of settling or determining the contractor’s claims and facilitating the dispute resolution process in February 2020 for all delay events until the end of December 2019.
This process involves the appointment of independent experts to assess the causes, duration and quantification of delays, Crawford points out.
“To date, the group has submitted two interim claims to experts after taking into account all payments received to date for the project, including a preliminary and general cost claim of R337 million, and a preliminary and general cost claim of subcontractor of R194 million.
“It is intended that the group will present the remaining claims relating to construction costs, commissioning costs and interest and finance charges to the experts before December. The experts will review all claims, draft agreements and limited matters of difference for referral to the DAB for a decision under the memorandum of understanding with Eskom.”
Stefanutti expects the DAB to issue its final binding decision in the second quarter of 2023 and noted that either side has the right to appeal.
“At this stage, the group’s claims team is not able to quantify the value of potential awards, as claims must follow due process. Therefore, these interim claims have not been recognized in the financial statements,” says Crawford.
