Annual Results - Stefanutti Stocks

1

AnnualResults

12 months ended

28 February 2021

MSC Durban CruiseTerminal,

KwaZulu-Natal

Restructuring

Plan update

Hirt & Carter warehouse, KwaZulu-Natal

22

2

Restructuring plan update (to end April 2021)

3

Sale of non-core assets

▪ One development property in the process of being sold

▪ Two properties (owner-occupied – formwork yard, satellite office)

▪ Residential property (Sasolburg)

▪ 33 Units at Northern Views (Centurion)

Restructuring plan update

4

Sale of certain operations

(classified as non-current assets Held for Sale)

▪ Mining Services division

• Materials Handling sub-division

• Tailings Management sub-division

▪ United Arab Emirates operation

• Sale negotiations ongoing

3


5

Sale of 93 units of underutilised plant & equipment

Net book value

R27.8mOutstanding settlement

R0.6mActual sale value

R45.9m

Winding down of contract mining sub-division

Sale of 77units

Net book value

R87mOutstanding settlement

R27.2mActual sale value

R115m


6

Recovery of slow-paying receivables

▪ Zambia

▪ Collected R36m (55% of R66m)

▪ Receipts remain irregular

55%R66m

4

Retrenchments (May 2020 – Feb 2021)

Internal restructuring – Salaried headcount

Resignations (until end Feb)

15% R44.6m

258 Retrenchment costReduction Monthly savings

R4.5m

11% 93

187 ReplacementsReduction Monthly savings

R5.7m

Restructuring plan update

7

26%

Reduction in

salaried headcount

Monthly savings

R10.2m

Eskom – Kusile Building Project (SSBR Package-16)

8

5

9

Eskom – Kusile Power Station (SS-Izazi Package-28)

Eskom – Kusile Building Project (SSBR Package-16)

10

6

Eskom – Kusile Main Civil Works (KCW Package-10)

11

Key

indicators(continuing operations)

1212

Mpophoweni Wastewater

Treatment Works,KwaZulu-Natal

B-BBEE

Level 181.3% Black Economic

Interest score

Capex

R34m

LTIFR

RCR

Health and safety

0,35

0,03

Cash on hand

R756m

Debt : Equity

441%

Current order book

R5.5 bn

Operating loss

(R111m)Contract revenue

R5.0 bn

7

13

COVID-19pandemic

Newlands Cricket Stadium,

Western Cape

Financial impact of COVID-19 (total operations)

Rm Revenue Operating profit

Secured contracts deferred due to lock-down (R696m) (R32m)

Secured contracts cancelled (R117m) (R5m)

Expected project awards delayed (unsecured) (R1 790m) (R70m)

Expected project awards cancelled (unsecured) (R293m) (R12m)

Unavoidable costs during lock-down - (R54m)

Total (R2 896m) (R173m)

14

8

Year-on-year comparison of hours worked

15

2.057

1.817

2.0451.987

2.0572.143

2.0152.108

2.013

1.269

1.528

1.732

1.615

0.676

0.996

1.368

1.499

1.358 1.347 1.323 1.290

0.846

0.960

1.099

0.0

0.5

1.0

1.5

2.0

Mar 2020

Level 5lock-down

April 2020

Level 5lock-down

May 2020

Level 4lock-down

June 2020

Level 3lock-down

July 2020

Level 3lock-down

Aug 2020

Level 2lock-down

Sep 2020

Level 1lock-down

Oct 2020

Level 1lock-down

Nov 2020

Level 1lock-down

Dec 2020

Level 1lock-down

Jan 2021

Level 3 *lock-down

Feb 2021

Level 3lock-down

FY2020 FY2021

Million

(37%) (37%)

(63%)

(51%)(31%)

(27%)(33%) (36%)

(33%)

(37%)

(37%)

(21%)

* Level 3 lock-down implemented on 29 December 2020

27 26 0

18 18 0

61 60 1

0 1

19

57

75 7987 89

109

224

243

0

50

100

150

200

250

April2020

May2020

June2020

July2020

Aug2020

Sep2020

Oct2020

Nov2020

Dec2020

Jan2021

Feb2021

COVID-19 Statistics: as at 28 February 2021

16

243 20 252 1 156

Total positive cases identified

Contractor positive cases

Total recoveriesTotal deaths

(sub-contractor)New cases

since Oct 2020

NigeriaSunday

28

Feb 2021

ZambiaMozambique

14 13 0

Botswana

Limpo

po0 0 0

KwaZulu-NatalEastern Cape

Western Cape

Limpopo

Free StateEswatini

Northern Cape

North West

Mpumalanga

Gauteng

0 0 0

0 0 0

77 73 0

6

6 4 0

18 16 022 22 0

14 14 0

1 1 0

0 0 0

96% recovery rate

9

Operational

overview

17

Houghton Hotel, Gauteng

Construction & Mining (C&M)

Contract revenue

Rbn

Rm

Operating profit / (loss)

Continuing operations

Contract revenue

Rbn

Rm

Operating profit / (loss)

Total operations

4.05.1

0

2

4

6

Feb 2021 Feb 2020

80

(418)

-600

-400

-200

0

200

Feb 2021 Feb 2020

3.74.7

0

2

4

6

Feb 2021 Feb 2020

71

(383)

-600

-400

-200

0

200

Feb 2021 Feb 2020

18

10

Construction & Mining (C&M) (continuing operations)

19

41%

22%

15%11%

6% 5%

49%

12%

26%

5% 4% 4%

0%

10%

20%

30%

40%

50%

60%

Transportinfrastructure

Surface miningrelated services

Water, sanitation& pipelines

Bulk earthworks& geotechnical

Industrial plants,oil & gas

Energygeneration

Feb 2021 Order book

% turnover and order book by sector

Current Order Book

R3.5 bn

Feb 2021 Order book

Total work outside South Africa 39% 60%

Public sector work in SA 21% 21%

Public sector work outside SA 25% 38%

▪ Short-term potential awards ±R4.9 billion

▪ Identified prospects ±R30.6 billion

Building overview – Excluding the UAE

20

Contract revenue

1.62.6

0

1

2

3

Feb 2021 Feb 2020

(22)(490)

-500

-300

-100

100

Feb 2021 Feb 2020

Rbn

Rm

Operating (loss)


Contract revenue

1.11.7

0

1

2

3

Feb 2021 Feb 2020

(31)(514)

-500

-300

-100

100

Feb 2021 Feb 2020

Rbn

Rm

Operating (loss)

Total operations

11

Building (continuing operations)

21

32%

23%

18%

12% 11%

2% 2%

27%

13%

8%4%

30%

10%8%

0%

10%

20%

30%

40%

Factories &warehouses

Shopping &retail

Office &commercial

Tourism &leisure

Housing &residential

Hospitals &medical centres

Energygeneration

Feb 2021 Order book

Feb 2021 Order book





▪ Short-term potential awards ±R2 billion


Current Order Book

R1.9 bn

Mechanical & Electrical (M&E) overview

22

Contract revenue

270 897

0

300

600

900

Feb 2021 Feb 2020

(64)(25)

-100

-50

0

50

Feb 2021 Feb 2020

Rm

Rm

Operating (loss)


Contract revenue

Operating (loss)

Total operations

270 897

0

300

600

900

Feb 2021 Feb 2020

(64)(25)

-100

-50

0

50

Feb 2021 Feb 2020

12

Mechanical & Electrical (M&E) (continuing operations)

23


67%

33%

100%

0%0%

20%

40%

60%

80%

100%

120%

Industrial plants and oil & gas Surface mining related services

Feb 2021 Order book

▪ Short-term potential awards ±R890 million


Current Order Book

R130m

Feb 2021 Order book




Group (continuing operations)

24


29%

22%19%

11%8% 8%

3%

31%

35%

7%

16%

5%3% 3%

0%

10%

20%

30%

40%

Transportinfrastructure

Building Surface miningrelated services

Water &sanitation

Industrial plants,oil & gas

Bulk earthworks& geotechnical

Energygeneration

Feb 2021 Order book

Feb 2021 Order book




▪ Short-term potential awards ±R7.8 billion


Current Order Book

R5.5 bn

13

R’000s

Head Office

Total

operationsas reported

Contract revenue continuing ops 4 679 460 1 650 385 897 191 - 7 227 036

Contract revenue discontinued ops 448 459 910 431 - - 1 358 890

Operating profit/(loss) continuing ops (382 500)** (514 313)^ (25 062) (100 394)# (1 022 268)

Operating (loss)/profit discontinued ops (35 080) 24 435 - - (10 645)

Operating margin % continuing ops (8.2%) (31.2%) (2.8%) - (14.1%)

Operating margin % discontinued ops (7.8%) 2.7% - - (0.8%)

Operating Segments: Year end FY2020

25

As at 29 Feb 2020

* Excluded from reported contract revenue and operating profit as UAE is equity accounted to end June 2020. From July 2020 the operation has been classified as Held for Sale.

** Includes provision for slow-paying receivables of R331m.^ Includes provision for Kusile power project of R462m.

# Includes amortisation & impairment of intangible assets & goodwill of R55m.

C&MBuilding

(excl. UAE)* M&E

R’000s

Head Office

Total

operationsas reported

Contract revenue continuing ops 3 664 938 1 105 862 269 786 - 5 040 586

Contract revenue discontinued ops 380 920 485 850 - - 866 770

Operating profit/(loss) continuing ops 70 705 (30 533) (64 168) (87 423)^ (111 419)

Operating (loss)/profit discontinued ops 8 839 8 391 - - 17 230

Operating margin % continuing ops 1.9% (2.8%) (23.8%) - (2.2%)

Operating margin % discontinued ops (2.3%) 1.7% - - 2.0%

Operating Segments: Year end FY2021

26

As at 28 Feb 2021

* Excluded from reported contract revenue and operating profit as UAE is equity accounted to end June 2020. From July 2020 the operation has been classified as Held for Sale.

^ Includes restructuring and legal fees of R78m.

C&MBuilding

(excl. UAE)* M&E

14

Financial

overview

27

Foundation for Ammonia Tank,

Sasolburg, Free State

Financial indicators – continuing operations

Contract revenue R5.0bn

Operating loss (R111m)

Loss after tax attributable to equity holders (R287m)

Loss per share (186.16c)

Headline loss per share (188.39c)

Headline loss per share - total operations (155.13c)

Cash on hand R756m

Results for the 12 months ended 28 February 2021

28

15

Statement of Profit or Loss

R'000Reviewed

28 Feb 2021Restated

29 Feb 2020


Contract Revenue 5 040 586 7 227 036

EBITDA 33 983 (767 820)

EBITDA % 0.7% (10.6%)

Depreciation & amortisation and impairment of goodwill (145 402) (254 448)

Operating Loss (111 419) (1 022 268)

Operating margin % (2.2%) (14.1%)

Equity accounted investees (1 323) (2 171)

Net finance costs (105 502) (87 126)

Loss before tax (218 244) (1 111 565)

Taxation (93 104) 4 412

Loss for the period (311 348) (1 107 153)

Discontinued operations 21 166 35 105

Loss for the year total operations (290 182) (1 072 048)

Loss attributable to ordinary shareholders (287 027) (1 070 943)

Headline loss attributable to ordinary shareholders (259 450) (1 041 065)

Weighted average shares in issue 167 243 684 167 243 684

Diluted weighted average shares in issue 188 080 746 188 080 746

EPS - Continuing operations (cents) (186.16) (662.00)

- Total operations (cents) (171.62) (640.35)

HEPS - Continuing operations (cents) (188.39) (644.10)


29

Extracts from Statement of Profit or Loss

▪ Reduction in contract revenue

▪ EBITDA profit of R34m impacted by the negative effects the Covid-19 pandemic has had on the operations

▪ The comparative year’s EBITDA loss was impacted by:

• The raising of an additional provision of R462m for the Kusile power project

• Provision for slow paying receivables of R331m

30

R'000Reviewed

28 Feb 2021Restated

29 Feb 2020



EBITDA 33 983 (767 820)

EBITDA % 0.7% (10.6%)

16


▪ Depreciation of R130m (Feb 2020: R200m)

• Includes IFRS 16 depreciation charge of R29m (Feb 2020: R60m)

▪ Amortisation & impairment of assets & goodwill of R15m (Feb 2020: R55m)

▪ Resulting in an operating loss of R111m (Feb 2020: R1bn)

31

R'000Reviewed

28 Feb 2021Restated

29 Feb 2020



EBITDA 33 983 (767 820)

EBITDA % 0.7% (10.6%)

Depreciation & amortisation and impairment of goodwill (145 402) (254 448)

Operating Loss (111 419) (1 022 268)



▪ Reduced contribution from UAE operation of R6m to June 2020 (Feb 2020: R48m)

From July 2020 UAE has been classified as Held for Sale

▪ Net finance costs:

• Interest earned R29m (Feb 2020: R28m)

• Interest paid R134m (Feb 2020: R115m)

– increased due to funding requirements

– including discontinued operations total interest paid is R137m (Feb 2020: R126m)

▪ The tax charge has been impacted by the profitability of the cross-border operations as well as the

group not providing deferred tax on the losses incurred in the South African operations during the year

32

R'000Reviewed

28 Feb 2021Restated

29 Feb 2020

Operating Loss (111 419) (1 022 268)


Equity accounted investees (1 323) (2 171)

Net finance costs (105 502) (87 126)

Loss before tax (218 244) (1 111 565)

Taxation (93 104) 4 412

31

32

17


▪ Loss for the year from continuing operations is R311m

▪ Discontinued operations reporting a profit of R21m

▪ Loss for the year for total operations amounted to R290m

▪ HEPS continuing operations – loss of 188.39 cents per share

▪ HEPS total operations – loss of 155.13 cents per share

33

R'000Reviewed

28 Feb 2021Restated

29 Feb 2020

Loss for the year (311 348) (1 107 153)

Discontinued operations 21 166 35 105

Loss for the year total operations (290 182) (1 072 048)

Loss attributable to ordinary shareholders (287 027) (1 070 943)

Headline loss attributable to ordinary shareholders (259 450) (1 041 065)

Weighted average shares in issue 167 243 684 167 243 684

Diluted weighted average shares in issue 188 080 746 188 080 746

EPS - Continuing operations (cents) (186.16) (662.00)


HEPS - Continuing operations (cents) (188.39) (644.10)


Statement of Financial Position

R'000Reviewed

28 Feb 2021Restated

29 Feb 2020ASSETSNon-current assetsProperty, plant and equipment 608 411 1 591 318Goodwill and intangible assets 345 664 405 930Equity-accounted investees 25 703 342 361Deferred tax assets 231 872 266 776

Current assetsBank balances 755 638 740 513Other current assets 2 285 196 3 186 154Non-current assets Held for Sale and disposal groups 1 053 068 -

TOTAL ASSETS 5 305 552 6 533 052

EQUITY AND LIABILITIESCapital and reservesOrdinary shareholders’ interest 352 568 729 904Non-controlling interest - (18 238)

Non-current liabilitiesInterest-bearing liabilities 182 821 479 601Non-interest-bearing liabilities - 26Excess billings over work done 46 506 294 823Provisions 40 376 121 948

Current liabilitiesOther current liabilities 2 651 350 2 985 721Excess billings over work done 1 205 771 1 053 733Provisions 551 512 885 103Taxation (10 079) 431Liabilities directly associated with discontinued operations 284 727 -

TOTAL EQUITY AND LIABILITIES 5 305 552 6 533 052Current interest-bearing liabilities 1 352 478 998 135

34

33

34

18

Extracts from Statement of Financial Position

▪ Work in progress has reduced slightly to R611m▪ 37% reduction in trade accounts receivable

• Debtors days (excluding retentions) decreased to 95 days from 99 days

35

Other current assets

Inventories 59 594 192 049

Contracts in progress 610 758 639 545

Trade accounts receivable 1 106 091 1 756 495

Other receivables 508 753 598 065

2 285 196 3 186 154

R'000Reviewed

28 Feb 2021Restated

29 Feb 2020ASSETSNon-current assetsProperty, plant and equipment 608 411 1 591 318Goodwill and intangible assets 345 664 405 930Equity-accounted investees 25 703 342 361Deferred tax assets 231 872 266 776

Current assetsOther current assets 2 285 196 3 186 154Non-current assets Held for Sale and disposal groups 1 053 068 -

▪ Reduction in Plant, Property and Equipment is attributable to:• Reversal of the prior year’s IFRS-16 right-of-use assets – R300m• Reclassification to non-current assets Held for Sale – R573m• Plant and equipment sold – R119m

▪ Capex spend of R34m (Feb 2020: R99m)• Excludes IFRS 16 right-of-use assets of R55m (Feb 2020: R305m)• Maintaining R30m (excluding IFRS 16 right-of-use assets)


▪ Net cash on hand is R756m

▪ The group on 1 July 2020 entered into a term loan agreement with its Lenders on standard terms and conditions applicable to this type of funding terminating 28 February 2022.

▪ On 25 May 2021 agreement was reached with the lenders to extend the current capital repayment profile of the loan.

▪ The capital portion of the loan repayments to commence in July 2021 with the residual loan balance at 28 Feb 2022 of ±R420m. The resolution of the Kusile power projects’ claims taking longer than anticipated.

▪ The purpose of the Restructuring Plan is to put in place an optimal capital structure and access to liquidity to position the Group for long term growth in this uncertain environment.

▪ Lenders have agreed to provide continued guarantee support for current and future projects being undertaken by the group.

▪ Implementation of the Restructuring Plan to be concluded by February 2022.

▪ To the extent required, shareholder approval will be sought.

▪ Cost of funding: 5.4% above prime including arranging and facility fees.

▪ The funding provided by the Lenders has assisted in relieving the group’s liquidity pressures even though current liabilities exceed current assets at 28 February 2021.

▪ In addition thereto, uncertainties surrounding the COVID-19 pandemic and contingent liabilities as noted in note 25 of the group’s Consolidated Annual Financial Statements for the year ended 29 February 2020, continue to indicate that a material uncertainty exists that may cast doubt on the group’s ability to continue as a going concern in the short term.

▪ However, having converted the short-term funding agreement with the Lenders to a term loan and on the basis of successfully implementing the Restructuring Plan, the directors consider it appropriate that the group’s results for the year be prepared on the going-concern basis.

36

R'000Reviewed

28 Feb 2021Restated

29 Feb 2020ASSETSCurrent assetsBank balances 755 638 740 513Other current assets 2 285 196 3 186 154Non-current assets Held for Sale and disposal groups 1 053 068 -

TOTAL ASSETS 5 305 552 6 533 052

35

36

19


37

▪ Total interest bearing debt R1 553m (Feb 2020: R1 510m)

▪ Including amounts due to: - Term loan funding (R1 321m) - (Feb 2020: R839m)

- IFRS 16 rental liability (R55m) - (Feb 2020: R300m)

- VRP Settlement Agreement (R111m) - (Feb 2020: R103m)

▪ Interest bearing debt : equity ratio deteriorated to 441% (Feb 2020: 207%)

▪ Other current liabilities includes short term interest bearing liabilities of R1 352m (Feb 2020: R998m)

R'000Reviewed

28 Feb 2021Restated

29 Feb 2020

Non-current liabilitiesInterest-bearing liabilities 182 821 479 601Non-interest-bearing liabilities - 26

Current liabilitiesInterest-bearing liabilities 1 352 478 998 135Non-interest-bearing liabilities - 22 520Bank overdraft 18 134 32 376

Interest-bearing liabilities directly associated with discontinued operations 284 727 -


▪ Trade payables, accruals and other current liabilities have reduced from R2bn to R1.3bn

▪ Decrease in advances received from customers of R96m

▪ Contracting provisions decreased by R415m from Feb 2020

▪ Liabilities associated with discontinued operations amount to R285m

38

R'000Reviewed

28 Feb 2021Restated

29 Feb 2020Non-current liabilitiesExcess billings over work done 46 506 294 823Provisions 40 376 121 948

Current liabilitiesOther current liabilities 2 651 350 2 985 721

Trade accounts payable, accruals & other current liabilities 1 297 983 1 965 066Excess billings over work done 1 205 771 1 053 733

Provisions 551 512 885 103

Liabilities directly associated with discontinued operations 284 727 -

37

38

20

Abridged statement of cash flows (total operations)

39

Working capital changes

Cash consumed from operations

Net interest paid and dividend income

Taxation paid

Financing activities

Opening cash balance

Closing balance

Investing activities maintaining

Exchange rate effects and other

No dividend has been declared

Other investing activities

Investing activities expanding

756

-92

-16

270

279

-4

-30

-70

-80

32

-274

741

741

0

26

601

149

-32

-67

-60

-6

-437

-314

881

Cash at the end of the year - discontinued operations

28 Feb 2021(Reviewed - Rm)

29 Feb 2020(Restated - Rm)

40

Industry-

related

matters

Nooitgedacht water treatment plant,

Port Elizabeth

39

40

21

Industry-related matters

▪ Legal process relating to the civil claim from the City of Cape Town

• The arbitration is set for 13 September to 8 October 2021

• The group remains confident that it can defend the matter

▪ Voluntary Rebuild Programme (VRP)

▪ The group continues to be negatively affected through disruptive and

unlawful activities by certain communities and informal business forums

41

42

Board related

matters

Newlands Cricket Stadium,

Western Cape

41

42

22

Changes to the board of directors

▪ Dermot Quinn, non-executive director, will resign at the company’s next Annual General Meeting in August 2021

▪ John Poluta, alternate non-executive director, to be appointed as a

non-executive director at the company’s next Annual General Meeting

▪ Antonio Cocciante will step down as CFO and executive director effective 31 May 2021

▪ Yolanda du Plessis will be appointed as acting CFO and executive director effective 1 June 2021

43

Chairperson

Yolanda

du Plessis

Antonio

Cocciante

Zanele

Matlala

Howard

Craig

Bharti

Harie

John

Poluta

Dermot

Quinn

Busisiwe

Silwanyana

Russell

Crawford

44

Conclusion

Ferrobank Tailings Facility,

Emalahleni, Mpumalanga

43

44

23

Conclusion

45

Kusile Power Projects

Successful close-out of all arbitration cases

Successful implementation of the Restructuring Plan

Execution of projects at tender margin

46

Questions

& Answers

Palapye water treatment expansion,

Botswana

www.stefanuttistocks.com

45

46

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Disclaimer

This presentation may contain forward-looking statements, which include all statements other than statements of

historical facts, which have not been reviewed or reported on by the group’s auditors, and may reflect the current

views or expectations of the group with respect to, among other things, future events, strategy, the economic outlook

for the industry, the group’s liquidity, capital resources, expenses and financial and operational performance.

Words, including but not limited to, "aim", “believe”, “anticipate”, “expect”, “intend”, "could", "would", “should”,

“estimates”, “project”, “plan”, “may”, “potential”, "targets" or similar words and phrases or the negative thereof are

used to identify such statements. Forward-looking statements, by their very nature, contain known and unknown

risks, uncertainties, assumptions and other important factors, because they relate to events and depend on

circumstances that may occur in the future, whether or not outside the control of the company.

Such factors may cause the company's actual results, performance or achievements to be materially different from

future results, performance, developments or achievements expressed or implied by such forward-looking

statements. Such forward-looking statements are based on numerous assumptions regarding the company's present

and future business strategies and the environment in which it will operate in the future.

No assurance can be given that forward-looking statements will prove to be correct. These forward-looking

statements speak only as at the date of this presentation. In addition, no obligation is undertaken by the group to

update or revise any forward-looking statements contained within this presentation to reflect any change in its

expectations with regard thereto or any change in events, conditions or circumstances on which any of such

statements are based, and investors are cautioned not to place any reliance thereon.

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Annual Results - Stefanutti Stocks

Documents

Transcript of Annual Results - Stefanutti Stocks