Stefanutti Stocks : Annual Integrated Report 2024

2024Integrated Annual Report

Celebrating BIAGINO STEFANUTTI

lt is with a deep sense of loss and great sadness that we received the news of Gino Stefanutti's passing on 6 May 2024.

Gino founded the company in 1971.

Gino was a remarkable man who led by example.

I do not think that he could ever have realised the extent of the incredibly positive impact he had on so many lives

- friends, colleagues, and even strangers.

His legacy will forever remain in our culture and heritage, and we honour the memory of our founder who inspired and motivated many within our organisation and across the construction industry.

Some of us fortunate enough to have worked closely with him, will remember the many profound wisdoms and insights he shared.

We bid Gino a final 'Arrivederci .'

Stefanutti Stocks Integrated Annual Report 2024

CONTENTS

OVERVIEW

About this report 2024 highlights Company profile Group structure Capabilities

SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS

Summarised Consolidated Statement of Profit or Loss and Other Comprehensive Income

Summarised Consolidated Statement of Financial Position

Summarised Consolidated

Statement of Cash Flows

Summarised Consolidated Statement of Changes in Equity

Notes to the summarised consolidated financial statements

STRATEGICOVERVIEW REPORT

1. BusinessAbout thismodelreport

1. StrategicCompanyfocusprofile
2. Stakeholder engagement
3. Material risks
4. Risk management Chairman's report Performance review
   Chief Financial Officer's report Five-year financial review Operational reviews

OVERVIEWNOTICE OF ANNUAL

AboutGENERALthis reportMEETING Company profile

Notice of annual general meeting Form of proxy

1. Notes to the form of proxy
2. Annexure A

79

80

81

08

09

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13

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85

92

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94

GOVERNANCE

Board of directors	48
Executive Committee	50
Corporate governance report	51
Social and Ethics Committee report	61
Audit, Governance and Risk Committee report	63
Remuneration report	67

ADDITIONAL

INFORMATION

Shareholders' diary	96
Abbreviations and definitions	97
Corporate information	98

Stefanutti Stocks  Integrated Annual Report 2024

01

ABOUT THIS REPORT

SCOPE AND BOUNDARY

The integrated annual report for 2024 comprises the operations of Stefanutti Stocks Holdings Limited and its subsidiaries, joint operations and equity-accounted investees (the company, the group, or Stefanutti Stocks).

This report is primarily intended to address the information requirements of investors (the group's equity shareholders and prospective investors). Stefanutti Stocks also presents information relevant to the way it creates value for clients, employees and other key stakeholders.

The information in this report covers the financial and non-financial performance of the company for the year ended 29 February 2024, and where it is relevant to include information post year-end, this has been incorporated and noted. In assessing the risks, opportunities and outcomes that materially impact the group's ability to create value for its stakeholders, the boundary has been extended beyond financial reporting to include the material interests attributable to or associated with key stakeholders.

Stefanutti Stocks endeavours to achieve a high standard in all disclosures in this report and to provide meaningful, accurate, complete, transparent and balanced information to stakeholders. The board and board committees were actively involved in the disclosures made in this report.

This report was prepared in accordance with the following key reporting frameworks:

• South African Companies Act, No. 71 of 2008, as amended (the Companies Act),
• The Listings Requirements of the JSE Limited (JSE),
• King IV Report on Corporate Governance™ (King IV) (copyright and trademarks are owned by the Institute of Directors in Southern Africa NPC and all of its rights are reserved) for South Africa 2016,
• International Integrated Annual Reporting Council's International Framework,
• IFRS® Accounting Standards (IFRS Accounting Standards),
• South African Financial Reporting Requirements as specified in the JSE Listings requirements,
• The company's Memorandum of Incorporation (MOI).

The Stefanutti Stocks Integrated Annual Report contains a summary extract of the consolidated annual financial statements. The 2024 consolidated annual financial statements have been prepared under the supervision of the Chief Financial Officer (CFO), Yolanda du Plessis, and have been audited by Forvis Mazars (previously Mazars), the group's external auditors. The integrated annual report, as well as the consolidated annual financial statements, sustainability report, and investor presentations for the year ended 29 February 2024, are available on the company's website.

The integrated annual report has been reviewed by the board but has not been externally assured. The requirement for external assurance is considered annually and is at this stage not deemed necessary by the relevant board committees. The consolidated annual financial statements have been externally assured by the group's independent auditor, Forvis Mazars, who included a Material Uncertainty relating to Going Concern paragraph in their unqualified audit opinion for the year ended 29 February 2024.

This report contains the most material issues of concern to all the company's stakeholders. For additional information visit the company's website: www.stefanuttistocks.com.

MATERIALITY

Materiality is determined taking into account the International Framework, King IV principles and internal policies. The group defines material issues as those matters having the potential to affect its strategy, business model, sustainability or one or more of the capitals (as further described on pages 8 and 9) over the short, medium, and long term, taking into account the likelihood and consequence of the matters.

FORWARD-LOOKING STATEMENTS

The statements made within this integrated annual report may contain forward-looking information including statements regarding the company's intent, belief or current expectations with respect to Stefanutti Stocks's businesses and operations, market conditions, results of operations and financial condition, capital adequacy, specific provisions and risk management practices.

Investors/shareholders are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements are based on Stefanutti Stocks's current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements.

These statements are based on a number of assumptions that are subject to change. The integrated annual report includes only matters up to the date of this report and the period reported on. Stefanutti Stocks disclaims any duty to update the information herein.

BOARD RESPONSIBILITY STATEMENT

The board of directors acknowledges its responsibility to ensure the integrity of the integrated annual report. The board has accordingly applied its mind, collectively and individually, to the integrated annual report and, in its opinion, the integrated annual report addresses all material issues, and fairly presents the integrated performance of the organisation and its impacts. The integrated annual report has been prepared taking into account the recommendations of King IV. The board authorised the integrated annual report for release

on 18 June 2024.

Zanele Matlala	Russell Crawford
Chairman of the board	Chief Executive Officer
18 June 2024

Stefanutti Stocks  Integrated Annual Report 2024

02

ABOUT THIS REPORT CONTINUED

CEO AND CFO RESPONSIBILITY STATEMENT ON INTERNAL FINANCIAL CONTROLS

After due, careful and proper consideration, the directors, whose names are stated below, hereby confirm that:

• The consolidated annual financial statements, an extract of which is set out on pages 78 to 84 and which are available on the company's website, fairly present in all material respects the financial position, financial performance and cash flows of the issuer in terms of IFRS Accounting Standards;
• To the best of our knowledge and belief, no facts have been omitted or untrue statements made that would make the consolidated annual financial statements false or misleading;
• Internal financial controls have been put in place to ensure that material information relating to the issuer and its consolidated subsidiaries have been provided to effectively prepare the consolidated annual financial statements of the issuer;
• The internal financial controls are adequate and effective and can be relied upon in compiling the consolidated annual financial statements, having fulfilled our role and function as executive directors with primary responsibility for implementation and execution of controls;
• Where we are not satisfied, we have disclosed to the Audit, Governance and Risk Committee and the auditors any deficiencies in design and operational effectiveness of the internal financial controls and have taken steps to remedy the deficiencies; and
• We are not aware of any fraud involving directors.

PREPARATION OF FINANCIAL STATEMENTS

The consolidated annual financial statements, available on the group's website www.stefanuttistocks.com as well as the extract from the consolidated annual financial statements contained in this integrated annual report, have been prepared under the supervision of the CFO, Yolanda du Plessis, CA(SA). The consolidated annual financial statements from which the extract has been included, have been audited in compliance with the applicable requirements of the Companies Act No. 71 of 2008 as amended.

Yolanda du Plessis

Chief Financial Officer

18 June 2024

COMPLIANCE WITH COMPANIES ACT AND MOI

Stefanutti Stocks Holdings Limited is in compliance with the provisions of the Companies Act, or relevant laws of establishment, specifically relating to its incorporation and is operating in conformity with its MOI.

CERTIFICATE BY THE COMPANY SECRETARY

In terms of section 88(2)(e) of the Companies Act No. 71 of 2008 as amended, I certify that, to the best of my knowledge and belief, Stefanutti Stocks Holdings Limited has, in respect of the financial year ended 29 February 2024, lodged with the Companies and Intellectual Property Commission all returns and notices required of a public company in terms of the Companies Act and that all such returns and notices are true, correct and up to date.

William Somerville

Company Secretary

18 June 2024

INDEPENDENT AUDITOR'S REPORT

The unmodified independent auditor's report, on the consolidated annual financial statements, which includes an emphasis of matter, can be found on page 12 of

the consolidated annual financial statements on the company's website www.stefanuttistocks.com.

Y Dockrat is the individual audit partner responsible for the audit.

Stefanutti Stocks  Integrated Annual Report 2024

Russell Crawford	Yolanda du Plessis
Chief Executive Officer	Chief Financial Officer
18 June 2024

03

2024 HIGHLIGHTS

FINANCIAL - CONTINUING OPERATIONS

CONTRACT REVENUE
R7,1bn	17%
(2023: R6,1bn)
OPERATING PROFIT
R210m	107%
(2023: R101m)
ORDER BOOK
R8,4bn	14%
(2023: R7,4bn)

	HEALTH AND SAFETY							SOCIAL
										B-BBEE RATING
		RCR
	0,24							Level 1	1	2	3	4	5	6	7	8
							(2023: Level 1)
		(2023: 0,44)
										SKILLS DEVELOPMENT AND TRAINING SPEND
	LTIFR
		2024		0,03
										R11,9m	R8,1m
	0	0,01	0,02	0,03	0,04	0,05
		2023					0,05
	ZER0
	FATALITIES
											2024			2023
										NUMBER OF EMPLOYEES
									8 000

Stefanutti Stocks  Integrated Annual Report 2024

CASH BALANCES
R755m	35%
(2023: R561m)
HEADLINE LOSS PER SHARE
5,52c	80%
(2023: Loss of 27,29c)

(2023: Zero)

LTI-FREE HOURS

22m

(2023: 34m)

6 000
4 000
	5 413	6405
2 000
	2024	2023

04

COMPANY PROFILE

Stefanutti Stocks is a multidisciplinary construction group that delivers projects, of any scale, to diverse sectors in the built environment. The group's geographical footprint spans South Africa and sub-Saharan African countries where its mission is to deliver exceptional engineering solutions that enrich people's lives.

VISION

Re-engineering the built environment.

MISSION

A multi-disciplinary construction group delivering exceptional engineering solutions that enrich people's lives.

Stefanutti Stocks's broad spectrum of expertise covers traditional and niche construction, including:

• Building (specialising in the Industrial and Commercial sectors including one-stop design and build of cold room facilities and the complete data centre offering encompassing Civil Structural Architectural (CSA), Mechanical Electrical Piping (MEP), 3D modelling, etc.).
• Civils (including the Structural Rehabilitation and Water sectors).
• Geotechnical (including lateral support and piling).
• Roads, Earthworks and Mining infrastructure.
• Renewable Energy infrastructure (including both civil and electrical balance of plant projects).
• Electrical & Instrumentation (including the design and build of electrical step-down facilities).
• Mechanical (including industry-leading, turnkey dirty water clarification solutions (S&P High-Rate Clarifier (S&P HRC)).
• Oil & Gas (including in-housepipe-spool fabrication and bulk tank construction).
• Mining Services (including materials handling and tailings management).

Stefanutti Stocks is registered with the Construction Industry Development Board (CIDB) as a Category 9 Contractor, with no restrictions on the size of projects for which the group can tender. The group is ISO 9001:2015, ISO 14001:2015, ISO 45001:2018 and ISO 27001:2022 certified.

Stefanutti Stocks is one of South Africa's leading engineering and construction groups and is listed on the JSE Main Board in the "Construction and Materials

- Construction" sector.

OPERATIONAL FOOTPRINT

The group's operational footprint on the African continent spans South Africa and sub-Saharan Africa, including Botswana, Eswatini, Mauritius, Namibia, Zambia and Zimbabwe in both the private and public sectors.

Clients include governments, state-owned companies, local authorities, large industrial entities, mining corporations, financial institutions and property developers.

The group's workforce is 5 413 including 3 100 South African employees, with its head office based in Kempton Park, Gauteng.

The group has a values-driven culture which underpins sustainable partnerships with all stakeholders.

The above is achieved by setting and meeting measurable key objectives to support sustainable earnings growth and, at the same time, maintaining a sound financial position while implementing key non-financial objectives to support the group's strategy.

Regional operations in Africa

Shaded countries on the map indicate the group's operational footprint

  Inland   Coastal

  Western Cape   Africa

Stefanutti Stocks  Integrated Annual Report 2024

05

GROUP STRUCTURE

Stefanutti Stocks's hands-on management style and flat management structure contributes to its agility and ability to respond to opportunities and challenges.

Management spends a considerable amount of time on the group's sites, in support of the construction teams - this visible felt leadership (VFL) is a key part of the corporate culture. The group's philosophy is based on the Founder's Mentality, and approaches business with the mindset of owners, rather than employees.

More about the group's philosophy can be found here: stefanuttistocks.com/about/our-philosophy

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Stefanutti Stocks  Integrated Annual Report 2024

06

CAPABILITIES

BUILDING

• Industrial and commercial buildings, including:
• • Warehousing
  • Production and processing facilities
  • Distribution centres
  • Office accommodation
• Retail facilities
• Hospitality and leisure facilities
• Data centres
• Hospital and healthcare facilities
• Turnkey and alternative procurement, including design and build projects

MECHANICAL ELECTRICAL PIPING (MEP)

• Control systems
• Field instrumentation
• Materials handling systems
• Mechanical equipment
• Switchgear and motor control centres
• Motor control centre supply and installation
• Overland and underground pipelines
• Process plant construction
• Process piping
• Design and build high-rate water clarifier plants
• Structural steel and pipe support fabrication and erection
• Pipe spool fabrication and installation
• Tank and tank farm construction
• Petrochemical turnarounds, shutdown and maintenance
• Commissioning support and assistance
• Scaffolding, painting, and insulation

CIVILS

• Water infrastructure, including:
• • Wastewater treatment works
  • Water treatment works
  • Reservoirs and dams
  • Including mechanical and electrical fit out
• Transport infrastructure construction, including bridges (conventional, precast, incrementally launched, cable-stayed, balanced cantilever, etc.), rail infrastructure, container terminals and marine facilities
• Industrial civils in live operational environments including pulp/paper, sugar and petrochemical sectors.
• Caisson construction
• Specialist concrete rehabilitation, repair and waterproofing
• Industrial, petrochemical, and mining plant repair and renovation under shutdown or live conditions
• Desalination infrastructure
• Specialists in precast concrete solutions
• Specialist civil mine infrastructure
• Materials handling balance of plant (BOP)
• Energy infrastructure (power plants: coal-fired, gas, etc.),
• Petrochemical plants, industrial plants (cement) and industrial factories
• Environmental rehabilitation and management projects
• Full traditional civil capabilities supported by an increased full-service offering including MEP, design and build, project management and building information modelling (BIM)
• Marine infrastructure
• Slip forming
• Head gear construction

GEOTECHNICAL

• Piling in all soil conditions
• Design and construction
• Lateral support
• Rock anchoring
• Shotcrete
• Void fill
• Grouting - including specialist consolidation, compaction, and dolomitic treatment
• Sinkhole remediation and repairs

RENEWABLES

• Civil balance of plant design and construction
• Electrical balance of plant design and construction
• Main transmission substations
• Independent Power Producer (IPP) substations
• Solar photovoltaic (PV) balance of system
• Battery Energy Storage System (BESS)
• Medium voltage reticulation networks
• Overhead lines, medium and high voltages

ROADS & EARTHWORKS

- Road construction and rehabilitation

- Large earth dam construction

- Bulk civil services and infrastructures construction

- Construction of high-density polyethylene (HDPE)

lined containment infrastructure

- Crushing and screening

- Water infrastructure construction

- Rail infrastructure construction

- Large diameter welded steel pipe installation

- HDPE and ductile cast-iron pipeline installation

- Bulk earthworks

Stefanutti Stocks  Integrated Annual Report 2024

MINING SERVICES: MATERIALS HANDLING

• Conventional materials handling including:
• • Reclamation of dumps including screening, blending, placement, slurry disposal, final dump rehabilitation
  • Waste rock dump management
  • Handling of terrace coal

MINING SERVICES: TAILINGS OPERATIONS

• Design, construction, and operations of tailings storage facilities, including integrated digital monitoring and reporting in accordance with Global Industry Standard on Tailings Management (GITSM) standards
• Hydraulic mining/reclamation

- Mining infrastructure

- Tailings storage facilities construction

- Asphalt manufacture and paving

- Agricultural land preparation and infrastructural

development

- Irrigation design and construct

- In-situ concrete lining of pipelines

07

BUSINESS MODEL

The business model demonstrates how the group creates sustainable value for its stakeholders by transforming inputs, through business activities, into outputs and outcomes.

Operations follow a continuous process of procuring new work, executing with excellence, and managing the resources that are required within the process. A wide range of service offerings support the company's strategy as it operates within physical, political and social environments. In addition, various material risks are identified as the group endeavours to implement its business model, and these are set out on pages 13 to 21 of this report.

Stefanutti Stocks

CAPITALS	INPUTS
	HUMAN	- 5 413 group employees
		- Board of directors
Employees, human
- Executive Committee
resource practices, trends
- Social and Ethics Committee
		- Founder's Mentality
		- OHSE Forum and HR Forum
		- Remuneration Committee

	SOCIAL AND	- Emerging contractor development
	RELATIONSHIP	- R1,5 million invested in SED initiatives
	- HR Forum
Relationships with and between
employees, communities and
other stakeholders

BUSINESS ACTIVITIES

STRATEGY	PROCUREMENT
Delivering products	Established track record
and services to clients	based on technical
in various regions,	expertise and market
while remaining within	knowledge enhancing
acceptable risk levels	reputation
MANAGEMENT	EXECUTION INPUTS
FOCUS	Innovative projects
Effectively managing	utilising the right people,
risk, ensuring	knowledge and expertise,
compliance and	quality services and
remaining within budget	materials, keeping
	safety first

OUTPUTS	OUTCOMES
- Governance structures adhere	- R1,7 billion paid to employees
to King IV	- Good corporate governance
- Employee benefits include employee	practices
wellness programme, retirement	- Key staff retention
funds, medical aid, children's	- Engaged and energised staff
educational cover and funeral cover	- 2 804 employees are deemed
- Remuneration policy with long-term	PDIs (91% of South African
incentives for key staff	employees)
- Various initiatives address skills
development and training
- B-BBEE initiatives	- B-BBEE Level 1 Contributor status
- Dedicated mentorship and support	- Transformed construction
of emerging contractors	industry and job creation
- Donating time, skills and materials	- Economic growth for communities
to support educational facilities	- 0,03 LTIFR
	- 0,24 RCR
	- 133 bursary beneficiaries

Integrated Annual Report 2024

  NATURAL

Any stock or flow of energy and material that produces goods and services

  FINANCIAL

Representative of natural, human, social or manufactured capital such as shares, bonds or banknotes

• Environmental Forum
• Climate change initiatives
• Improved biodiversity management
• R7 billion revenue
• R529 million property, plant and equipment
• R536 million contracts in progress

- Environmental framework	- No major reportable
- Environmental initiatives	environmental incidents
	- ISO 14001 certifications
	- Reduced environmental impact
	- Water conservation
- R755 million cash on hand	- R7 billion contract revenue
- R322 million cash generated	- R117 million capital expenditure
by operations	- R5,1 billion total assets
	- Interest-bearing debt reduced

  MANUFACTURED

Material goods and infrastructure owned, leased or controlled by the group that contribute

to production

  INTELLECTUAL

Value of the company's employee knowledge, skills and proprietary information that can provide

a competitive advantage

• Four operating regions
• R117 million capital expenditure
• R6,8 billion group order book as at 29 February 2024
• Multidisciplinary expertise
• Leading company operating across South Africa and sub-Saharan Africa
• Risk monitoring through risk registers
• Internally developed operating ICT system
• Brand
• CIDB Category 9 Contractor
• R12 million invested in training

STAKEHOLDERS IMPACTED

- Clients	- Investors
- Communities	- Lenders
- ED partners	- Shareholders
- Employees	- Suppliers
- Financiers	- The JSE
- Industry and government	- Trade unions
regulators

- Enhancing and maintaining	- CIDB Category 9 Contractor rating
operating capacity

-	R6,8 billion group order book	- Sustainable performance
	as at 29 February 2024	- Investor confidence
- Combined assurance framework	- Stable and reliable systems
	to effectively manage risks facing	and processes
	the business

• Operational efficiency

08