Construction and engineering firm Stefanutti Stocks, which is battling to avoid joining recently delisted peers, says it has managed to more than halve losses in the businesses it intends to keep for its half-year to end-August.
The group said in a trading update it expects to report a loss per share from continuing operations of between 50c and 70c for its six months to end-August, an improvement of up to two thirds.
Total earnings per share, which includes assets held for sale, are expected to reflect a loss of between 100c and 120c from the prior period’s 147.06c, an up to about R80m improvement for a group valued at R92m on the JSE.
The group like many other construction firms, it has struggled amid a dearth of investment in infrastructure, and current liabilities exceeded its assets by R1.3bn in the year to end-February, when its operating loss widened to R111m, from R1.02m a year before. Net debt stood at R1.5bn at the end of February.
The company also struggled amid a protracted and costly legal wrangle with power utility Eskom, to recover money for services rendered at the multibillion rand Kusile power station.
An Eskom report in 2020 claimed a R1bn overpayment to a Stefanutti Stocks-Basil Read joint venture, something Stefanutti disputes. Eskom had adopted an adverse approach to certifying the work done, with Stefanutti saying in its 2021 results this had more than doubled the initial funding requirement to R986m, which excludes the initial effects of Covid-19.
Adjudication hearings were conducted during November 2020 and February 2021, but Stefanutti said in 2021 results it was highly probable that these disputes would be referred to arbitration. As several disputes relate to measurement of the works, all parties involved embarked on an independent expert process to resolve these disputes, and the parties were on track to substantially resolve the disputes by February 2022, the group said at the time.
Stefanutti has been pursuing a restructuring plan that includes job cuts and the sale of noncore assets. The group said in June it had agreed to sell its 49% stake in Al Tayer, an Emirati building and interior fit-out company, and received an initial payment of about R90m in November.
The R80m sale of its mining services division, however, fell through in August.
In afternoon trade on Wednesday, the group’s shares were trading 5.77% lower at 49c, having risen by three quarters so far in 2021, but having fallen almost 90% over the past five years.
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