Construction and engineering firm Stefanutti Stocks swung into a R1bn loss amid claims from Eskom it was overpaid for its work at the Kusile power station project, which required it to make provision for unrecoverable costs at the project.

The group reported a loss of R1.07bn in its year to end-February, from a loss of R111.3m previously, with the group making a provision of R461m for Kusile

An Eskom report earlier in 2020 claimed a R1bn overpayment to the Stefanutti Stocks-Basil Read joint venture, something Stefanutti disputes.

The group said the initial funding requirement at Kusile has increased from R400m to about R986m excluding the impact of Covid-19.

“Consequently, in addition to the provision of R263m raised at February 2019 for the potential unrecoverable preliminary and general costs, the group has now raised a further provision of R462m,” said CEO Russell Crawford.

The company said its total funding requirement was R1.2bn, which includes the estimated effect of the pandemic and the additional funding at Kusile.

The group is also battling with difficult market conditions, also making a R331m provision for late payments from clients.

The continued adverse market conditions, as well as the substantial impact of the Kusile power project, has reduced contract revenue from operations to R8,6 billion (Feb 2019: R9,9 billion).

Contract revenue from mining and construction fell by R200m to R5.1bn with an operating loss of R418m during the period. 

Stefanutti’s building division recorded an operating loss of R490m from R250m previously, this includes the provision raised for the Kusile power project as well as a project loss in the Gauteng division, which has been completed.

On Thursday, Stefanutti’s share price was down 6.9% to 27c, having fallen 60% over the past two years.

The group said it was unable to get an accurate assessment of the future effects Covid-19 will have on the company and its markets.

“The unknown future impact of the Covid-19 pandemic, together with the various protocols available to governments, has created an unpredictable business environment.”

The company did not declare a dividend for the period. 

Update: July 30 2020
This article has been updated with additional information


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