Over R1bn loss for Stefanutti Stocks
PROVISIONS: RAISES R1.18BN FOR FUTURE COSTS
Company and Eskom are in claims resolution process.
JSE-listed Stefanutti Stocks, which is involved in a dispute with Eskom, has raised R1.183 billion in provisions for future costs, project losses and a tax liability in Kenya.
The provisions include a further R462 million provision for potential unrecoverable monthly measured works to complete a controversial building project at the Kusile Power Station.
This is in addition to the provision of R263 million raised in February last year for potential unrecoverable preliminary and general costs at Kusile.
Apart from the provision for future costs at Kusile, Stefanutti Stocks has also made:
R331 million in specific provisions for slow-paying trade receivables;
A R294 million provision for specific project losses;
A R53 million provision for impairment of goodwill; and
A R43 million provision for a tax liability in Kenya.
These provisions contributed towards Stefanutti Stocks reporting a loss of more than R1 billion in the year to end-February.
CEO Russell Crawford said the substantial increase of internal funding for this Kusile project increased the group’s total funding requirement from R400 million to about R986 million, excluding the impact of Covid-19.
Crawford attributed this to Eskom adopting “an adverse approach to authorising certificates for work done on the Kusile building project”.
Alleged overpayment
Eskom alleged in a briefing document dated 10 June that it overpaid an estimated R1 billion to a Stefanutti Stocks-Basil Read (SSBR) joint venture for the Package 16 building project and the Stefanutti Stocks Izazi joint venture for Package 28.
This overpayment forms part of the almost R4 billion alleged overpayment by Eskom to various contractors at the Kusile power station. The Eskom briefing document said investigations by the Special Investigations Unit (SIU), Bowman Gilfillan and Eskom into these overpayments to contractors at Kusile is ongoing.
Stefanutti Stocks earlier emphatically denied it had been overpaid by Eskom and claimed the SSBR joint venture is owed additional amounts for work done since December 2018 and for which payments have been withheld. Package 16 comprised 81 buildings, including the unit auxiliary bays, at Kusile.
Crawford said the group believed there should be a future payout from Eskom.
He said Stefanutti Stocks and Eskom are in a claims resolution process where each party is employing independent experts to evaluate the causes of delays and the quantum of claims.
Crawford said Package 16 involved “a complex claim” and it will take while to be finalised.
In regard to the Package 28 contract awarded to the Stefanutti Stocks Izazi joint venture, Crawford said this was a much smaller and much easier project.
“They [Eskom] terminated the project because they could not give us access. We are just finalising all the commercial issues. It has gone to adjudication and we should have some form of ruling by the end of this year,” he said.
Results
Stefanutti Stocks on Thursday reported a 13% decline in contract revenue to R8.6 billion in the year to February from R9.9 billion in the previous year.
The operating loss before investment income skyrocketed by 554% to R1.03 billion from the prior loss of R158 million.
It reported a headline loss per share of 622.48 cents compared to the 70.12 cent loss in the prior year. The group’s order book stands at R8.5 billion, of which R4.2 billion relates to work beyond South Africa’s borders.