Stefanutti focused on restructuring


Stefanutti focused on restructuring

Published Date: 2020-11-27 | Source: Stephen Gunnion | Author: Stephen Gunnion

Stefanutti focused on restructuring

The beleaguered construction group is reducing loss-making projects so it can return to profitability.

Stefanutti Stocks has reported a reduced first-half loss despite revenue coming under pressure due to tough market conditions and the impact of Covid-19. It says it is now pushing ahead with a restructuring plan, which will see it dispose of some operations.

The construction group said the difficulties facing the construction industry, the impact of the pandemic and the well documented and ongoing delays in payments from clients had impacted on cash consumed from operations, which amounted to R179 million, down from R503 million last year. However, it said its total cash position improved slightly to R756 million.

Stefanutti has been battling liquidity issues due to non-payment from some of its clients, forcing it to negotiate additional funding from its lenders. In July, a short-term funding agreement was converted into a term loan, which terminates at the end of February 2022. Banks also agreed to provide guarantee support for current and future projects undertaken by the group, which had made good progress in reconfiguring its organisation structure to improve performance and cut overhead costs, including a reduction in its overall headcount.

In the meantime, CEO Russell Crawford said it continued to pursue a number of contractual claims and compensation events on Eskom's Kusile power projects.

Contract revenue from continuing operations fell 43% to R1.66 billion for the year to end-August and its operating loss before investment income narrowed to R101 million from R865 million last year. Its loss from continuing operations came in at R169 million, down from R909 million, while its headline loss per share declined to 128.42c from 607.72c previously. It hasn't declared an interim dividend.

At the end of August, its order book for continuing operations amounted to R7.4 billion, of which R3.3 billion was for work outside SA.

Crawford said the main focus was the successful implementation of the restructuring plan and to achieve favourable outcomes relating to its contractual rights and compensation events on the Kusile power projects.

The company's shares rose 6.5% to 33c in thin trade yesterday.

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