Fines, payments choke Stefanutti Stocks

But the company‚ which released its year-end results on Tuesday‚ said it hoped a stronger performance in the second half of the financial year to February would be maintained in the next financial year‚ regardless of slow paying debtors and the hefty fine it is likely to get for its collusive behaviour.

A poor performance from the building division was also blamed for the poor results.

"Various debtors paid us late and our building division let us down. We could blame market conditions but the blame is really with us. We know though that our building (division) can pick up their progress‚" chief executive Willie Meyburgh said.

The loss was exaggerated by a penalty of R323m imposed on Stefanutti on Friday (10 May) by the Competition Commission.

Some 40 construction companies in SA are being investigated for anti-competitive behaviour. The investigation will help the industry‚ Meyburgh said.

Meyburgh said Stefanutti was working out a response as the fine was higher than expected. "We will see what we do next. We are able to pay the fine over a period of years‚" he added.

The group stressed the second half of its financial year had shown some improvement in its performance.

"What the numbers don't show is that the second half of the year was much better than the first‚" chief financial officer Dermot Quinn said. "Our operating margin was down to 2.5% in the year. It had been 4.5% in 2012. But it was 60% better in the second half of the year‚" he added.

"We have a good pipeline of projects and are moving into Africa at a healthy pace. We cannot pay dividends this year because of the fine but we are set for a recovery‚" Quinn said.

He said the group's capital expenditure costs had been reduced and borrowings were being paid off quickly. The group bought Cycad Pipelines in 2011 and about R250m was borrowed for the deal. "We have repaid a third of it in just a year," Quinn said.

On the question of anti-competitive practices, Meyburgh conceded that the group had been involved but added that many of the transgressions occurred before Stefanutti listed in 2007 and merged with Stocks & Stocks in 2008.

"We have worked these practices out of our business and have given our staff training with regard to what constitutes anti-competitive work‚" he said.