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SSK
SSK
SSK - Stefanutti Stocks - Reviewed Condensed Consolidated Results For The 12
Months Ended 28 February 2009
STEFANUTTI STOCKS HOLDINGS LIMITED
(formerly Stefanutti & Bressan Holdings Limited)
("Stefanutti Stocks" or "the company" or "the group")
(Registration number 1996/003767/06)
Share code: SSK & ISIN: ZAE000123766
REVIEWED CONDENSED CONSOLIDATED RESULTS
FOR THE 12 MONTHS ENDED 28 FEBRUARY 2009
* Revenue up 144%
* Operating profit up 113%
* Headline earnings up 79%
* Normalised HEPS up 93%
* Cash generated from operations R1,1 billion
* Maiden dividend of 58 cents per share
CONDENSED GROUP INCOME STATEMENT
Reviewed Audited
12 months 12 months
ended ended
28 February 29 February
% 2009 2008
increase R`000 R`000
Revenue 6 316 570 2 587 859
Contract revenue 144 6 212 899 2 544 923
Contract costs (5 266 004) (2 139 915)
Gross profit 946 895 405 008
Other income 20 784 4 440
Operating costs (435 841) (192 132)
Earnings before interest,
taxation, depreciation and
amortisation (EBITDA) 145 531 838 217 316
Depreciation (100 896) (30 925)
Amortisation of intangible
assets (38 751) (2 087)
Operating profit 113 392 191 184 304
Investment income 74 879 41 130
Finance costs (30 535) (18 476)
Share of (losses)/profits
from associate company (703) 1 409
Profit before taxation 435 832 208 367
Taxation (116 414) (63 949)
Profit for the year 121 319 418 144 418
Attributable to:
Equity holders of the
company 121 297 525 134 919
Minority shareholders 21 893 9 499
319 418 144 418
Earnings per share (cents) 184,27 103,28
Diluted earnings per share
(cents) 173,56 99,23
Commentary to the income
statement
Headline earnings
reconciliation
Profit after taxation
attributable to equity
holders of the company 297 525 134 919
Adjusted for:
Loss on disposal of plant 2 423 818
and equipment
Tax effect of adjustments (678) (237)
Total minority interest of (3) (90)
adjustments
Headline earnings 121 299 267 135 410
Normalised headline
earnings reconciliation
Headline earnings 299 267 135 410
Adjusted for:
Amortisation of intangibles 38 751 2 087
Tax effect of adjustments (10 849) (584)
Normalised headline 139 327 169 136 913
earnings
Number of weighted average
shares in issue 161 464 960 130 634 200
Number of diluted weighted
average shares in issue 171 428 947 135 970 022
Earnings per share (cents) 78 184,27 103,28
Diluted earnings per share
(cents) 173,56 99,23
Headline earnings per share
(cents) 79 185,35 103,65
Diluted headline earnings
per share (cents) 174,57 99,59
Normalised headline
earnings per share (cents) 93 202,63 104,81
Diluted normalised headline
earnings per share (cents) 190,85 100,69
SEGMENTAL REPORTING
Primary segments KwaZulu- Western
28 February 2009 (R`000) Gauteng Natal Cape
Contract revenue 3 431 244 840 694 852 457
Profit for the year 142 338 38 920 48 307
Primary segments Outside
28 February 2009 (R`000) South Africa Total
Contract revenue 1 088 504 6 212 899
Profit for the year 89 853 319 418
CONDENSED GROUP BALANCE SHEET
Reviewed at Audited at
28 February 29 February
2009 2008
R`000 R`000
ASSETS
Non-current assets 2 000 566 545 728
Property, plant and equipment 763 246 358 129
Intangible assets 1 161 544 155 950
Investment in associates 15 795 -
Deferred taxation 59 981 31 649
Current assets 3 023 474 1 286 701
Bank balances 1 381 314 662 983
Other current assets 1 639 654 619 227
Taxation 2 506 4 491
Total assets 5 024 040 1 832 429
EQUITY AND LIABILITIES
Capital and reserves 1 613 258 615 773
Ordinary shareholders` interest 1 574 049 590 682
Minority shareholders` interest 39 209 25 091
Non-current liabilities 227 107 136 719
Interest-bearing liabilities 160 953 69 893
Non interest-bearing liabilities - 37 545
Deferred taxation 66 154 29 281
Current liabilities 3 183 675 1 079 937
Bank overdraft 47 437 -
Other current liabilities 1 870 555 603 568
Provisions 1 172 207 390 561
Taxation 93 476 85 808
Total equity and liabilities 5 024 040 1 832 429
Commentary to the balance sheet
Number of net shares in issue 175 859 983 139 380 867
Number of total shares in issue 188 080 746 148 355 867
Net asset value per share (cents) 895,06 423,79
Net tangible asset value per share
(cents) 234,56 311,90
Diluted net asset value per share
(cents) 836,90 398,15
Diluted net tangible asset value
per share (cents) 219,32 293,03
CONDENSED GROUP CASH FLOW STATEMENT
Reviewed Audited
12 months 12 months
ended ended
28 February 29 February
% 2009 2008
increase R`000 R`000
Cash generated from
operations 146 1 142 717 464 267
Interest received 74 879 41 130
Finance costs (30 535) (18 476)
Dividends received/(paid) 23 (30 255)
Taxation paid (152 980) (49 218)
Secondary tax on companies
paid (1 064) -
Cash flows from operating
activities 154 1 033 040 407 448
Expenditure to maintain
operating capacity (343 187) (154 632)
Expenditure for expansion (121 564) (97 098)
Cash flows from investing
activities (464 751) (251 730)
Cash flows from financing
activities 65 995 301 705
Net increase in cash for
the year 634 284 457 423
Effect of exchange rate
changes on cash and cash
equivalents 36 610 -
Cash at beginning of the
year 662 983 205 560
Net cash at end of the year 101 1 333 877 662 983
GROUP STATEMENT OF CHANGES IN EQUITY
Issued Foreign
capital Share currency
and based translation
R`000 premium payments reserve
Balance at 1 March 2007
audited 177 945 - (78)
Premium on issue of
ordinary shares 350 000 - -
Less listing expenses
written off against share
premium account (11 730) - -
Less capital distribution
from share premium (30 000) - -
account
Effect of consolidating
the S&B Share Incentive
Trust (61 850) - -
Employee share options - 10 905 -
Total income and expense - - (35)
for the year
Net profit for the year - - -
Translation of foreign
subsidiary - - (35)
Minority interest - - -
acquired
Dividends paid - - -
Balance at 29 February
2008 audited 424 365 10 905 (113)
Premium on issue of
ordinary shares 675 323 - -
Effect of consolidating
the trusts and treasury
shares (43 691) - -
Employee share options - 21 118 -
Realisation of share
based payments reserve - (446) -
Total income and expense
for the year - - 42 743
Net profit for the year - - -
Translation of foreign
subsidiary - - 42 743
Revaluation of land and
buildings - - -
Dividends paid by
subsidiary to outside
shareholders - - -
Minority interest - - -
acquired
Adjustment resulting from
PPA finalisation - - -
Redemption of shares - - -
Settlement of share trust
investments - - -
Balance at 28 February
2009 reviewed 1 055 997 31 577 42 630
Ordinary
Revaluation Retained shareholders`
R`000 surplus earnings interest
Balance at 1 March 2007
audited 3 571 32 035 213 473
Premium on issue of
ordinary shares - - 350 000
Less listing expenses
written off against share
premium account - - (11 730)
Less capital distribution
from share premium - - (30 000)
account
Effect of consolidating
the S&B Share Incentive
Trust - - (61 850)
Employee share options - - 10 905
Total income and expense
for the year - 134 919 134 884
Net profit for the year - 134 919 134 919
Translation of foreign
subsidiary - - (35)
Minority interest - - -
acquired
Dividends paid - (15 000) (15 000)
Balance at 29 February
2008 audited 3 571 151 954 590 682
Premium on issue of
ordinary shares - - 675 323
Effect of consolidating
the trusts and treasury
shares - - (43 691)
Employee share options - - 21 118
Realisation of share
based payments reserve - 446 -
Total income and expense
for the year 1 426 297 525 341 694
Net profit for the year - 297 525 297 525
Translation of foreign
subsidiary - - 42 743
Revaluation of land and
buildings 1 426 - 1 426
Dividends paid by
subsidiary to outside
shareholders - (1 487) (1 487)
Minority interest - (11 242) (11 242)
acquired
Adjustment resulting from
PPA finalisation - - -
Redemption of shares - (12 163) (12 163)
Settlement of share trust
investments - 13 815 13 815
Balance at 28 February
2009 reviewed 4 997 438 848 1 574 049
Minority Capital
shareholders` and
R`000 interest reserves
Balance at 1 March 2007
audited 2 210 215 683
Premium on issue of
ordinary shares - 350 000
Less listing expenses
written off against share
premium account - (11 730)
Less capital distribution
from share premium - (30 000)
account
Effect of consolidating - (61 850)
the S&B Share Incentive
Trust
Employee share options - 10 905
Total income and expense
for the year 9 459 144 343
Net profit for the year 9 499 144 418
Translation of foreign
subsidiary (40) (75)
Minority interest 13 422 13 422
acquired
Dividends paid - (15 000)
Balance at 29 February
2008 audited 25 091 615 773
Premium on issue of
ordinary shares - 675 323
Effect of consolidating
the trusts and treasury
shares - (43 691)
Employee share options - 21 118
Realisation of share
based payments reserve - -
Total income and expense 21 893 363 587
for the year
Net profit for the year 21 893 319 418
Translation of foreign
subsidiary - 42 743
Revaluation of land and
buildings - 1 426
Dividends paid by
subsidiary to outside
shareholders - (1 487)
Minority interest (10 767) (22 009)
acquired
Adjustment resulting from
PPA finalisation 2 992 2 992
Redemption of shares - (12 163)
Settlement of share trust
investments - 13 815
Balance at 28 February
2009 reviewed 39 209 1 613 258
COMMENTARY
Introduction
The directors are pleased to present the reviewed results for the 12 months
ended 28 February 2009 ("the year") which reflect the continued strong growth as
reported at the previous year-end. Following the successful conclusion of the
acquisition of construction group Stocks Limited ("Stocks") during the year
("the Stocks merger"), the group has been repositioned as a major competitor in
the first-tier construction sector. Stefanutti Stocks now has a geographical
footprint across South Africa, Southern Africa and the Gulf region.
The integration of all acquisitions to date is progressing well and, amongst
other benefits, synergies are also beginning to reflect from economies of scale.
In addition the comprehensive re-branding exercise to rename the group following
the Stocks merger has been successfully completed. Stocks has been included in
the reviewed condensed consolidated results for seven months from 31 July 2008,
the effective date of the merger.
Basis of preparation
The reviewed results for the year have been accounted for in accordance with
International Financial Reporting Standards and prepared in accordance with IAS
34: Interim Financial Reporting and in compliance with the South African
Companies Act, 1973. The reviewed results are prepared on the historical cost
basis, with the exception of certain financial instruments and properties which
are measured at fair value. The accounting policies and method of measurement
and recognition applied in preparation of the reviewed results are consistent
with those applied in the group`s audited annual financial statements for the
previous year ended 29 February 2008, except for the application of IFRIC 12:
Service Concession Arrangements. The interpretation clarifies that contractual
service arrangements do not convey the right to control the use of the public
service infrastructure to the operator, instead the operator acts as a service
provider. The IFRIC provides guidance on the recognition and measurement of the
various aspects of service concession arrangements from an operator`s
perspective.
The preparation of the reviewed results required the use of estimates and
assumptions that affect the values of assets and liabilities at the reporting
date, as well as the determination of revenue and expenses during the reporting
periods. Although these estimates are based on management`s best knowledge of
current events and actions that the group may undertake in the future, actual
results may differ from those estimates.
Auditor`s review
The reviewed results for the year have been reviewed by the group`s auditors,
Mazars Moores Rowland. Their unqualified review opinion is available for
inspection at the company`s registered office.
Group profile
Stefanutti Stocks operates throughout South Africa, Southern Africa and the Gulf
region with expertise spanning concrete structures, rehabilitation and marine
construction, piling and geotechnical services, roads and earthworks, mine
residue disposal facilities (tailings dams), opencast contract mining, building
works and mechanical, electrical and powerline construction. In addition the
group has established skills to participate in projects on a Public-Private-
Partnership (PPP) basis.
Review of operations
Structures
The Structures business unit encompasses the group`s geotechnical, civil
structures and marine capabilities.
Boosted by a 50% increase in production volumes within the civil engineering
industry, this business unit again accounted for the larger portion of group
revenue and profit growth. Structures was awarded a number of infrastructure and
expansion contracts like the Chemical Berth in Richards Bay and other contracts
in joint venture such as the Kusile Power Station; Ben Schoeman Dock in Cape
Town; and the concrete precast units for the Gauteng Freeway Improvement
Project.
Building
The Building business unit operates throughout South Africa and Southern Africa
servicing the full scope of building construction from commercial and industrial
through to residential and leisure.
Together with the Stocks operation, this unit performed strongly during the
year, substantially increasing revenue with normal building margins. It is
currently working in partnership on both the OR Tambo and Cape Town airports,
and in partnership successfully completed the One & Only hotel in Cape Town two
months ahead of schedule. The Housing acquisition concluded by Stocks prior to
the merger has been successfully bedded down. This part of the business unit is
currently involved in a number of housing projects for institutions.
In light of a recent downturn in projects in major nodes, the business unit is
now diversifying geographically and has established a presence in the Eastern
Cape, Mpumalanga and North West Province.
International: Gulf
Through the Stocks merger the group gained a presence in the Gulf region and has
established an office in the Jebel Ali Free Zone in Dubai. Stefanutti Stocks is
in partnership in specialist interior fit-out company Al Tayer Stocks and
electro-mechanical specialist Zener Steward. Both companies performed well
during the year.
Business prospects in the Gulf region, and particularly in Dubai, are being
closely monitored.
Mechanical, Electrical & Power
This business unit comprises Skelton & Plummer Investment Holdings Company (Pty)
Limited, which was acquired by the group in January 2008. It provides
mechanical, electrical and instrumentation construction work across the
industrial, mining, manufacturing and petrochemical sectors throughout Southern
Africa.
The company made a solid contribution to both group revenue and profit for the
year under review.
Mining Services
The business unit specialises in mine residue disposal facilities (tailings
dams) and opencast contract mining across South Africa.
Difficult market conditions were experienced throughout the mining sector in the
latter half of the year, due to falling commodities markets worldwide. The
business unit nonetheless posted positive results due to the award of a number
of contracts for waste disposal and re-mining programmes by major mining houses.
Roads & Earthworks
Roads & Earthworks operates in the construction of roads, bulk earthworks,
landfill sites, golf course developments, terraces for new developments and
municipal services throughout South Africa as well as in Mozambique and
Swaziland.
The awards by the Johannesburg Development Agency on the Bus Rapid Transit
System contributed towards the growth during the year. In addition, a new
asphalt division has expanded the business unit`s capacity to encompass all
types of road surfacing. Additional capital expenditure was incurred to increase
capacity.
Again this unit made an excellent contribution to group revenue and profit.
Property & Concessions
This business unit procures contracts by facilitating property development and
partners with government in the provision of facilities or services through
concession contracts (PPPs). Services within the concessions sector include
facilities management, maintenance and project funding assistance.
Notwithstanding the negative impact of the global economic crisis on government-
funded projects, the business unit is well placed to capitalise on the potential
of this market.
Acquisitions
With effect from 31 July 2008, the company acquired 100% of the issued share
capital of Stocks. In terms of IFRS 3: Business Combinations the Purchase Price
Allocation has been completed.
Stocks
Acquisition date 31 July 2008
Voting equity % 100
Number of shares issued at R17,00 per share 39 724 879
At acquisition values R`000
Non-current assets 369 660
Current assets 902 456
Non-current liabilities (61 131)
Current liabilities (973 640)
Net asset value acquired 237 345
Cost of acquisition 1 087 272
Intangible arising on acquisition 92 285
Goodwill arising on acquisition 757 642
Cash paid 411 949
Revenue for the period from 1 May 2008 - 28 2 261 679
February 2009
Profit after taxation for the period from 1 73 997
May 2008 - 28 February 2009
Profit after taxation since acquisition 71 349
Revenue and profit is reported in terms of Stocks` statutory period which is 1
May 2008 to 28 February 2009. It is impracticable to disclose this information
from 1 March 2008 as Stocks previously had a 30 April year-end.
The goodwill is attributable to the workforce of the acquired business and the
significant synergies expected to be realised after the group`s acquisition of
Stocks.
In line with current strategy, the company acquired the remaining minority
interest in Stefanutti Stocks Building Gauteng (Pty) Limited (formerly
Stefanutti & Bressan Building Inland (Pty) Limited), Stefanutti Stocks Building
KZN (Pty) Limited (formerly Stefanutti & Bressan Building (Pty) Limited) and
Stefanutti Stocks Geotechnical (Pty) Limited (formerly Stefanutti & Bressan
Piling (Pty) Limited). Further acquisition of minority interests in subsidiaries
is being considered.
Prior year acquisitions are disclosed in the most recent audited financial
statements.
Name change
With effect from 19 September 2008, the company formally changed its name to
Stefanutti Stocks Holdings Limited.
Financial results
Group contract revenue for the period rose 144% to R6,2 billion (2008: R2,5
billion). Operating profit was up 113% to R392,2 million (2008: R184,3 million)
while net profit after tax ("NPAT") increased by 121% to R319,4 million (2008:
R144,4 million). Earnings per share ("EPS") grew by 78% to 184,27 cents (2008:
103,28 cents), notwithstanding the additional 39 724 879 ordinary shares issued
in terms of the Stocks acquisition. Headline earnings of R299,3 million
translated into headline earnings per share ("HEPS") of 185,35 cents (2008:
103,65 cents). A share-based incentive scheme expense of R21,1 million (2008:
R10,9 million) as required by IFRS 2: Share-based Payments and amortisation
costs of R38,8 million (2008: R2,1 million) are included in earnings for the
year. Should the amortisation costs be excluded from headline earnings for the
year the normalised HEPS translates to 202,63 cents (2008: 104,81 cents).
Related party transactions
The group has no material related party transactions other than those with group
companies which are conducted on an arm`s-length commercial basis.
Directorate
Following the conclusion of the Stocks merger, Stephen Pell (former CEO of
Stocks) was appointed as an executive director and Herman Mashaba (former non-
executive Chairman of Stocks) was appointed as a non-executive director to the
board of Stefanutti Stocks. We welcome them to the board and look forward to
their contribution.
Company secretary
Antonio Cocciante, who was fulfilling the role of company secretary in a
temporary capacity, has resigned this position with effect from 18 May 2009 but
continues in a financial management capacity. William Somerville was appointed
in his stead.
Prospects
Stefanutti Stocks is well-aligned with the infrastructure, mining, petrochemical
and power generation markets and will continue to benefit from anticipated
government and parastatal spend on infrastructure projects. Although the mining
industry has slowed as a result of the drop in commodities markets, certain
sectors have been less severely affected and the group will focus on
opportunities in these sectors. Both the Southern African and Gulf regions
continue to present attractive expansion prospects.
The group will continue to closely monitor the impact on client expenditure
programmes of the current uncertainty in global financial markets.
Stefanutti Stocks` order book amounted to R6,4 billion at year-end.
Dividend declaration
Notice is hereby given that, in line with dividend policy, a final dividend of
58 cents per share (2008: Nil) was declared on 15 May 2009, payable to all
shareholders recorded in the register on Friday, 26 June 2009, the record date.
The last day to trade cum dividend will be Friday, 19 June 2009 and the shares
will trade ex dividend on Monday, 22 June 2009. Payment will be made on Monday,
29 June 2009. Share certificates may not be dematerialised or rematerialised
between Monday, 22 June 2009 and Friday, 26 June 2009, both dates inclusive.
Appreciation
We would like to thank all our employees for their hard work and dedication
which have contributed to such a successful year, and welcome the new employees
that have joined the group. We also thank our business partners, advisors and
shareholders for their ongoing support and extend our gratitude to our fellow
directors for their continued wise counsel.
On behalf of the board
Gino Stefanutti Willie Meyburgh
Executive Chairman Chief Executive Officer
19 May 2009
Directors:
B Stefanutti (Executive Chairman);
W Meyburgh (Chief Executive Officer);
D Quinn+ (Financial Director);
S Pell; N Canca*; K Eborall*; H Mashaba*
M Mkwanazi *; B Sithole *;
J Fizelle *+ (alternate to B Sithole)
*Non-executive director +Irish
Registered office:
Protec Park, Cnr Zuurfontein & Oranjerivier Drive, Kempton Park, 1619, (PO Box
12394, Aston Manor, 1630)
Auditors:
Mazars Moores Rowland, 5 St Davids Place, Parktown, 2193, (PO Box 6697,
Johannesburg, 2000)
Sponsor:
Bridge Capital Advisors (Pty) Limited, 2nd Floor, 27 Fricker Road, Illovo
Boulevard, Illovo, 2196, (PO Box 651010, Benmore, 2010)
Transfer secretaries:
Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg,
2001, (PO Box 61051, Marshalltown, 2107)
Company secretary:
W Somerville, 20 Lurgan Road, Parkview, 2193
www.stefanuttistocks.com
Date: 19/05/2009 07:25:53 Produced by the JSE SENS Department.
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