bridging your expectations · stefanutti stocks’ main sustainability objectives are to create an...

Stefanutti Stocks Integrated Report 2012

Stefanutti S

tocks Integrated

Rep

ort 2012

Bridging your expectations


p6 Group overviewEach key business unit offers highly diversified services across the spectrum of engineering and construction disciplines.

Contents

p16 Chairman’s statement“Stefanutti Stocks’ strategy for growth and unlocking shareholder value is sound and we continue to address ongoing operational challenges.”

p46Social and environmental reviewStefanutti Stocks’ main sustainability objectives are to create an equitable and safe working environment for its employees as well as contribute to the environment in which the group operates.

Group at a glance

Company profile 1

Definitions and abbreviations 1

Vision, Mission and Values 1

Performance highlights 1

Strategic intent 2

Four-year financial review 3

Scope and boundary 4

New group reporting structure 5

Group overview 6

Risk management 8

Stakeholder engagement 10

Material issues 11

Board of directors 12

Executive Committee 14

Reports to stakeholders

Chairman’s statement 16

Chief Executive Officer’s report 18

Operational review 22

Structures 22

Roads & Earthworks 26

Mining Services 30

Mechanical, Electrical & Power 32

Building 36

Corporate governance report 40

Social and environmental review 46

Our employees 47

Safety, health and environment 55

Transformation and CSI 59

Value added statement 66

Remuneration report 67

Summary of financial statements

Chief Financial Officer’s report 74

Preparation of annual financial statements 76

Certificate by the Company Secretary 76

Independent auditors’ report 76

Directors’ responsibilities and approval 77

Audit, Governance and Risk Committee report 78

Directors’ report 80

Financial statements 81

Shareholders’ analysis 89

Shareholders’ diary 90

Administration

Notice of annual general meeting 91

Summary of the new Memorandum of Incorporation 96

Form of proxy 99

GRI index 101

Corporate information ibc

This Integrated Report is also

available as an interactive online

report on the corporate website:

www.stefanuttistocks.com

1

Group at a glance 1

Reports to stakeholders 16

Summary of financial statements 73

Administration 91


Company profile

Stefanutti Stocks is one of South Africa’s leading engineering and construction groups and has been listed on the JSE Main Board in the “Construction and Materials – Heavy Construction” sector since 2007. The group offers highly diversified services across the full spectrum of engineering and construction disciplines. The focus areas of the group comprise structures, buildings, roads, open-pit mining, mechanical, industrial, electrical and power.

All group operations are registered with the Construction Industry Development Board (CIDB) as a category 9 Contractor, which places no limitations on the size of project the group can tender on.

The group operates in South Africa, sub-Saharan Africa as well as in the Middle East, across the private and public sectors, with clients spanning governments, State-owned companies and local authorities, industry, large corporations, financial institutions and property developers. The African countries include Angola, Botswana, Malawi, Mozambique, Sierra Leone, Swaziland and Zambia, with offices in Doha and Dubai in the Middle East.

Stefanutti Stocks’ headquarters are in Kempton Park, Gauteng, and employs a global workforce of almost 13 000 with about 10 000 employees throughout South Africa.

Financial highlights

R8,0 billionContract revenue

R359 millionOperating profit

153 centsHeadline earnings per share

Definitions and abbreviations The definitions listed below have been used throughout this Integrated Report.

“Asset turnover” Contract revenue divided by average total assets

“B-BBEE” Broad-based black economic empowerment

“Companies Act” Companies Act, No 71 of 2008, as amended

“CSI” Corporate Social Investment

“Cycad Pipelines” Cycad Pipelines (Pty) Ltd and its related operations

“DIFR” Disabling Injury Frequency Rate

“Earnings yield” HEPS as a percentage of market value per share

“ED” Enterprise Development

“EPC” Engineer, Procure and Construct

“EPCM” Engineer, Procure, Construct and Manage

“EPS” Earnings per share

“EXCO” Executive Committee

“GRI” Global Reporting Initiative

“HDI” Historically Disadvantaged Individual

“HEPS” Headline earnings per share

“IASB” International Accounting Standards Board

“IFRS” International Financial Reporting Standards

“IT” Information Technology

“JSE” JSE Limited

“King III” King Report on Corporate Governance for South Africa 2009

“KZN” KwaZulu-Natal

“Listings Requirements” Listings Requirements of the JSE

“LTIFR” Lost-Time Injury Frequency Rate

“MEP” Mechanical, Electrical & Power

“Net profit margin” Profit after taxation as a percentage of contract revenue

“Operating profit” Operating profit before investment income

“Operating profit margin” Operating profit as a percentage of contract revenue

“Return on assets” Profit after taxation as a percentage of average total assets for the period

“Return on equity” Profit attributable to equity holders of Stefanutti Stocks as a percentage of average capital and reserves attributable to equity holders of Stefanutti Stocks

“RPM” Roads, Pipelines & Mining Services

“SADC” Southern African Development Community

“SAFCEC” South African Federation of Civil Engineering Contractors

“SANRAL” South African National Road Agency Limited

“SENS” Stock Exchange News Service

“SHE” Safety, Health and Environment

“Stefanutti Stocks”; “the group” or “the company” Stefanutti Stocks Holdings Limited

“the board” The board of directors of Stefanutti Stocks

“the current year” The financial year ended 29 February 2012

“the next year” The financial year ending 28 February 2013

“the previous year” The financial year ended 28 February 2011

“Total assets” Total non-current and current assets

“WACC” Weighted Average Cost of Capital

Vision

To be a dynamic multi-disciplinary group that is the leading South African-based construction business with Engineer, Procure and Construct ability.

Mission We aim to become the preferred construction partner for all of our stakeholders Our professional conduct will establish a track record of industry excellence Maximise shareholder value by building a sustainable business presence in

Africa and within targeted international markets Create a desirable place of work, a natural home for creativity, enthusiasm and

personal safety

Values Candour: Frank and respectful discussions with the objective of finding

positive outcomes Professionalism: The application of a competent, disciplined and meticulous

approach to all aspects of business, resulting in performance of high quality and reliability

People relations: The value which causes people to treat one another fairly and with respect, and always be mindful of the human dignity of others

Enthusiasm: A high level of positive energy and a determination to succeed Dynamism: Openness and flexibility of mind and an energetic, proactive

solution-driven attitude

Performance highlights

2012

2011

2010

2009

7 991

6 896

7 365

6 213

Contract revenue (R’million)

2012

2011

2010

2009

359

442

501

392

Operating pro�t (R’million)

2012

2011

2010

2009

153

192

224

185

HEPS (Cents)

Stefanutti Stocks Building KZN won the Platinum Award for a million man-hours without a disabling injury and maintaining a low accident frequency rate

Attained B-BBEE Level 2 Contributor status as of May 2012

2


Strategic intent

Key strategic long-term goals

The strategic long-term goals for Stefanutti Stocks are to:

become the leading construction group in South Africa;

become the preferred construction partner for clients, government(s), joint-venture partners, employees, prospective employees

and investors;

establish an unquestionable track record of industry excellence; and

establish a sustainable business presence in targeted local and international markets.

Continue to unlock value for all stakeholders through a value-driven culture. This will be achieved by:

setting and achieving measurable key financial objectives to support a sustainable earnings growth and, at the same time, maintain

a sound financial position; and

implementing key non-financial objectives to support the growth strategy.

The overall objectives of Stefanutti Stocks’ sustainability strategy are to:

create an equitable working environment for the group’s employees to enable them to develop to their full potential;

be profitable, while nurturing and respecting the environment in which the group operates. The group recognises the potential impact

Stefanutti Stocks has on the natural and social environments in which it operates;

be the employer of choice. In achieving this goal, the group strives to provide a healthy place of work with a focus on training and

developing the staff, ensuring effective communication and building awareness of the effects of HIV/Aids; and

play an active role in South Africa’s transformation process.

Milestones

Founded the company Stefanutti & Bressan by Gino Stefanutti and Ivo Bressan

Swaziland: Open offices

Roads & Earthworks: Establish a new operation

Awarded: First bridge construction

Awarded: Contract for the Tugela River Bridge

1971 1974 1988 1992

3

Group at a glance 1



Administration 91


Four-year financial review

Year ended 29/28 February 2012 2011 2010 2009

PROFIT INFORMATION

Contract revenue R’million 7 991 6 896 7 365 6 213

Operating profit R’million 359 442 501 392

Operating profit margin % 4,5 6,4 6,8 6,3

Net profit margin % 3,3 4,8 5,3 5,1

Profit after income tax R’million 264 333 389 319

Headline earnings R’million 264 331 392 299

FINANCIAL POSITION

Total assets R’million 5 911 5 071 5 028 5 024

Total equity R’million 2 114 1 854 1 684 1 613

Total liabilities R’million 3 797 3 217 3 344 3 411

Cash from operations before working capital R’million 900 306 948 1 094

ASSET MANAGEMENT

Return on assets % 4,8 6,6 7,7 9,3

Return on equity % 13,3 18,8 23,6 27,5

Net asset turn times 1,5 1,4 1,5 1,8

SHAREHOLDERS’ RATIOS

Earnings per share cents 153 194 220 184

HEPS per share cents 153 192 224 185

Dividend per share cents 24 45 70 58

STOCK EXCHANGE STATISTICS

Market capitalisation – close R’million 2 031 1 956 1 862 1 580

Market value per share

– At year end cents 1 080 1 040 990 840

– Lowest for the year cents 980 900 600 725

– Highest for the year cents 1 310 1 311 1 225 2 195

PE ratio at year end times 6,4 5,0 4,8 8,1

Dividend ratio at year end times 3,4 6,3 8,4 –

Weighted number of shares ’000 172 448 172 051 174 788 161 465

Mozambique: Open offices Kempton Park: Gauteng office opens

Awarded: Three major cooling towers for Eskom’s Majuba power station

Revenue: R84,0 million

Geotechnical operation: Specialising in reinforced piling and lateral support

200319961994

4


Scope and boundary

This Integrated Report may contain certain forward looking statements concerning the group’s key business units’ strategy, financial conditions, growth plans and expectations. Such views include both known and unknown risks, assumptions, uncertainties and important factors that could materially influence the actual performance of the group. No assurance can therefore be given that these will prove to be correct and no representation or warranty expressed or implied is given as to the accuracy or completeness of such views.

Assurance and comparabilityThis Integrated Report has not been independently assured this year. The group, however, reviews all internal and external assurances already in place and co-ordinates this with its risk management profile. The annual financial statements have been audited and the Independent Auditors’ report can be found in the comprehensive annual financial statements on the inserted CD in the front of this Integrated Report and the group’s website: www.stefanuttistocks.com. Approval of the Integrated Report It is the board’s responsibility to ensure the integrity of this Integrated Report. The board has applied its mind to the Integrated Report and in its opinion this report addresses all the material issues and fairly represents the integrated performance of the group.

Gino Stefanutti Willie MeyburghChairman Chief Executive Officer

18 July 2012

Revenue: R1,0 billion

Acquired: Environmental, Civil and Mining Projects (Pty) Ltd

Lists on the Johannesburg Stock Exchange

Cape Town: Office opens

BEE partner: Introducing Moputso Investments (Pty) Ltd (part of Mowana Investments group)

Milestones

This report, for the financial year ended 29 February 2012, is the first Integrated Report prepared by Stefanutti Stocks Limited and its subsidiaries to stakeholders. It aims to provide a balanced, understandable and complete view of the business by reporting on the material issues, risks and opportunities faced by the group as well as the group’s environmental, social and governance responsibilities.

This Integrated Report was prepared in accordance with the International Financial Reporting Standards, the requirements of the South African Companies Act, No 71 of 2008, as amended, the Listings Requirements of the JSE Limited, the principles of the King Report on Governance for South Africa, 2009, the Global Reporting Initiative’s G3.1 Reporting Guidelines and the Discussion Paper on Integrated Reporting released by the South African Integrated Reporting Committee. For additional financial information and recent announcements please visit our website at www.stefanuttistocks.com.

The Stefanutti Stocks’ Integrated Report is published in various media, with a summary of the financial statements contained in this printed Integrated Report. The Integrated Report, which includes the comprehensive annual financial statements and investor presentations for the year ended 29 February 2012, are available on the company’s website and on the CD inserted in the front of this Integrated Report.

Reporting on corporate responsibility issues is addressed in the operational review by each of the key business units of the group and where targets and performance indicators have been set, they have been disclosed herein.

There are no material changes to the content of this Integrated Report when compared to the 2011 Annual Report, other than a greater emphasis now on providing additional information on the company’s strategic direction, risk and sustainability initiatives.

2005 2006 2007

5

Group at a glance 1



Administration 91


New group reporting structure


Acquired: Business operations of Waste Energy Recovery and Management (Pty) Ltd, Apollo E&I Construction (Pty) Ltd and RGF Power Projects CC


Acquired: Cycad Pipelines (Pty) Ltd effective March 2012

Implemented a perpetual employee participation plan known as the Stefanutti Stocks Employee Participation Plan 2012

Acquired: Majority stake in Skelton & Plummer Investment Holdings Company (Pty) Ltd


Merged with Stocks Limited and gained entry into UAE markets

BEE shareholder: Leswikeng Building (Pty) Ltd

Acquired: Majority stake in Civil & Coastal (Pty) Ltd

Rebranded as Stefanutti Stocks

2008 20122010

As previously reported to the market, Stefanutti Stocks has revised its reporting structures for the group, effective 1 March 2012, whereby Mining Services, previously reported as part of Mechanical, Electrical & Power (MEP), is now reported as part of Roads & Earthworks. The newly acquired Pipelines business will also be reported as part of Roads & Earthworks, with the business unit now known as Roads, Pipelines & Mining Services. Mechanical (Oil & Gas), is a newly established division operating within MEP. The order book indicated below is as at 29 February 2012.

BuILDING

MID

DLE

EAST

STRuCTuRES

ROADS, PIPELINES & MINING SERVICES

Pipelines

Roads & Earthworks

Buildings, Roads & Earthworks Swaziland

Design & Tailings

Operations

Open-pit Mining

Materials Handling

Al-Tayer Stocks

Construction

Zener Steward

Power

Electrical & Instrumentation

Mechanical (Oil & Gas)

Mechanical (Mining & Infrastructure)

Marine

Geotechnical

Civils KZN

Civils

Africa (SADC)

Coastal

Housing

Inland

ME

P

R2,3 billionOrder book

R0,4 billionOrder book

R4,1 billion

Order book

R1,8 billion

Order book

6


Group overview

Structures Roads &Earthworks

Mining Services

Mechanical, Electrical & Power

Building (including Middle East)

Key operations Key operations Key operations Key operations Key operations

Civils Civils KZN Marine Geotechnical

Roads & Earthworks Gauteng Roads & Earthworks Swaziland

Design & Construct Tailings Operations Open-pit Contracting Materials Handling

Mechanical Electrical & Instrumentation Power

Inland Middle East Coastal Al-Tayer Stocks Housing Zener Steward Africa (SADC) Construction

Business unit capabilities Business unit capabilities Business unit capabilities Business unit capabilities Business unit capabilities

Construction of: Mining infrastructure Bridges and transport infrastructure Fossil and renewable energy power

plants Petrochemical plants and related

infrastructure Bulk materials handling infrastructure Marine infrastructure, ports

and harbours Heavy industrial plants

and structures Geotechnical construction, piling

and lateral support Effluent and water treatment plants Structural rehabilitation, concrete

repair and waterproofing Dams

Roads Bulk earthworks Mining surface infrastructure Industrial infrastructure plants Township infrastructure Transport infrastructure Pipelines for water and other

products and materials Trenched optic fibre

Design, construction and operation of waste residue disposal and recovery facility

Hydraulic mining and dredging Bulk materials handling Coal discard and fines disposal

and recovery Open-pit contracting Drilling and blasting for mines Crushing and screening at mines Rehabilitation and closure of mines

High voltage overhead line construction (11 kV to 765 kV)

High voltage substation construction (11 kV to 132 kV)

Fibre-optic installation

Surface and underground mining infrastructure Petrochemical plants and related

infrastructure Supply, fabrication and erection of

steel and platework Electrical installation Supply and installation of piping Instrumentation and control

installation

Healthcare facilities Transport nodes Retail and parkades High-rise residential Housing Office accommodation Educational institutions Stadiums Hotels and leisure

Middle East Construction Interior fit-out Refurbishment Electro-mechanical installations

Contribution Contribution toto revenue (%) operating profit (%)*


Contribution Contribution to revenue (%) to operating profit (%)*


*Excluding head office *Excluding head office *Excluding head office *Excluding head office

32 50

1121

7

Group at a glance 1



Administration 91


Structures Roads &Earthworks

Mining Services


Building (including Middle East)

Key operations Key operations Key operations Key operations Key operations

Civils Civils KZN Marine Geotechnical

Roads & Earthworks Gauteng Roads & Earthworks Swaziland

Design & Construct Tailings Operations Open-pit Contracting Materials Handling

Mechanical Electrical & Instrumentation Power

Inland Middle East Coastal Al-Tayer Stocks Housing Zener Steward Africa (SADC) Construction

Business unit capabilities Business unit capabilities Business unit capabilities Business unit capabilities Business unit capabilities

Construction of: Mining infrastructure Bridges and transport infrastructure Fossil and renewable energy power

plants Petrochemical plants and related

infrastructure Bulk materials handling infrastructure Marine infrastructure, ports

and harbours Heavy industrial plants

and structures Geotechnical construction, piling

and lateral support Effluent and water treatment plants Structural rehabilitation, concrete

repair and waterproofing Dams

Roads Bulk earthworks Mining surface infrastructure Industrial infrastructure plants Township infrastructure Transport infrastructure Pipelines for water and other

products and materials Trenched optic fibre

Design, construction and operation of waste residue disposal and recovery facility

Hydraulic mining and dredging Bulk materials handling Coal discard and fines disposal

and recovery Open-pit contracting Drilling and blasting for mines Crushing and screening at mines Rehabilitation and closure of mines

High voltage overhead line construction (11 kV to 765 kV)

High voltage substation construction (11 kV to 132 kV)

Fibre-optic installation

Surface and underground mining infrastructure Petrochemical plants and related

infrastructure Supply, fabrication and erection of

steel and platework Electrical installation Supply and installation of piping Instrumentation and control

installation

Healthcare facilities Transport nodes Retail and parkades High-rise residential Housing Office accommodation Educational institutions Stadiums Hotels and leisure

Middle East Construction Interior fit-out Refurbishment Electro-mechanical installations



Contribution Contribution to revenue (%) to operating profit (%)*


*Excluding head office *Excluding head office *Excluding head office *Excluding head office

12 -1

45 34

8


Risk management

An important consideration when preparing the Integrated Report is to address material issues and risks as well as providing a view of what the company and its stakeholders deem important to ensure the financial, social and environmental sustainability of the group. This is Stefanutti Stocks’ first year of reporting in an integrated manner and while the board is responsible for the governance of risk and approves all policies and guidelines that relate to mitigating the risks for the group, it recognises that the company is still in the process of ensuring that the statutory reporting relating to risk management within the group is done appropriately. The Audit, Governance and Risk Committee remains responsible for monitoring the group’s risk management.

Stefanutti Stocks’ philosophy is to be “risk aware” and not “risk averse” and to recognise potential opportunities flowing from selected risks. The company endeavours to minimise risks by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints, as determined by the board’s risk appetite parameters.

Each discipline is responsible for identifying, assessing and recording risks and to monitor procedures aimed at mitigating identified risks.

The group risk register has been reviewed, updated and aligned to the group’s strategic plan. The following are deemed to be the potential high-impact risks:

Risk Controlling strategies/mitigations

External environment: MarketsSignificant changes in pricing levels (margin pressure)

Diversification and expansion of group offering Identification of opportunities: external to existing markets New geographical territories New markets Alternative procurement approaches and methods Market intelligence, specifically on pricing and contracting trends

Growth strategiesNew geographical expansion Rigorous estimating and tendering process with appropriate authority levels

Due diligence to ensure understanding of new conditions Development of policies and procedures in support of strategy On-the-ground commitment to gain practical experience Assistance from advisory firms and consultants

Acquisitions and mergers Alignment with group strategy Comprehensive industry and market research Detailed due diligence/professional advisors Profit warranties Carefully managed integration process/merger integration plans Mergers, Acquisitions and Disposals Committee

New markets Comprehensive/ongoing market research Detailed due diligence/professional advisors Development of policies and procedures in support of strategy Appropriately skilled management

Legislative complianceCompetition law Ongoing training and awareness of programmes for all management on

Competition Act requirements Risk management and legal compliance reviews Compliance overseen by Audit, Governance and Risk Committee

Laws governing health and safety Rigorous health and safety programmes across the group, including management forums Monitoring of health and safety and ensuring corrective action is taken Social and Ethics Committee established

Other laws relevant to the group Identification of core Acts applicable to the group and key controls to ensure compliance Risk management and compliance reviews

9

Group at a glance 1



Administration 91


Medium level risks, from a group perspective, are as follows:

Risk Controlling strategies/mitigations

External environment: MarketsLoss of market share Diversification client relationship marketing strategies

Quality, on-time and within client budget performance Process of continual improvements and cost control Growing market share in selected business areas

External environment: Socio-politicalB-BBEE Employee Participation Plan

Structured process to increase management representation at various board levels Procurement with qualifying B-BBEE suppliers Appropriate measurement and reporting systems to be strengthened/ implemented

Strategic management: Growth strategiesNew client sectors “Know Your Client” due diligence

Maintenance of private/public sector client proportions Marketing/business development initiatives Established client relationship programme

Strategic/business management: Business model/approachesPartnering/strategic alliances/joint ventures

Seeking compatible cultures/approaches Building strong interpersonal relationships at correct management levels Establishing new arrangements on small scales first Ensuring joint-venture partners are a good fit in terms of skills, quality and financial capability

Estimating, contracting and execution: Major projects/different contracted projectsEstimating risk Well-developed estimating systems

Experienced estimators Regular reviews of rates Structured tender finalisation process Complex, large, new type of projects to be subject to particular focus

Contractual terms Commercial skills capacity Contracting to standard (industry) terms Deviations subject to professional advice and senior management sign-offs Transferring/avoiding high risks (price risks-indexation, provisional sums, fixed prices, etc)

Project delivery(problem contracts) Project management controls covering all aspects of the project processes are devised and

implemented covering items such as: contract award, start-up site management, monthly contract reviews, monthly forecasting, site asset controls, quality management plans, health and safety plans, commercial plans, valuations and payment management, sub-contracting and supplier management, other project operating controls, purchase controls, handover and completion certificates controls, financial performance reviews, controls and record keeping

Skills development, capacity building and human capital development

Human capital managementEmployment equity Focused recruitment preference for HDIs

Focus on total B-BBEE scorecard

Financial managementFinancial gearing Appropriate financial gearing levels determined and reviewed regularly

Information TechnologyIT failure Adequate service level agreements with IT service providers

Disaster recovery strategy developed by group IT Contingency plan with respect to network connectivity

10


Stakeholder engagement

Stefanutti Stocks engages in open, constructive and transparent communication with stakeholders. The Human Resources department, Social and Ethics Committee and investor relations functions within the group, maintain relevant communication with existing and new stakeholders.

Company announcements are published on SENS and posted on the website and relevant financial results announcements are mailed to shareholders. The Chief Executive Officer and Chief Financial Officer are available to answer queries from shareholders, including industry analysts, and, wherever viable, engage with the financial media in an attempt to ensure accurate reporting.

Roadshows to the investor community and senior management of the group are conducted twice a year and the presentations are readily available on the company’s website. Investor days are also hosted by the group for those interested in the operations of the group.

The internal newsletters keep the Stefanutti Stocks employees updated on all relevant issues pertaining to the group and specific communication is undertaken when performance evaluations are carried out. Regular toolbox talks are held on all sites to communicate any new information to employees and to address day-to-day queries and questions.

Stakeholder group Communication channels

Shareholders, investors and

analysts

Annual general meetings, annual and interim reports, analysts roadshows, investor days, corporate advertising and website

Employees Ongoing internal newsletters, training sessions, performance reviews, staff meetings, email announcements and website

Communities Ad hoc liaison meetings, telephone calls and formal functions and website

Clients Ongoing meetings, letters, email updates, formal functions, personal visits, telephone calls and website

Suppliers Scheduled project meetings, email updates, telephone calls, formal functions and website

11

Group at a glance 1



Administration 91


Material issues

The board reviews the material issues on a regular basis, as required by King III, and classifies the issues that have a material impact on the key operations into five categories, namely governance and leadership, earnings growth, human capital, operational, health, safety and environment.

The group’s material issues are as follows:

Material issues Stakeholders impacted Response to issue

Governance and leadership:To ensure that there is adequate governance in place

EmployeesShareholdersInvestorsAnalysts

The company has a board, Audit, Governance and Risk Committee, Sustainability Committee, Remuneration and Nominations Committee, Mergers, Acquisitions and Disposals Committee. The Sustainability Committee was reconstituted as the Social and Ethics Committee with effect from 1 March 2012.

The codes of conduct and ethics are applied across the group.

Commitment by the group to the adherence of the requirements and guidelines as set out in King III.

Leaders within the group have been identified to ensure succession planning.

The B-BBEE codes are being applied throughout the group’s businesses.

Earnings growth:To ensure sustainable growth in earnings to compensate the stakeholders of the company

ShareholdersInvestorsAnalystsClientsSuppliersEmployeesFinanciers

The company has an EXCO that monitors and reviews operational performance against business plan objectives, budgets and financial targets. The EXCO will take corrective action in the event of non-performance by a business unit.

Human capital:To attract (by providing excellent benefits and opportunities), retain (by recognition, development and career prospects), develop and motivate employees to their full potential

EmployeesShareholdersInvestorsAnalystsClientsCommunities

The Human Resources function assesses capacity requirements, employment and development of skills, B-BBEE scorecard, compensation and benefits as well as the culture of the organisation.

Operational:Operational issues associated with the securing of tenders, assets, credit, fraud and reputation

EmployeesShareholdersInvestorsAnalystsClientsCommunitiesSuppliers

These issues are addressed by applying vigilant controls and measures within the group to monitor success and occurrences.

There are comprehensive IT systems in place to monitor all areas of the business.

Ongoing training.

Health, safety and environment:To ensure that the company provides a healthy and safe environment for its employees and subcontractors to operate in, while considering the impact on the environment

EmployeesShareholdersInvestorsAnalystsClientsCommunities

Group Health, Safety and Environment Framework.

Ongoing health and safety training across the group.

The use of energy-saving products and fuel optimisation is considered, recycling of resources is applied where appropriate. Rehabilitation of the environment where the group has projects, is undertaken to the best of the group’s abilities.

12


Board of directors

3.1. 4.2.

Executive directors

1. Willem (Willie) Meyburgh (58)Chief Executive Officer

National Diploma Civil Engineering, BCom

Appointed April 1996

Willie has over 35 years’ experience in the construction industry. He has vast experience in the construction industry with several large projects across the full spectrum of construction activities. Prior to joining Stefanutti & Bressan Civils (Pty) Ltd as Managing Director in 1996, he held a number of executive management positions for leading construction companies in South Africa. Willie was appointed to his present position of Chief Executive Officer when the group listed in 2007.

2. Dermot Quinn (60)Chief Financial Officer

BScEcon, CA(SA)

Appointed November 2005

Dermot qualified as a chartered accountant in 1984 with audit firm Arthur Young. He joined the group in 1992, after having spent five years with Grovewalk Holdings Limited as Chief Financial Officer. He was appointed as Chief Financial Officer of Stefanutti & Bressan (Pty) Ltd in 2000 and, on the restructuring of the group in 2005, was appointed to the board in the same capacity.

Stephen Pell (54)Chief Operating Officer

BSc (Building Management)

Appointed July 2008 and resigned 31 March 2012

Mergers, Acquisitions and Disposals Committee

Prior to joining Stefanutti Stocks in 2006, Stephen gained extensive experience in the construction markets in South Africa, Africa and the Middle East, particularly in the disciplines of building, industrial civil and roads and earthworks. He previously held the position of director at Murray & Roberts Limited and Managing Director of Murray & Roberts Construction. In July 2007 he was appointed as Chief Executive Officer of Stocks Limited. Following the merger with Stefanutti & Bressan Holdings Limited in 2008 he was appointed as Executive Director and later in 2010 was appointed Chief Operating Officer of Stefanutti Stocks. He resigned effective 31 March 2012.

3. Schalk Ackerman (53)BEng (Civil)

Appointed March 2010

Schalk has over 30 years’ experience in the civil engineering construction industry. Prior to joining Stefanutti & Bressan (Pty) Ltd as Managing Director in July 2007, he was Managing Director of the Civil Engineering business unit and an EXCO member of another major South African construction group. He was appointed to the position of Managing Director of the Structures business unit in September 2008 and became an Executive Director of Stefanutti Stocks in March 2010.

Non-executive directors

4. Biagino (Gino) Stefanutti (64)Chairman and Co-founder

National Diploma Civil Engineering

Appointed April 1996

Gino has over 40 years’ experience in the engineering and construction industry. He co-founded Stefanutti Stocks with Ivo Bressan as Stefanutti & Bressan (Pty) Ltd in 1971. With the listing in 2007, Gino became the Non-executive Chairman of the group.

5. Bridgman Sithole (49)Appointed July 2007

B-BBEE Transformation Committee (Effective 1 March 2012 part of Social and Ethics Committee)

Bridgman is currently Executive Chairman of Mowana Investments (Pty) Ltd (Mowana), a black empowerment investment holding company invested in Stefanutti Stocks. Prior to joining Mowana in 2005, Bridgman was an Executive Director of Strategy & Business Development at Business Connexion. He has also held various senior positions within the ANC, provincial governments and ABSA Bank Limited. Bridgman currently serves on the boards of numerous private companies.

6. Joseph Fizelle (41)Alternate to Bridgman Sithole

BCom, HDip PrAcc, CA(Ireland) Fellow of the Irish Institute of Chartered Accountants

Appointed July 2007

Audit, Governance and Risk Committee

Joseph is an Executive Director of Mowana, a black empowerment investment holding company invested in Stefanutti Stocks. Prior to joining Mowana in 2004, Joseph was employed in corporate finance at JP Morgan and Standard Bank for a period of six years and before that at PricewaterhouseCoopers. He currently serves on the boards of numerous private companies.

13

Group at a glance 1



Administration 91


5. 11.

7.

9.

6.

8.

10.

Independent non-executive directors

7. Herman Mashaba (52)Appointed July 2008

Remuneration and Nominations Committee

B-BBEE Transformation Committee (Effective 1 March 2012 part of Social and Ethics Committee)


Social and Ethics Committee

Herman founded the cosmetics company Black Like Me Products in 1984. He served as Non-executive Chairman of Stocks Limited from 2005 until the merger with Stefanutti & Bressan Holdings Limited in 2008. Following the merger he was appointed to the board as Non-executive Director. Herman is Deputy Non-executive Chairman of Growthpoint Properties Limited and is also the past Chairman of the Institute of Directors in South Africa and the Executive Chairman of his investment company, Lephatsi Investments (Pty) Ltd.

8. Kevin Eborall (67)Nat Dip Prod Eng (Industrial Engineering)

Appointed July 2007


Remuneration and Nominations Committee

Mergers, Acquisitions and Disposals Committee – Chairperson

Kevin graduated as an industrial engineer in 1965. He has held senior management positions at Dorbyl, ICL and Fraser Alexander. Kevin has served on the boards of various private and public companies and continues to hold a number of directorships both in South Africa and Australia. Kevin provides consulting services to companies in the mining and industrial sectors. He is the Chairman of Skygistics, an international satellite communications company.

9. Nomhle Canca (46)BA (Political Science), BA (Economics)

Appointed July 2007

Audit, Governance and Risk Committee – Chairperson



Nomhle has over 21 years’ experience in the financial services industry, having started her career as a stockbroker in Atlanta (USA) and later registered with the New York Stock Exchange. She is the co-founder of Women Investment Portfolio Holding (Wiphold) and Women’s Development Bank. She has held various directorships at private and State-owned companies.

10. Mafika Mkwanazi (58)Lead Independent Director

BSc (Maths), BSc (Electrical Engineering)

Appointed July 2007

Remuneration and Nominations Committee – Chairperson

Mafika is currently the Non-executive Chairman of Hulamin Limited and sits on the board of the SABS. He has previously held senior positions at South African Breweries Limited, Bristol Myers (Pty) Ltd as a production manager for the Consumer division, and BMW as an engine plant manager. Mafika has served on the boards of various companies including Nedbank Limited, Transnet (where he was Non-executive Chairman since 13 December 2010), Western Areas Limited, the Industrial Development Corporation, Letseng Diamonds and Metrorail.

11. Zanele Matlala (48)BCom, BCompt (Hons), CA(SA)

Appointed February 2012


Social and Ethics Committee – Chairperson

Zanele, a chartered accountant, joined Merafe Resources Limited in 2005 as an Independent Non-executive Director, appointed as Merafe’s Chief Financial Officer on 1 October 2010, and promoted to Chief Executive Officer on 1 June 2012. Before joining Merafe, she was group Financial Director of Kagiso Investments (Pty) Ltd, a position she held from January 2006. Zanele was appointed to Stefanutti Stocks’ board with effect from 27 February 2012.

Company Secretary

William Somerville (55)ACIS, ACMA and a Diploma in Corporate Law

Appointed May 2009

William has been Company Secretary since May 2009. He is a qualified chartered secretary with extensive experience in the company secretarial and corporate governance arenas. He holds an ACIS, ACMA and a Diploma in Corporate Law.

14


Executive Committee

1. Willem (Willie) Meyburgh (58)Refer to his CV on page 12.

2. Schalk Ackerman (53)Refer to his CV on page 12.

3. Dermot Quinn (60)Refer to his CV on page 12.

4. Siphiwe Nzimande (54)Group Business Development Director

BCompt (Hons), MBA


Siphiwe has held various executive positions in both the public and private sectors including being the Commercial Director at Murray & Roberts Construction, Chief Operations Officer at the Gauteng Shared Service Centre and Commercial Executive for Eskom’s Generation group. He previously served for three years as Chief Executive Officer of Business Against Crime South Africa. Siphiwe joined Stefanutti Stocks in June 2010 and was appointed to the EXCO in March 2011.

5. Jan Oberholzer (53)Managing Director Power

BEng (Electrical), MDP, MBL, Executive Leadership (university of Michigan)


Prior to joining the group, Jan spent 26 years with Eskom in various executive leadership positions. These included leading Eskom’s major capital investment programme as well as managing one of the largest electrification programmes in the world. He was appointed Managing Director of Mechanical, Electrical & Power in January 2009 and joined the EXCO in March 2010.

We are driven by a skilled and committed team

2.

4.3.

1.

15

Group at a glance 1



Administration 91


6. Luc Jacobs (53)Managing Director Building

Industrial Engineer in Civil Engineering (Masters degree – Belgium)


Luc has 27 years’ experience in the southern African construction industry having previously worked for Murray & Roberts Engineering and Stocks Construction. His expertise covers industrial engineering and commercial building projects. In 2000 he became an Executive Director of the newly formed Stocks Building Africa and Managing Director of the Inland region in 2006. He was appointed Managing Director of the Building business unit of Stefanutti Stocks in 2010 and joined the EXCO in March 2011.

7. Elardus Rademeyer (43)Group Human Resources Executive

BCom (Financial Management), BCom (Hons) Labour Relations

Appointed June 2008

Elardus has held the role of National Chairman and the Chief Negotiator for national negotiations on behalf of the civil engineering industry. He was Non-executive Chairman of a non-profit training company CEITS, which was established by the South African Federation of Civil Engineering Contractors (SAFCEC) to provide industry training. In the group, Elardus focuses on human resources, health and safety as well as broad-based black economic empowerment.

7.

8.

9.

5.

6.

8. Frik Venter (59)Managing Director Roads & Earthworks

National Diploma Civil Engineering

Appointed October 2010

Frik has 35 years’ experience in the civil engineering industry, mainly in the construction of roads and large dams. He started his career with Savage & Lovemore (later part of Group Five) and was later appointed Managing Director of the African operations for Group Five’s Roads division. He managed the Roads and Opencast Mining divisions at Concor before joining Stefanutti Stocks in October 2010.

9. Vince Olley (49)Managing Director Mechanical & Electrical

National Certificate Light Current, MSc (Change Management & Coaching)


Vince has 22 years’ construction experience. Prior to joining the group, Vince spent 17 years with Aveng Grinaker-LTA. He was Managing Director of Aveng Grinaker-LTA M & E prior to being appointed as an Executive Director. Vince was appointed Managing Director of Mechanical & Electrical in March 2012.

16


Chairman’s statement

“Stefanutti Stocks is a well-diversified group which is beneficial in the challenging environment currently being experienced by the construction sector. The growth in the group’s order book is testimony to this statement.”

The 2012 financial year proved challenging to the group, with the local construction industry under constant pressure. Trading conditions were extremely competitive and the group’s year end results are testament to this. The results are nonetheless satisfactory under the circumstances.

Throughout the group, management expended significant effort in mitigating the effects of prevailing adverse macro conditions. Unfortunately, the group experienced more loss-making contracts this year than has been the norm in the past.

The group’s order book continues to increase to R9,3 billion at the end of May 2012. The challenge will be to convert this into reasonable margins.

Despite the negative aforementioned factors, I am optimistic that the group is well positioned for growth when the construction industry takes a positive turn.

The national and global environmentSince the beginning of 2012, international markets have once again become volatile. This has had a direct impact on our local markets, in particular the infrastructure and building industries. Although we are experiencing signs of recovery in certain areas of the construction industry, the outlook for the industry, as a whole, over the short term, remains subdued.

The multibillion-rand public infrastructure programme announced by President Jacob Zuma in his State of the Nation address, is seen as a positive indication that Government is intent on stimulating economic growth. Many of the priority projects

identified by Government are designed to improve infrastructure in transport, water, rail and electricity, among others, and to service the commodity, agricultural and social infrastructure sectors. Stefanutti Stocks is well positioned to bid on these opportunities as they become available.

With SANRAL having to place a temporary embargo on all toll-related roads projects, there is now much uncertainty in the South African road construction market.

The residential and non-residential building sectors remain under pressure. There are some opportunities within the affordable housing sector, and Stefanutti Stocks is carrying out a number of contracts for some of the large listed institutions.

The shortage in power supply throughout South Africa is well documented and it is expected that significant infrastructure spend will be required in the near future to address this issue.

Corporate governance and social investmentCorporate governance remains a focus area for Stefanutti Stocks. The Corporate governance report, commencing on page 40, sets out the principles and policies in more detail.

We are conscious of our corporate responsibility regarding the effects of our operations on the environment and the need to uplift the communities in which we operate. The Social and environmental review commencing on page 46, illustrates the initiatives and programmes in which the group is involved, in this regard.

17

Group at a glance 1



Administration 91


Performance indicators

Stefanutti Stocks’ strategy for growth and unlocking shareholder value is sound

Sustainable economic, social and environmental conditions remain key to our business

Acquisitions and non-adjusting events after reporting periodStefanutti Stocks concluded the acquisition of Cycad Pipelines, a specialised pipeline infrastructure construction company and a major competitor in the water infrastructure sector, at a cost of R261,0 million with effect from 1 March 2012. The acquisition is in line with our growth strategy to broaden our service offering in the construction sector.

B-BBEEWe continually strive to improve our B-BBEE credentials and are pleased to report that in May 2012, we met our target and are now a Level 2 Contributor.

Towards the end of February 2012, the company’s wholly owned subsidiary, Stefanutti Stocks (Pty) Ltd, implemented a perpetual employee participation plan known as the Stefanutti Stocks Employee Participation Plan 2012 (SSEPP). The SSEPP is intended to enhance the ability of Stefanutti Stocks to attract, retain and reward employees, by allowing them to participate in the economic benefits generated by the scheme. This will provide employees with an incentive to promote and align the economic interest of Stefanutti Stocks with their own, while at the same time allowing Stefanutti Stocks to further enhance its B-BBEE credentials.

DirectorateThe board welcomes Zanele Matlala as an Independent Non-executive Director with effect from 27 February 2012.

Stephen Pell resigned as Chief Operating Officer with effect from 31 March 2012. Stephen’s duties have been assumed by Willie Meyburgh and certain business unit heads.

AppreciationI would like to take this opportunity to thank the members of the board, Willie Meyburgh and his executive team as well as all the Stefanutti Stocks employees for their dedication and hard work during this year.

Gino StefanuttiChairman

18 July 2012

18


Chief Executive Officer’s report

“As a group we continue to look for opportunities to expand our service offering and pursue projects outside the South African borders to grow our footprint and alleviate the margin pressure being experienced as a result of the highly competitive construction market in South Africa.”

The year in perspectiveWe are pleased to present our first Integrated Report for the year ended 29 February 2012. Looking back at the year under review, the effect of an extremely competitive trading environment coupled with a volatile global market is clearly reflected in the group’s overall results. Despite the persistent depressed construction market, Stefanutti Stocks, with its well-diversified discipline and geographic business model, has performed satisfactorily.

The local construction market is currently oversupplied and highly competitive. Fiercely competitive tendering, due to the scarcity of work, continues to reduce profitability in our businesses. New opportunities outside the South African borders continue to be pursued and we have strengthened our presence in Mozambique and Botswana. We continue to look for opportunities to diversify our service offering. The acquisition of Cycad Pipelines and the planned growth of Stefanutti Stocks’ Mechanical & Electrical business unit into the oil and gas markets, are good examples of this strategy.

The Structures business unit reported a sound set of results taking into account the competitive and tough market conditions. The Building business unit delivered a solid performance despite trading in an aggressive market where margins came under severe pressure.

The Roads & Earthworks business unit reported an increase in contract revenue, however, at an operating profit level, the results were negatively impacted by delays in contract awards and contract cancellations. The Mining Services business unit also reported an increase in contract revenue, which was unfortunately offset by a disappointing operating loss traded by the MEP business unit. The competitive environment and certain loss-making projects in the Mining division, which were completed in the second half of the year, contributed to its results. However, this business unit recently secured a contract mining project from Ikwezi Mining Limited (Ikwezi) in KwaZulu-Natal valued in excess of R1,0 billion over a period of 50 months. The MEP business unit, which forms part of the Mining Services business unit, did not meet performance expectations, due to loss-making projects and restructuring costs. During the period under review, the MEP business unit was restructured and focus has been placed on the loss-making operations to improve and return to historic profitability levels.

A comprehensive overview of Stefanutti Stocks’ key business units commences on page 22 of this Integrated Report. The key operations for the 2012 Integrated Report have been reported according to the historic group structure. Reviewed condensed consolidated financial results can be found in the presentation included in the CD in the front of this Integrated Report.

19

Group at a glance 1



Administration 91


Performance indicators

Stefanutti Stocks is well positioned to take advantage of any improvement in economic activity in its core markets

The group has increased its order book, over the past 18 months, to R9,3 billion at the end of May 2012

A key focus is to minimise loss-making projects and to restore margins to more acceptable levels

Financial performanceContract revenue showed a satisfactory increase of 15,9% to R8,0 billion (2011: R6,9 billion) and operating profit declined by 18,8% to R359 million (2011: R442 million). The reduction in profits was mainly as a result of delayed contract awards, contract cancellations, lower margin projects and loss-making projects.

The group’s interest-bearing borrowings increased by R139 million due to funding required for continuing capital expenditure, mainly by the Roads & Earthworks and the Mining Services business units. Working capital consumed cash generated during the year as a result of an increase in accounts receivable and work-in-progress balances.

Earnings per share and diluted headline earnings per share reduced by 20,8% and 20,2% respectively. Despite this, a final dividend of 12 cents per share has been declared, which brings the total dividend for the year to 24 cents per share (2011: 45 cents per share).

The financial performance of the group is discussed in more detail in the Chief Financial Officer’s report commencing on page 74 of this Integrated Report.

The group’s strategy for sustainabilityWe are cognisant of the principles of sustainability and we believe that our stated strategy for sustainable financial growth will be achieved mainly through organic expansion in our existing key business units and selective strategic acquisitions.

The Sustainability Committee, which has been incorporated into the newly formed Social and Ethics Committee, is responsible for ensuring that Stefanutti Stocks reports in terms of the GRI Guidelines and we have, where possible, enhanced our sustainability reporting.

The Department of Energy published a request in August 2011 for proposals to be submitted for the first tranche of 3 725 MW of renewable energy projects, which must be in service by 2016. We participated in the first bidding tranche which closed on 4 November 2011, the financial closure being expected in June 2012. This was done on the basis of subcontracting to certain EPC contractors. In the second tranche we have tendered as an EPC contractor. Financial closure of the latter is expected in December 2012. Preliminary activities around possible nuclear plants are on the increase and we are looking at a number of options on how to position ourselves to take advantage of these opportunities.

20


Chief Executive Officer’s report continued

The significant discovery of natural gas in the northern part of Mozambique, in addition to the country’s substantial coal reserves, will create exciting infrastructure expansion opportunities.

Anglo American Plc’s stated strategy to replenish its Tier 1 assets with industry-leading exploration projects creates opportunities for the local mining and construction contractors. Stefanutti Stocks is in discussions with the Anglo American group to position itself as a Tier 1 supplier.

As previously stated, due to the highly competitive nature of the South African construction market, we continue to explore opportunities beyond our borders. Our business strategy is to expand our footprint in countries where we have a strong presence, and to follow our clients into areas where they already have or are establishing a presence. Positive developments have been seen in Sierra Leone, Guinea, Liberia, Botswana, Mozambique and Zambia.

Conditions remain subdued in the Middle East, however, in certain areas, there are early signs of an improving market. While this business constitutes a small part of the overall business, the group has identified this region as having significant long-term growth potential.

Competition CommissionThe investigation by the Competition Commission into anti-competitive behaviour by companies within the construction industry is ongoing. Stefanutti Stocks is co-operating fully with the Competition Commission and all regulatory authorities. We have submitted the requisite documentation in this regard and await feedback from the Commissioner. The outcome may result in the imposition of an administrative penalty to Stefanutti Stocks, but current indications are that the outcome of this process will only be known during the latter part of 2012 and therefore no provision has been made in this regard.

Health and safetyWe remain committed to enhancing our health and safety processes and procedures. We wish to constantly improve our health and safety record. During the year under review, we were the proud recipients of numerous safety awards. The group’s DIFR at 29 February 2012 was maintained at 0,23 (2011: 0,22).

Unfortunately the group recorded one fatality during the year. The passing of Lorah Makwatha is viewed with sadness and our condolences go out to her family and friends.

Outlook and prospectsA recovery of the construction market is expected in the medium term and is dependent on several factors, including the timeous delivery of Government plans for infrastructure investment, the confidence of the mining industry to invest in capital projects and the general performance of the economy. Mining and petrochemical infrastructure projects and developments in renewable energy are beginning to show promise.

The infrastructure plans of the South African Government, valued at R845 billion, have been approved and budgeted for the next three years. Stefanutti Stocks will tender on these projects when they are presented to the market, however, the timing of the release of these tenders remains uncertain.

Effective 1 March 2012, the Mining Services business unit and the newly acquired Cycad Pipelines business were incorporated into the Roads & Earthworks business unit to form the new RPM business unit.

Stefanutti Stocks continues to grow its order book and we are pleased to confirm an order book of R9,3 billion at the end of May 2012 (May 2011: R8,2 billion), of which 75% of the order book is for the current year. We believe that the group is well positioned to benefit from any medium- to long-term economic and trading improvement in the market.

21

Group at a glance 1



Administration 91


AppreciationI would like to express my gratitude to the EXCO team and all our employees for their hard work and dedication to the group over the past year. I would also like to welcome the new staff members to the Stefanutti Stocks team and hope that you have a long and rewarding career with the group.

My appreciation also goes out to the board for its advice and support during the year. I believe that Stefanutti Stocks has a strong platform from which to build the group into a market leader in our industry.

I would also like to extend my appreciation to all our customers, suppliers, service providers and shareholders for their continued support and commitment to Stefanutti Stocks.

Willie MeyburghChief Executive Officer

18 July 2012

Operational review – Structures

Management: Above left to right: Simon Allen, Werner Jerling, Brian McDonald

Schalk Ackerman Managing Director

23

Financial review

Revenue (R’million)

2012

2011

2010

2 531

2 073

2 099


2012

2011

2010

181

177

166

Contract revenue by sector (%)

l Miningl Water, sanitation and pipelinesl Industrial plants, oil and gasl Transport infrastructure

Power stations and transmission

33

9

9

29

20


Notable projects

Notable projects for the year included:

Project Duration Value Location

Kusile Civil Works for Kusile Power Station 66 months R1 465 million Mpumalanga

Grootegeluk Medupi Expansion Project 34 months R805 million Limpopo

Ben Schoeman Dock 60 months R500 million Western Cape

Sierra Leone Marine Works 12 months R95 million Sierra Leone

Durban Harbour Marine Projects 15 months R303 million KwaZulu-Natal

Moma Sands Expansion 24 months R159 million Mozambique

Ramp-up project portfolio at Kumba’s Sishen Mine (all group disciplines) 24 months R525 million Northern Cape

Trekopje Uranium Mine 15 months R150 million Namibia

Business overviewA business overview of the Structures business unit is on page 6 of this Integrated Report.

The year in perspectiveThe Structures business unit experienced an above-average year given the difficult market conditions and it reported an increase in turnover of 22,1% from R2,1 billion to R2,5 billion compared to the prior year. Operating profit for the period was marginally higher year-on-year at R181 million (2011: R177 million). The operating margin at 7,1% (2011: 8,5%) remained below historic levels due to the competitive environment. Structures remained the largest contributor to earnings in the group.

The order book, as at 29 February 2012, was stable at R2,3 billion (2011: R2,4 billion). Slight volume growth is expected in the coming year and although Structures has secured a meaningful portion of its 2013 budget, the intensifying competition in the market remains a concern.

Above left to right: Koos Saayman, Geoff Thompson, Petrus van Straten, Ken Gibbs

Group at a glance 1



Administration 91

24


Within Structures, the Civils division has been the largest contributor to the bottom line for the current financial year, contributing 32% of the business unit’s revenue. The Marine division established itself as a major competitor in South Africa and has been exploring opportunities along the sub-Saharan coastline of Africa and the Middle East. It is focused on marine infrastructure development related to the mineral and petrochemical sectors. The Marine division recently completed a large project in Sierra Leone with well-established international construction and dredging companies.

In addition, the Geotechnical division produced a commendable performance and successfully completed a sizeable project in Sierra Leone.

The focus during the year under review was to: h develop EPC capabilities in the renewable energy sector to enable a full service offering to clients in this industry. A number of EPC bids were submitted as part of the ongoing Renewable Energy Programme;

h offer design and construct solutions that added further value to the group’s clients;

h move more aggressively into Africa, following traditional clients with their initiatives into Africa;

h recruit young industry professionals, both locally and internationally, and to offer strong mentorship programmes to accelerate the managerial development of highly talented individuals;

h diversify the business to target niche markets and specific clients, offering a full multi-disciplinary service; and

h build strong and lasting collaborative relationships with strategic clients and to work closely with our clients to ensure success on their projects.

Risks associated with the Structures business unit Some of the major risks that the Structures business unit faced during the year included:

h delivery of local projects at stringent margins that had to be managed closely to ensure profitability, as there was little room for error; and

h a shortage of highly skilled resources, which resulted in the programme of recruiting and training suitably skilled and qualified individuals.

Operational initiatives, training and achievementsThe SHE Induction Programme is project specific according to client specifications and includes site induction as per Stefanutti Stocks’ occupational health and safety procedures.

A Safety Induction Booklet has been developed by the Structures business unit. The content is SAFCEC approved. The booklet is available in five languages, namely English, Afrikaans, Sotho, Zulu and Xhosa and contains project-specific SHE matters and can be tailor-made if needed.

SHE awards received were as follows: h Nosa 5 star grading – 2011 h T1 Green status for Sasol Projects h Award for Significant Contribution to the Environment at Kumba’s Sishen South Project

h Excellent Safety Performance Award – DMO h Disabling Injury-Free Hours achievements

• 1500000atGrootegelukMedupiExpansionProject • 1000000atThubilishaBunkerProject • 1000000atFTWaxProjectSasol • 500000atLPMConsortiumProject–Medupi • 1000000atMedupiLPSProject

h Sasol Award for RCR of less than 0,42 h 2011 Project Safety Achievers – Impala Platinum h Commendation for 350 000 LTI Project free hours at Waterval Chrome Recovery Plan Project

h Lowest LTIFR and DIFR figures in the structures industry

Strategy and outlookThe strategy and focus for Structures going forward is to:

h continue to build on current capabilities to allow the group to enter large multi-disciplinary projects with a full service offering focused on defined markets and specific clients;

h aggressively pursue minerals and petrochemical developments in Africa;

h further develop the business unit’s alternative construction execution service offerings to its clients;

h further develop and expand the Marine division’s already excellent technical capabilities to be a major marine contractor in its chosen areas of operation; and

h further develop the management skills in multi-disciplinary, EPC and collaborative construction execution models.

Operational review – Structures continued

Operational review – Roads & Earthworks

Management: Above left to right: Russel Crawford, Craig Morris

27

Financial review


2012

2011

2010

868

846

1 104


2012

2011

2010

74

109

152

Contract revenue by sector (including the Mining Services business unit) (%)

l Miningl Transport infrastructurel Power stations and transmission

49

34

17

Frik Venter Managing Director

Business overviewA business overview of the Roads & Earthworks business unit is on page 6 of this Integrated Report.

The year in perspectiveWith effect from 1 March 2012, the Roads & Earthworks, newly acquired Cycad Pipelines and Mining Services divisions were merged to form the new RPM business unit. However, for the purpose of this Integrated Report, the Roads & Earthworks business unit reports separately from that of the Mining Services business unit, as reported last year, and Cycad Pipelines will only be reported on in the coming financial year. The RPM business unit will further incorporate the Swaziland Civil, Roads and Buildings operations.

The Roads & Earthworks business unit’s turnover increased, year-on-year, from R846 million to R868 million. Operating margin was down on that achieved in 2011, as a result of delayed project awards, problems experienced with the Swaziland Airport contract and some loss-making road surfacing projects for SANRAL.

The decision by Government to stop all processes on projects related to the tolling of national roads had a negative impact on the market sentiment. Fewer road projects were on offer and market conditions remained extremely competitive. Stefanutti Stocks is, however, not totally reliant on road projects in order to fill its order book.

The order book in Swaziland remained under pressure as a result of the financial situation of the country. The Roads & Earthworks business unit was, however, able to secure some privately funded work and it is pleased with the team’s performance under very difficult conditions.

Stefanutti Stocks Integrated Report 2012 Group at a glance 1



Administration 91

Notable projects



Kusile Earthworks 60 months R400 million Mpumalanga

Sishen SIB 36 months R250 million Northern Cape

Hopetown 36 months R300 million Northern Cape

SANRAL 36 months R300 million Mpumalanga

28


Risks associated with the Roads & Earthworks business unitMajor risks that the Roads & Earthworks business unit faced during the year under review included the completion of several SANRAL contracts. The necessary mitigating actions were implemented and the projects are mostly completed or nearing completion.

The overdue monies owed by the Swaziland Government are being monitored closely with large tranches having been paid recently. The group has the full commitment of the Swaziland Government that all amounts will be settled in due course.

Operational initiatives, training and achievementsGoing forward, the new RPM business unit sees the shortage of skills, amplified by inadequate pre- as well as post-matric qualifications, as a major concern for the expansion of the industry in South Africa.

As a countermeasure, the RPM business unit continued with its ambitious skills development programme for its staff and equipment operators. This programme, coupled with a newly introduced integrated IT platform, is already producing positive results. The full implementation of these initiatives remains one of the key objectives.

The group’s core values are instilled in all the skills development programmes with special emphasis on professionalism.

Strategy and outlookAlthough markets remain depressed, the business unit is experiencing some recovery in certain of its market segments. While it may be premature to determine whether this positive trend will continue, the group is of the opinion that the international commodity demand should persist, albeit at a more subdued pace. This may encourage the mining houses to remain aggressive with investments into new projects on the continent. This, together with the South African Government’s intention to spend on fixed capital projects, is creating a more positive forward looking platform for the industry. The outlook for the RPM business unit has therefore been upgraded from neutral to positive for the next 18 months.

Subsequent to the February year end, RPM has been awarded further projects which increased its order book. The largest project was a coal contract-mining project awarded by Ikwezi Mining Limited (Ikwezi) to Mining Services. The RPM business unit will assist Ikwezi in the development of this greenfields project including the installation and management of the mining infrastructure together with contract mining of an open-pit coal mine. The project has an estimated duration of approximately 50 months and a value in excess of R1,0 billion. Several mid-size contracts have been awarded to the Roads & Earthworks and Swaziland divisions.

The RPM order book was R1,8 billion as at 29 February 2012.

The RPM business unit has identified additional opportunities in the mining sector, both in contract mining and infrastructure development throughout the African continent. The business unit is well-equipped to pursue these opportunities as the relevant competencies are all within the business’ core capabilities. Although this business requires large capital investments, intensive modelling, financing options and rationalisation will determine a viable ratio of growth versus capital investment with appropriate rates of return.

The business unit is actively pursuing projects in Africa and has formed strategic alliances with international partners to support these initiatives.

Operational review – Roads & Earthworks continued

Management: Above left to right: Frik Venter, Craig Morris

Operational review – Mining Services

31

The Mining Services business unit’s financial information includes the MEP results for the financial years reported.

Contract revenue by sector

All of this business unit’s contract revenue is derived from mining infrastructure, mining services and open-pit contract mining.

Financial review


2012

2011

2010

951

702

474

Operating pro�t/(loss) (R’million)

2012

2011

2010

-5

43

56

Mike Smith Managing Director


Notable projectsNotable projects for the year included:


Mashala Resources contract mining 24 months R200 million Mpumalanga

Foskor contract mining 36 months R120 million Mpumalanga

Total coal material handling 60 months R84 million Mpumalanga

BHP Billiton material handling 24 months R43 million Mpumalanga

Business overviewA business overview of the Mining Services business unit is on page 7 of this Integrated Report.

The year in perspectiveAs explained in the Roads & Earthworks business unit overview, set out on pages 26 to 29 of this Integrated Report, the Mining Services business unit will form part of the new RPM business unit, with effect from 1 March 2012. For the purposes of this Integrated Report, the historic financial and operational performance of the Mining Services business unit will be reported separately.

The Mining Services business unit had a reasonable performance for the year as indicated above, despite some loss-making contracts which have now been completed. The prospects going forward are encouraging, particularly in the contract, mining and material handling divisions.

Risks associated with the Mining Services business unitThe risks faced by the Mining Services business were and still are the continued delays suffered by the mining industry in obtaining the relevant permits and licences from governmental authorities. This makes it extremely difficult to source heavy mining equipment for new mining ventures on a “just-in-time” delivery basis given the long lead times required by the equipment manufacturers.

Similar to the Roads & Earthworks business unit, this business unit requires large capital investments. Constant attention to financing options and modelling is given to determine viable ratios of growth versus capital investment with appropriate rates of return.

Operational initiatives, training and achievementsThe operational initiatives, training and achievements for the Mining Services business unit have been included in the same section in the Roads & Earthworks business unit overview on page 28 of this Integrated Report.

Strategy and outlookThe strategy and outlook for the Mining Services business unit have been included in the same section in the Roads & Earthworks business unit overview, on page 28 of this Integrated Report.

Group at a glance 1



Administration 91

Operational review – Mechanical, Electrical & Power (MEP)

33

Management: Above left to right: Danie de Villiers, Roger Venzo, Stephen Phakisi

Financial reviewThe financial figures are included in the Mining Services business unit’s figures and not reported separately for the 2012 financial year. As of 1 March 2012, the Mechanical & Electrical business unit, together with the Power business unit, will be reported as a consolidated financial business named MEP.


l Miningl Power transmission and distributionl Industrial plants, oil and gas

52

22

26

Jan Oberholzer Managing Director




Administration 91

Notable projects



Mechanical & Electrical Grootegeluk Conveyors 18 months R80 million Limpopo

O2 E & I installation project 12 months R38 million Free State

M14 Furnace 10 months R80 million Gauteng

Kumba’s Sishen Mine 10 months R45 million Northern Cape

Twickenham HRC and filter presses 8 months R40 million Limpopo

PowerTabor – Witkop 400 kV high-voltage overhead line 9 months R118 million Limpopo

Mercury – Zeus 765 kV high-voltage overhead line 9 months R50 million Free State

Glendale 132 kV high-voltage overhead line 7 months R20 million KwaZulu-Natal

Gumeni 132 kV high-voltage overhead line 7 months R20 million Mpumalanga

Business overviewA business overview of the original MEP business unit is on page 7 of this Integrated Report.

The year in perspectiveFor financial reporting purposes, as of 1 March 2012, the MEP business consists of the Mechanical & Electrical business unit and the Power business unit. Both the Mechanical & Electrical and the Power business units will share existing support services going forward and will move to new offices at Elandsfontein in Gauteng.

For the purpose of this Integrated Report, the historic financial and operational performances of the Mechanical & Electrical business unit and the Power business unit are reported with the Mining Services business unit.

Above left to right: Aubrey Michel, Mark Finaughty, Craig Trueman

Vince OlleyManaging Director

34


The Mechanical (Mining & Infrastructure) division, within the Mechanical & Electrical business unit, had a challenging year and the results were affected by fierce competition in the market which negatively impacted on margins.

The Electrical & Instrumentation division, also within the Mechanical & Electrical business unit, experienced difficulties after the acquisition of Apollo E&I Construction (Pty) Ltd, resulting in high staff turnover and the establishment of a new management team. The division’s poor performance was exacerbated by various loss-making projects of which most were written off during the year. The group is confident that these issues are being addressed and that this division will make a positive contribution going forward.

Although the Power business unit reported an increase in revenue, market conditions remained exceptionally challenging in the power sector. In addition, project award times and new tenders continue to be delayed as a result of outstanding land and rights issues with the relevant State-owned enterprise. Fierce competition in the open tender market continued to negatively affect margins and the time delays between tender submission and tender adjudication resulted in high staff holding costs which had an adverse effect on the Power division’s profitability.

Risks associated with the MEP business unitThe risks associated with the MEP business unit are the:

h holding costs incurred when the tender process delays the award of projects; and

h lack of continuity of work, especially in the Power business unit.

Operational initiatives, training and achievementsThe environment in which this business unit operates requires that the SHE Induction programmes are constantly reviewed and revised in accordance with project requirements. These must then be communicated to all employees prior to commencing work to ensure that the safety standards demanded by clients and the group are adhered to.

The health and safety awards received during the year were as follows:

h Exxaro – Grootegeluk Medupi Expansion Project: 180 Lost-Time Injury-Free workdays award

h Amplats – Rasimone Underground Project: Overall Project Safety achievement award

Strategy and outlookEffective 1 March 2012, Stefanutti Stocks restructured two business units, namely the Mechanical & Electrical business unit and the Power business unit, to form the MEP business. These business units will be managed as follows:

h Mechanical & Electrical – Vince Olley as Managing Director; and h Power – Jan Oberholzer as Managing Director.

The strategy and focus for the two business units going forward are to:

h increase the capacity of the overarching Mechanical & Electrical business unit to enter large multi-disciplinary projects in its traditional mining sector. Service offering includes structural steel, piping, plate work and electrical and instrumentation installations;

h establish a Mechanical (Oil & Gas) division offering structural steel, piping fabrication and installation, scaffolding, painting and insulation. Maintenance and shutdown work will be targeted. These services will significantly enhance the current oil & gas, electrical and instrumentation capability. This division will also be well placed to service South Africa’s power generation projects;

h build the order book for the Mechanical & Electrical business unit, which will remain challenging, but the group believes that the restructuring will create a strong platform from which to take advantage of any economic recovery in the markets which it services;

h build the order book with continuity for the Power business unit which is focused primarily on transmission, distribution and related activities; and

h concentrate on local clients for additional business opportunities before expanding to neighbouring countries.

Operational review – Mechanical, Electrical & Power continued

Management: Above left to right: Johan Brink, Howard Schwegmann, Natachia Antonis, Dave van der Merwe

Operational review – Building

37

Financial review


2012

2011

2010

3 641

3 276

3 688


2012

2011

2010

121

116

142


l Of�ce and commerciall Educationl Otherl Shopping and retaill Factories and warehousesl Residentiall Hospitals and medical

Power stations and transmission

33

6

511

24

10

83

Luc Jacobs Managing Director


Business overviewA business overview of the Building business unit is on page 7 of this Integrated Report.

The year in perspectiveThe Building business unit delivered a solid performance despite the current competitive market conditions, and turnover increased by 11,1% from R3,3 billion in the previous year to R3,6 billion for the current year. Although profit margins were marginally lower than last year, the results of this business unit were in line with management’s expectations. Building KZN performed satisfactorily, with Building Inland and Africa delivering a stable performance. Building Western Cape incurred some losses due to the lack of available work. The housing business did not perform to expectation as a result of delayed project awards which affected the continuity of operations. The business focused on securing work outside South Africa, which offered more attractive margins, as well as repeat business from established clients.

Above left to right: Bheki Vilakazi, Paul Dos Santos, Brad Wantenaar

Group at a glance 1



Administration 91

Notable projects



Unilever Warehouse 24 months R240 million KwaZulu-Natal

New Engineering building University of Pretoria 36 months R235 million Gauteng

Office block for Tau Pride 15 months R164 million North West

Shoprite Distribution Centre 12 months R161 million Western Cape

Mascom Data Centre 12 months R145 million Botswana

Radisson Hotel 30 months R105 million Mozambique

Musgrave Shopping Centre upgrade 20 months R90 million KwaZulu-Natal

Houses for Exxaro Limited 18 months R70 million Limpopo

38


During the past year the Building business unit experienced an increase in international competition outside South Africa. A number of targeted large projects did not materialise which was disappointing. The order book increased and closed at R4,1 billion as at 29 February 2012 (2011: R2,7 billion).

The Africa Building division is currently being restructured and realigned to participate in the more lucrative SADC markets. Operating models and capacity are being built to contract successfully in SADC. It was active mainly in Mozambique and Botswana during the past year and it plans to expand its presence in most SADC countries.

The Housing division was negatively affected by the slow deal flow on mining projects.

The multi-disciplinary nature of the Stefanutti Stocks group has opened doors for the Building business unit in the mining industry in South Africa and SADC and it is successfully contracting in this arena.

Risks associated with the Building business unitRisks the Building business unit faced during the year included:

h delivery of projects procured at challenging margins; h building operational models and understanding the legal framework of the various African countries;

h managing cross-border resources and cash-strapped clients; h gearing up for mining projects in a collaborative environment; and

h working on multi-disciplinary projects.

Operational initiatives, training and achievementsThe SHE Induction Programmes are site-specific and amended to suit changes in client requirements, local by-laws and new legislation.

The SHE awards received during the year were: h KwaZulu-Natal, Master Builders South Africa (MBSA), 5 star h Inland, 5 star

Safety awards received at MBSA: h One on Herrwood, National 1st place h Sikhupe International Airport Swaziland, Regional 1st place h KPMG Phase II, Regional 1st place h Patricia Road, Regional 1st place h Unilever Warehouse, Regional 2nd place h University of Pretoria, Regional 2nd place h Frame Warehouse, Regional 2nd place h President’s Award of Excellence – Grahaeme Carver h Regional Contracts Manager of the Year – John Borradaile h Regional Safety Manager of the Year – Michelle Kok h Regional Safety Officer of the Year – Alfred Ntshauba h Special Award for commitment to MBSA OHS System – Dallas Pakkirir

The consulting, research and risk management services awards: h Botswana – highest rated in business sector h Mozambique – Gold Award for best construction company in Mozambique

Strategy and outlookThe strategy and focus for the Building business unit going forward are to:

h position the business to take advantage of mass housing opportunities in South Africa and the SADC countries, driven by mining expansions and social development programmes;

h build capacity and structures for partnering with the group on large multi-disciplinary projects;

h build a quality order book by partnering with key clients, and concentrating on specialised niche markets;

h grow the business in SADC countries with reputable and existing clients; and

h build capabilities to facilitate earlier participation in the lifecycle of projects.

The secured order book will allow this business unit to focus on the delivery of quality projects while building of capacity to improve profitability and quality of work in the short and medium term.

Operational review – Building continued

40


Corporate governance report

Ethical leadership and good corporate governanceThe directors and management of Stefanutti Stocks subscribe to the generally accepted principles of good corporate governance as one of the foundations of a sustainable business. The company is committed to and accepts responsibility for applying these principles to ensure that the group is being managed within prudent risk parameters. The group is subject to and endorses the ongoing disclosure, corporate governance and other requirements imposed by the JSE, including the JSE Listings Requirements. The group supports the principles of the South African Code of Corporate Practices and Conduct as recommended in King III as well as the Companies Act.

Corporate governance within Stefanutti Stocks is managed and monitored by the Audit, Governance and Risk Committee and the monitoring of and reporting on sustainability within the group is overseen by the Social and Ethics Committee. The board’s responsibilities and terms of reference are detailed in the board charter. This charter has been developed to enable the directors to maintain effective control over strategic, financial and compliance matters of the group. This charter is reviewed and updated annually.

The board is accountable to the stakeholders. It directs the group to achieve profitability by exercising good judgement, strong leadership and by acting with integrity.

Review of key focus areasThe board is satisfied that the group has, to a large extent, applied the fundamental principles recommended by King III, throughout the year, and has identified particular areas with elements marked for ongoing improvement including:

h corporate citizenship; h sustainability in terms of economic, social and environmental performance;

h risk management; h IT governance; and h integrated reporting.

Issues of corporate governance, including the requirements of the Companies Act, will continue to receive the board’s attention, consideration and refinement as necessary in order for the group to remain compliant with current practices in corporate governance and with the changes arising from the South African corporate law reformation process. Sound corporate governance remains one of the priorities of the board and executive management.

Board of directorsComposition, independence and skills of the boardA key aspect of the group’s governance philosophy is that no individual board member has unfettered powers of decision‑making. During the year under review, the board comprised five independent non‑executive directors, two non‑executive directors and four executive directors and was chaired by a Non‑executive Chairman. The non‑executive directors exert significant influence at meetings in considering the composition of the board, and competency in respect of the group’s affairs carries as much weight as independence. The independence of the directors was assessed and confirmed by the Remuneration and Nominations Committee based on the independence requirements of King III. The roles of Chief Executive Officer and Chairman are split.

While the Chairman of the board is not an independent non‑executive director as prescribed by the JSE Listings Requirements and recommended by King III, the board is of the view that Gino Stefanutti’s appointment is in the best interest of the group and does not negatively affect the board’s independence. Mitigating factors which should be taken into account are the appointments of a Lead Independent Director and five independent non‑executive directors. In addition, the board is satisfied that the benefits of the Chairman’s extensive industry experience (spanning over 41 years and having co‑founded the group) and knowledge of the company outweigh the advantages of appointing an independent non‑executive chairman at this time.

The directors of the company during the year under review were:B Stefanutti (Non‑executive Chairman)W Meyburgh (Chief Executive Officer)DG Quinn (Chief Financial Officer)SD Pell (Chief Operating Officer)

(resigned effective 31 March 2012)SJ Ackerman (Executive Director)NJM Canca (Independent Non‑executive Director)KR Eborall (Independent Non‑executive Director)HSP Mashaba (Independent Non‑executive Director)ZJ Matlala (Independent Non‑executive Director)

(appointment effective 27 February 2012)ME Mkwanazi (Lead Independent Director)LB Sithole (Non‑executive Director – Alternate JWLM Fizelle)

A brief curriculum vitae for each director is set out on pages 12 and 13 of this Integrated Report.

41

Group at a glance 1



Administration 91


Each of the directors brings to the board a wide range of expertise, commercial and technical experience and business acumen that allows them to exercise independent judgement in board deliberations and decisions. Non‑executive directors have unrestricted access to management at any time, and further have access to the external auditors. All directors are entitled, at the group’s expense, to seek independent professional advice on any matters pertaining to the group where they deem this to be necessary.

The board composition is reviewed annually and any shortfalls in terms of skills and experience are identified and addressed accordingly. The board increased its number of independent directors and complies fully with King III in this regard.

The responsibilities of the Chairman and Chief Executive Officer, and likewise the responsibility of executive and non‑executive directors, are strictly separated to ensure that no director can exercise unrestricted powers of decision‑making. The Chairman provides leadership and guidance to the board and encourages proper deliberation on all matters requiring the board’s attention while obtaining input from other directors. The practice of appointing the Chairman on an annual basis was introduced in accordance with the recommendations of King III. The Chief Executive Officer and other executive directors are responsible for implementing strategy and operational decisions in respect of operational issues. Non‑executive directors contribute their

independent and objective knowledge and experience to board deliberations. All non‑executive directors are sufficiently qualified to contribute industry skills and expertise.

In line with recommendations of King III, ongoing training for directors is being addressed and enhanced.

Board charter The board charter, which is being reviewed to incorporate improvements recommended by King III and the Companies Act, codifies the board’s composition, appointment, authorities, responsibilities and processes and sets out the fiduciary duties and roles of each director of the company.

In addition to the responsibilities set out in the Companies Act, the board’s responsibilities, outlined in the charter, include:

h monitoring key risk areas, performance indicators and management;

h reviewing the performance of the Chief Executive Officer; h reviewing the group’s financial results and procedures, policies and codes of conduct;

h implementing the group’s plans and strategies; h approving financial and non‑financial objectives, including economic, social and environmental performance; and

h ensuring ethical behaviour and compliance with laws and regulations.

Governance structure

Board of directors

Chief Executive Officer


Remuneration and Nominations

Committee


Mergers, Acquisitions and Disposals

Committee

42


Corporate governance report continued

Board processesCompany SecretaryAll directors have access to the Company Secretary, who provides guidance to the board as a whole and to individual directors with regard to how their responsibilities should be discharged. The Company Secretary also oversees the induction of new directors and their ongoing training and assists the Chairman and Chief Executive Officer in setting the annual board plan and board agendas, as well as in formulating governance and board‑related matters.

In addition, the Company Secretary liaises closely with the group’s sponsor, where appropriate, in regard to compliance with the JSE Listings Requirements.

Regulatory and legislative complianceThe Audit, Governance and Risk Committee monitors the group’s compliance with the recommendations as set out in King III, the JSE Listings Requirements, the Companies Act and other applicable legislation.

Share dealings and disclosures of interestDirectors are required to declare to the board their shareholdings, additional directorships, potential conflicts of interest and any dealings in securities of the company.

In addition, all directors and management with access to financial information are prohibited from dealing in the securities of the company during “closed periods” as defined by the JSE. This is governed by the company’s share dealing policy, which is reviewed by the board annually and also contains “clearance to deal” provisions. Appropriate communication is sent to all directors and affected staff twice (at year end and at interim period‑end), alerting them that the company is entering a closed period.

New appointments, retirements, resignations, removals and re-election of directorsNew board appointments are proposed and vetted by the Remuneration and Nominations Committee taking into account the blend of skills, experience and diversity. The committee is responsible for making recommendations for final board approval in a formal and transparent process.

Zanele Matlala was appointed as an independent non‑executive director of the company and as a member of the Audit, Governance and Risk Committee with effect from 27 February 2012.

Stephen Pell resigned as an executive director effective 31 March 2012.

The re‑election of directors is done at the annual general meeting and the directors being nominated for re‑election can be found in the notice to the annual general meeting commencing on page 91 of this Integrated Report.

Induction and trainingAn induction programme is in place which includes introductions to key senior management, site visits, an overview of group operations and guidelines on corporate governance. In addition, new directors are provided with copies of the latest interim financial results announcements, annual financial statements, board packs and upcoming board meeting agendas as well as an overview of the company’s accounting systems.

Board and committee members receive training from time to time on issues relevant to the business.

Board and committee effectiveness evaluationThe board periodically conducts an evaluation of its effectiveness reviewing its mix of skills, the effectiveness of the sub‑committees and related corporate governance matters. During the year, the Chairman conducts one‑on‑one sessions with each individual director to identify any areas of concern. A questionnaire‑based collective board and committee evaluation is also conducted. No critical issues were identified and the overall outcome was positive.

The Company Secretary provides ongoing development for board members in the form of site visits and presentations on specific technical topics.

There is no formal board mentorship programme in place as it is not deemed necessary at this stage.

Succession planningThe formal succession plan for the Chief Executive Officer, Chairman, board of directors and senior management is reviewed annually by the Remuneration and Nominations Committee. In addition, the committee regularly reviews the group’s succession strategy and makes recommendations to the board.

Delegation of authority – board committeesFunction of the board committeesTo assist the board in discharging its collective responsibilities, certain board responsibilities have been delegated to the Audit, Governance and Risk Committee, Remuneration and Nominations Committee, B‑BBEE Transformation Committee, Mergers, Acquisitions and Disposals Committee and the Sustainability Committee (a sub‑committee of the Audit, Governance and Risk Committee). With effect from 1 March 2012, the B‑BBEE Transformation Committee and Sustainability Committee were discontinued and their functions assumed by the newly formed Social and Ethics Committee.

The board recognises that it is ultimately accountable and responsible for the performance and affairs of the group and that the use of delegated authorities to board committees in no way absolves the board and its directors of the obligation to

43

Group at a glance 1



Administration 91


carry out their duties and responsibilities. While retaining overall accountability and subject to matters reserved to itself, the board has delegated to the Chief Executive Officer the authority to run the day‑to‑day affairs of the group. The Chief Executive Officer delegates his authority to the EXCO which consists of the Chief Executive Officer, Willie Meyburgh, Executive Directors Schalk Ackerman, Stephen Pell, who resigned on 31 March 2012, and Dermot Quinn, as well as senior management: Luc Jacobs, Siphiwe Nzimande, Jan Oberholzer, Elardus Rademeyer, Frik Venter and Vince Olley, as from 1 March 2012. The EXCO meets monthly to assist the Chief Executive Officer in the management of group operations and finances and reports directly to the Chief Executive Officer, who in turn reports to the board.

Board committeesThe board has created various committees to enable it to properly discharge its duties and responsibilities and to effectively fulfil its decision‑making process. The board is supplied with relevant and timely information by these committees, enabling them to discharge their responsibilities. The directors have access to all company‑related information, records and documents.

The following committees have been formally constituted: h Audit, Governance and Risk Committee h Remuneration and Nominations Committee h B‑BBEE Transformation Committee h Mergers, Acquisitions and Disposals Committee h Sustainability Committee (a sub‑committee of the Audit, Governance and Risk Committee)

h Social and Ethics Committee (which replaced the B‑BBEE Transformation and Sustainability Committees with effect from 1 March 2012)

Each board committee acts within formalised terms of reference which have been approved by the board. These are reviewed annually and updated where necessary. These terms of reference set out the purpose, membership, duties and reporting procedures of the various committees. The committees are subject to regular evaluation by the board with regard to performance and effectiveness.

Audit, Governance and Risk CommitteeFor information pertaining to the Audit, Governance and Risk Committee, please refer to the Audit, Governance and Risk Committee report commencing on page 78 of this Integrated Report.

Remuneration and Nominations CommitteeFor information pertaining to the responsibilities and functions of the Remuneration and Nominations Committee, please refer to the Remuneration report commencing on page 67 of this Integrated Report.

B-BBEE Transformation Committee The board believes that transformation is a business imperative for the group. The committee assists and advises the board on all B‑BBEE‑related matters, transformation and corporate social investment. It is chaired by Independent Non‑executive Director Herman Mashaba, and includes Non‑executive Director Bridgman Sithole. The committee operates under a written charter approved by the board.

The committee’s role, duties and achievements over the past year included:

h monitoring the group’s compliance with relevant industry B‑BBEE Codes of Good Practice;

h ensuring management embraces the principles of transformation on an enterprise‑wide basis across all facets of the group’s activities;

h developing and implementing an appropriate transformation strategy;

h regularly reviewing policies, plans and processes aimed at facilitating transformation across the group; and

h reviewing integrated reporting to stakeholders on aspects of transformation.

Mergers, Acquisitions and Disposals CommitteeThe committee is chaired by Independent Non‑executive Director Kevin Eborall, and further comprises Non‑executive Directors Nomhle Canca and Herman Mashaba. The board has mandated the committee to review and approve mergers, acquisitions and disposals, subject to specific limits. Meetings are held on an ad hoc basis.

Sustainability CommitteeThe main purpose of the Sustainability Committee was to assist the Audit, Governance and Risk Committee and to advise the board on sustainability matters. It was chaired by Independent Non‑executive Director Nomhle Canca, until it formed part of the Social and Ethics Committee.

Social and Ethics CommitteeIn February 2012, the B‑BBEE Transformation and Sustainability committees were discontinued and their functions assumed by the newly formed Social and Ethics Committee. The latter committee is also responsible for the matters set out in Regulation 43(5) of the Companies Act and it held its first meeting in early April 2012.

The responsibilities and duties of the committee are to: h monitor the group’s compliance with the relevant codes and charters of the various statutory/governmental bodies;

h monitor the group’s compliance with industry or sector codes, if applicable;

h promote the principles of transformation on an enterprise‑wide basis across all facets of the group’s activities;

h review transformation plans and programmes;

44


Corporate governance report continued

h regularly review policies, plans and processes aimed at facilitating transformation across the group; and

h review integrated reporting to stakeholders on aspects of transformation.

Board meetingsThe board meets at least four times a year. Ad hoc meetings are convened when required. Directors are provided with all necessary information in advance to enable them to discharge their responsibilities, including, inter alia, detailed board packs. Board documentation is provided to directors in a timely manner, with the tabling of documents at board meetings being the exception. Where necessary, decisions are taken between board meetings by way of written resolution as provided for in the company’s Memorandum of Incorporation (MOI).

The board agenda and meeting structure focuses on strategy, performance monitoring, governance and related matters. Management ensures that board members are provided with all relevant information and facts to enable them to make objective and informed decisions.

The board meets with management annually to agree on the group’s strategy. Non‑executive directors meet without the presence of management as and when deemed necessary.

All committees have satisfied their responsibilities during the year in compliance with their formal charters. There is transparency and full disclosure from these committees to the board. Committee chairmen provide the board with a verbal report on committee activities and the minutes of committee meetings are made available to the board.

In addition, the chairmen of the committees or a nominated committee member attends the company’s annual general meeting to answer any questions from stakeholders pertaining to the relevant matters handled by their respective committees. Committee effectiveness evaluations are conducted annually. Findings and recommendations are presented to the board, which tables an action list to address any areas marked for improvement. The charters of all the board committees are reviewed annually as standard practice.

Details of attendance by directors of the board and committee meetings for the year under review are set out below:

Directors Board

Audit, Governance

and Risk Committee

Remuneration and

Nominations Committee

B-BBEE Transformation

Committee

Mergers, Acquisitions

and Disposals Committee

Number of meetings during the year 5 4 3 2 1

B Stefanutti (Chairman)* 5/5 n/a 3/3•• n/a n/a

W Meyburgh (Chief Executive Officer) 5/5 4/4•• 3/3•• 2/2•• 1/1••

DG Quinn> (Chief Financial Officer) 5/5 4/4•• 3/3•• n/a 1/1••

SJ Ackerman 5/5 2/4•• n/a n/a n/a

SD Pell• 5/5 4/4•• n/a 2/2•• 1/1••

NJM Canca**# 5/5 4/4 n/a n/a 1/1

KR Eborall**^ 4/5 3/4 3/3 n/a 1/1

HSP Mashaba**† 5/5 n/a 3/3 2/2 0/1

ZJ Matlala**‡ n/a n/a n/a n/a n/a

ME Mkwanazi** ˜ 5/5 n/a 3/3 n/a n/a

LB Sithole* 4/5 n/a n/a 1/2 n/a

JWLM Fizelle*> (alternate to LB Sithole) 2/2 4/4 n/a n/a n/a

* Non-executive ** Independent non-executive # Audit, Governance and Risk Committee Chairman ~ Remuneration and Nominations Committee Chairman † B-BBEE Transformation Committee Chairman ^ Mergers, Acquisitions and Disposals Committee Chairman > Irish • Resigned 31 March 2012 •• By invitation ‡ Appointed 27 February 2012 n/a Not applicable Accompanied LB Sithole to one meeting

45

Group at a glance 1



Administration 91


Internal controlThe directors are responsible for the group’s systems of internal control. While no system can provide absolute guarantees and protection against material loss, the systems are designed to give the directors reasonable assurance that problems can be identified promptly and remedial action taken where appropriate.

The importance of internal control systems and management of risks are clearly communicated to all employees so that they have a clear understanding of their roles and obligations in this regard. Overall, the board remains responsible for the management of the internal control systems with the assistance of the Audit, Governance and Risk Committee. These systems of internal control are designed to provide reasonable but not absolute assurance as to the integrity and reliability of the annual financial statements, to safeguard and maintain accountability of the group’s assets, and to identify and minimise significant fraud, potential liability, loss and material misstatement while complying with applicable statutory laws and regulations.

There are inherent limitations to the effectiveness of any system of internal control, including the possibility of human error and the circumvention or overriding of controls. The system is therefore designed to manage rather than to eliminate risk of failure and opportunity risk.

No issues have come to the attention of the board to indicate that there has been a material breakdown in the systems of internal control during the year.

Information technologyThe group placed an increased focus on the importance of IT governance and sustainability during the financial year. Kevin Wilson was appointed as General Manager IT Services and manages the day‑to‑day activities of the IT department, while Willie Erasmus is Head of the IT Steering Committee, which reports into the EXCO.

A complete review of the IT governance and IT internal controls was performed by an independent service provider, and areas of improvement were identified and are in the process of being corrected. An audit of this nature will be performed every two years.

Code of Ethics (Code) A formal Code is in place setting out standards of integrity and ethics in dealings with suppliers, customers, business partners, stakeholders, Government and society at large. Every employee of Stefanutti Stocks is expected to subscribe to the Code, which requires all to act with honesty and integrity in all dealings with stakeholders and to interact with fairness, dignity and respect to create and protect a credible and well‑reputed business and working environment free from harassment and discrimination.

Annual general meetingThe annual general meeting will be held on 7 September 2012 at 12:00. Information relating to the annual general meeting is contained in the notice of the annual general meeting commencing on page 91 of this Integrated Report. The Chairman of the board, chairmen of the board committees and the external auditors will be available to answer questions at the annual general meeting.

Memorandum of IncorporationThe adoption of a new MOI, aligned with the Companies Act, has been submitted to shareholders for approval at the forthcoming annual general meeting. The salient terms of the new MOI are contained as an appendix to the notice to the annual general meeting commencing on page 91 of this Integrated Report.

47




Administration 91

IntroductionIn line with Stefanutti Stocks’ evolving approach to integrated reporting, this review discloses the group’s material sustainability information in accordance with the GRI G3 Guidelines for the second consecutive year.

This approach allows stakeholders to assess the ability of the group to create and sustain value over the short, medium and long term with information presented within a consistent and comparable framework. The index on page 101 references the GRI disclosures and enables Stefanutti Stocks to self-declare this Integrated Report compliant with GRI Application Level C.This review covers the group’s South African operations for the year ended 29 February 2012.

It is the task of the newly formed Social and Ethics Committee (previously the Sustainability Committee) to ensure that the Stefanutti Stocks business grows in an economically, environmentally and socially balanced way. As such, the committee has identified several functional strategies and initiatives to guide the progress of the group’s sustainability management. These initiatives are aimed at:

h our employees; h safety, health and environment (SHE); and h transformation and corporate social investment (CSI).

Our employeesThe group recognises that its ongoing success and expansion is greatly dependent on the calibre of its fundamentally important stakeholder group – its employees. Stefanutti Stocks continuously strives to be the industry’s employer of choice. The company addresses the sector’s chronic shortage of specialist resources by being a progressive, responsible employer seeking innovative methods to attract, develop and retain staff. To achieve this objective, the group has continued with and instituted new initiatives that are mentioned in the sections that follow.

The group adheres to an approach to talent management and hiring policy, which is based on equality, is free of discrimination, aids in individual development, and allows for performance-based advancement in order to maintain a balanced and highly skilled workforce.

Employee distributionDue to the diverse needs of the business units within the group, each business unit is encouraged to develop human resource plans to meet its specific operational needs. These individual plans must, however, align with the group’s employment values.

Ideally, labour is procured from local communities in areas where projects are undertaken to ensure that the benefits to and upliftment of such communities are maximised.

Group employee numbers of RSA operations increased by 15,7% to 9 935 as at year end (2011: 8 585), the breakdown of which is displayed in the graphs and pie charts that follow:

2011

Total headcounts as at 29/28 February (RSA operations)

Corporate Services


Building

Structures

Roads & Earthworks

Mining Services

4648

1 0691 077

1 4491 105

6661 356

1 7331 874

3 6224 475

2012

In line with Stefanutti Stocks’ evolving approach to integrated reporting, this review discloses the group’s material sustainability information in accordance with the Global Reporting Initiative’s G3 Guidelines for the second consecutive year.

48


Social and environmental review continued

Headcount by appointment type (%)

l Permanentl Project speci�cl Bursaries

44,1

55,8

0,1

Headcount by appointment type

540

3933 989

5 008

Permanent

Bursaries

Projectspeci�c

05

MaleFemale

Headcount by employment type (%)

l Salaried staffl Wage earners

22,9

77,1

Headcount by employment type

505

4281 852

7 150

Salaries

Wages

MaleFemale

Headcount by gender

861

9339 002

7 724

2012

2011

MaleFemale

Headcount by region

7153

EasternCape

05

FreeState

MaleFemale

2874 388

Gauteng

413917

KwaZulu-Natal

281 436

Limpopo

501 135

Mpumalanga

97312

NorthWest

7390

NorthernCape

44266

WesternCape

Headcount by age group2012 2011

l 18 – 20l 20 – 25l 25 – 30l 30 – 35l 35 – 40l 40 – 45l 45 – 50l 50 – 55

55+

441 2362 1491 9041 4111 036

801627727

43931

1 7991 6781 205

907741602679

49




Administration 91

Over the last five years, the group’s year-on-year headcount increases have been attributable largely to acquisitive activities and organic growth, as illustrated in the graph below:

Average headcount trend (RSA operations)

9 844

8 677

7 375

6 945

6 268

2012

2011

2010

2009

2008

Staff turnover for the group in 2012 was 39,3%, a marked improvement compared to 2011 at 48,9%. These figures are, however, inflated and significantly skewed, as 44,1% of the total workforce (9 935 staff) comprises temporary employees on limited duration contracts, which is common practice within the industry.

Aligned with the strategic objective to be the industry’s employer of choice, great strides have been made over the last three years to reduce the natural attrition within the group as is reflected in the graph and tables below:

Total headcount – three-year natural attrition trend (%)

2012

2011

2010

39,3

48,9

59,6

Headcount key measures (salaried staff only)

Age groupHeadcount

Feb 2012

Annualattrition

%

18 – 20 years 3 66,720 – 25 years 208 24,525 – 30 years 384 17,730 – 35 years 391 19,835 – 40 years 295 20,040 – 45 years 258 8,545 – 50 years 231 12,150 – 55 years 219 19,255 + years 291 29,7

2 280 18,6

Headcount key measures (total headcount per age group)

Age groupHeadcount

Feb 2012

Annualattrition

%

18 – 20 years 44 73,320 – 25 years 1 236 49,525 – 30 years 2 149 46,830 – 35 years 1 904 41,535 – 40 years 1 411 37,340 – 45 years 1 036 31,245 – 50 years 801 27,950 – 55 years 627 28,255 + years 727 26,1

9 935 39,3

Headcount key measures (total headcount per gender)

GenderHeadcount

Feb 2012

Annualattrition

%

Female 933 52,9Male 9 002 37,9

9 935 39,3

Headcount key measures (total headcount per region)

RegionHeadcount

Feb 2012

Annualattrition

%

Eastern Cape 160 24,4Free State 5 20,0Gauteng 4 675 38,7KwaZulu-Natal 1 330 27,4Limpopo 1 464 26,4Mpumalanga 1 185 31,1North West 409 93,2Northern Cape 397 62,7Western Cape 310 55,5

9 935 39,3

50



Headcount key measures (total headcount per occupational level)

HeadcountFeb 2012

Annualattrition

%

Top management 91 7,7Senior management 174 13,2Middle management 512 22,9Junior management 2 825 23,0Semi-skilled 2 497 32,6Unskilled 3 836 29,5

9 935 39,3

Headcount key measures (total headcount per ethnic group)

HeadcountFeb 2012

Annualattrition

%

African 8 068 41,6Coloured 277 59,3Indian 152 17,2White 1 438 24,2

9 935 39,3

The statistics relating to total attrition terminations include retirements, resignations, non-renewal of limited duration contracts, retrenchments based on operational requirements, dismissals, transfers and deaths.

Industry associationsStefanutti Stocks subscribes to the principle of freedom of association and recognises the right of all employees to join a trade union of their choice. Representative trade unions are therefore seen as one of the group’s stakeholders.

The group, represented by its business units, is a member of the following associations and forums:

h Gauteng Voluntary Bargaining Council and Builders Union Bargaining Council

h South African Federation of Civil Engineering Contractors (SAFCEC)

h Master Builders Association (MBA) h Green Building Council of South Africa (GBCSA) h Building Industry Federation of South Africa (BIFSA) h The Engineering Council of South Africa (ECSA) h The South African Institute of Civil Engineering (SAICE) h The South African Council for Project and Construction Management Professions (SACPCMP)

h The Geotechnical Division of SAICE

The most prominent trade unions to which employees belong are as follows:

h National Union of Mineworkers (NUM) h United Chemical Industries Mining Electrical State Health and Alliance Workers Union (UCIMESHAWU)

h Association of Mineworkers and Construction Union (AMCU) h Building Construction Allied Workers Union (BCAWU)

Skills development and trainingSkills development and training remains crucial to the overall sustainability of the group. Stefanutti Stocks is committed to facilitating training opportunities that will contribute towards the attainment of diversity at all levels of the group’s businesses. It assists in retaining highly sought-after skills and is driven by structured programmes as well as through individual needs.

Stefanutti Stocks is dedicated to growing the broader skills base within local communities near its various sites, by providing informal training in skills such as concreting and shuttering.

Training spendTotal training spend for the year under review was R7,1 million (2011: R7,3 million). A total of 8 577 trainees attended in 2012 (2011: 8 322) of which 76,7% were black employees (2011: 80,4%). Each business unit provides a monthly analysis of its skills development expenses, indicating targets set and actual results achieved. The average training spend per employee for all employees, including limited duration employees, amounted to R717 for 2012 (2011: R858).

The group focused on safety and skills training as can be seen from the graphics below. More detailed information on safety training is furnished on page 56 of this Integrated Report.

Training attendees per category

l Administrationl Computerl Plantl Safetyl Skilll Specialisedl Others

84 223426

3 670

2 283

1 013

878

Training courses and attendees per gender

MaleFemale

Number ofcourses

Number ofattendees

183305

5598 018

51




Administration 91

Training courses and attendees per appointment type

DetailNo of

coursesNo of

attendees

Permanent 248 5 541

Limited duration contract 240 3 036

488 8 577

Training courses and attendees per employment type

DetailNo of

coursesNo of

attendees

Salaries 372 3 397

Wages 116 5 180

488 8 577

Gender Employment type Appointment type

Category Total Male Female Salaries Wages PermanentProject

specific

Training expenditure (Rand) 7 120 456 4 934 718 2 185 738 3 593 649 3 526 807 4 411 340 2 709 116

No of employees trained 2 851 2 675 176 894 1 957 1 620 1 231

No of training days 13 528 10 632 2 896 5 679 7 849 8 067 5 461

No of training hours 108 224 85 056 23 168 45 432 62 792 64 536 43 688

Total employees 9 935 9 002 933 2 280 7 655 4 382 5 553

Training hours per total employees 10,9 9,5 24,8 19,9 8,2 14,7 7,9

Training hours per employee attended training 38,0 31,8 131,6 50,8 32,1 39,8 35,5

Training cost trend (R’million)

7,1

7,3

7,5

5,4

2012

2011

2010

2009

Training courses presented (%)

l Safetyl Skilll Specialisedl Plantl Others

48,5

18,8

9,5

9,4

13,8

Training centresKusile Power StationStefanutti Stocks has set up a satellite training centre to accommodate the group’s employees and those of joint-venture partners to receive practical training which focuses mainly on training as per the Structures training centre development programme mentioned below.

Structures training centreThis training centre, which provides services for the group, has innovated its method of training and has revitalised its syllabus. This centre is registered as an accredited centre with the Construction Education and Training Authority (CETA).

New registered skills programmes provided are: h Competent construction worker – Solid Foundations two-day course

h A two-day course run as a form of induction for all hourly paid employees

h Construction hand (Grade III level training) h Generic training to prepare hourly paid workers• Shutterhand Lower 2 and Upper 1• Concretehand Lower 2 and Upper 1• Reinforcing-hand Lower 2 and Upper 1

52



Roads & Earthworks and Mining training centreDuring the year under review, this training centre was established and accredited with the Mining Qualifications Authority. Programmes are dedicated to the areas of apprentice training, a development programme for mining engineers and a newly introduced operator training, which involves the use of simulators that will reduce training time, cost and damage to plant going forward.

Training programmesStefanutti Stocks offers the following flagship programmes and successful initiatives:

h Bursaries and learnerships h Graduate Academy h Cadet Foreman Programme h Site Leadership Development Programme h Leadership Development Programme and Management Capacity Building

Bursaries and learnershipsThe group continues to offer bursaries to full-time students, enabling them to qualify with degrees or national diplomas from recognised South African universities and universities of technology. The financial assistance offered covers all expenses related to books, class fees and accommodation. The group provides the bursars with an opportunity for additional training during their vacation periods.

Candidates are selected on academic merit, with strong emphasis on students from historically disadvantaged backgrounds. Focus is placed on skills that are scarce such as civil engineering and quantity surveying, which are in great demand in the industry.

Technical Development Programme

Junior Foreman Development Programme

Assessment

Existing core employees

New LDC employees

Pre-employment assessmentGrade 9 level

Accelerated Development

Pre-employment assessmentGrade 12 level

Practical work experience

Practical work experience

Construction hand NQF 2

NQF 4

Competent construction worker NQF 1

Supervisor Development Programme

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53




Administration 91

While a large number of black women are attracted to the group’s bursary scheme, the challenge the group faces is its long-term retention. The group offers highly competitive remuneration plans for graduates and junior professionals together with site leadership development programmes, which support their development. Attention has been and will continue to be given to the facilitation and management of diversity issues.

The tables below illustrate the current breakdown of the participation in the group’s bursary and learnership programmes:

Total bursaries Black bursars % Black

66 34 51,5

Total learnerships Black learners % Black

129 80 62,0

Profile candidate star

Zimele Masondo (learnership)

Zimele worked for a Stefanutti Stocks bricklaying sub-contractor on a limited duration contract. In 2008, after the contract came to an end, he joined Stefanutti Stocks KZN as a bricklayer. Shortly thereafter, he was promoted to a charge-hand, where site agents noticed Zimele’s potential and recommended him for further development training.

He was enrolled for the NQF 4 Supervisory Learnership in 2009 and after dedication and hard work in completing the programme, was promoted to a Junior Foreman in August 2011. Zimele is currently giving valuable input while working on our Mayville contract with his team.

Profile candidate star

Ayanda Ndlela (bursary)

Ayanda has been a dedicated full-time student at Durban University of Technology since 2008. She has obtained distinctions and has shown great aptitude. She graduated in 2009 with a Diploma in Construction Management and Quantity Surveying, and was promoted to a Junior Quantity Surveyor in 2010.

Showing great promise, Ayanda was recently promoted to a Junior Quantity Surveyor B. She is the only Junior Quantity Surveyor who is currently running her own contract, with the support of a Senior Quantity Surveyor. She attends contract review meetings and has a personal development plan in place, which is guiding her career path to becoming a Quantity Surveyor during 2013.

Graduate AcademyOver the past three years, the Stefanutti Stocks Structures business unit has held graduate inductions, however, its first Graduate Academy only took place this year. This more intensive two-week programme forms part of the newly recruited bursary students’ induction, welcoming them to the group.

Bursars were treated to presentations given by the group’s operational managing and other directors, a site visit to the Olifantsfontein plant yard and Kusile Power Station, and training at many value-adding organisations including Bosch, Liebherr, CNCI and Formscaff.

54



Graduate Academy

As part of the two-week Graduate Academy programme, the graduates were split into teams and given a box of materials which included polypropylene straws, bamboo skewers, super glue and primer dental floss, and were asked to construct a bridge of their own design.

The bridges were judged on aesthetics as well as load and aimed to test the graduates’ ingenuity and imagination. At the end of the two weeks these bridges were rigorously load tested by John Masters, a Technical Manager.

The winning team members were: Thabang Ndwebi, Christopher Bloem, Joubert Tulleken and Lawrence Da Silva.

Their bridge failed in deflection at 11 kg, and ultimate failure was amazingly achieved at 14 kg.

Cadet Foreman ProgrammeStefanutti Stocks’ efforts in training and developing young cadet foremen in 2012 yielded pleasing results with a total of 66 attendees enrolled in the programme (2011: 80), 34 of whom were black employees (2011: 43).

This programme has been successfully implemented across all group business units and is aimed at providing specialised education for learners who have completed Grade 12. Its main focus is to address the shortage of skills in middle management, however, this initiative has empowered learners from further afield.

Site Leadership Development Programme (SLDP)Two years ago, the Structures business unit set out to develop the SLDP borne out of the need to fast-track development and knowledge of internal systems and processes. Its main purpose was to establish a way in which the group’s intellectual capital could be shared across all operations based on the “each one teach one” principle.

This highly customised programme has proved to be extremely effective. Open, honest and direct participation is encouraged. Directors, project managers and senior employees share the challenges they faced, their personal accomplishments, and the lessons learnt from their many years of practical experience.

It is envisaged that this programme will set a benchmark, creating a culture whereby innovative ideas, problem-solving solutions and new concepts and processes are shared between business units, making them available to all Stefanutti Stocks employees.

To date, the SLDP has guided and benefited over 200 delegates within the business unit with 35% being black beneficiaries.

Leadership Capacity Building (LCBP) and Management Capacity Building (MCBP) programmesThese two programmes have been developed by the Building business unit to enhance its capacity of both senior and middle management respectively. Both programmes are aimed at empowering staff, embedding group values, enabling delivery and driving business excellence.

The LCBP is an organisational change approach that is strategic and systemic in nature involving a structured learning process. In order for leadership to build a world-class business with a competitive advantage, the LCBP focuses on developing insight and problem-solving abilities, business acumen, external and internal relationship management, self-management and interpersonal skills.

The MCBP is competency based in nature that incorporates the ethos of the LCBP. It is a three-year programme focused on building insight through academic-based education and training. It optimises performance by concentrating on the business and not the individual and builds readiness for progression.

Thus far, a total of 70 delegates have completed the LCBP with 1% being black, and 120 delegates have benefited from the MCBP with 26% being black participants.

55




Administration 91

Safety, health and environmentSafety, health, environment and quality (SHEQ) remain a priority for the Stefanutti Stocks group and form the very foundation of its business model. SHEQ plays an important role in attracting and retaining a productive and talented workforce while maintaining the confidence of our clients and the communities in which the group operates.

The group’s safety forum plays a vital part in knowledge sharing and building a repository of the group’s best practices, which is accessed by all business units, thus ensuring that all practices across the group are aligned.

It is our belief that all incidents are preventable. While the board accepts ultimate responsibility, a constant challenge faced by the group is the entrenchment of the value that safety, health and quality is the responsibility of all stakeholders, regardless of status or location.

For a full discussion on each of the business unit’s individual operational initiatives, training and SHE awards refer to the operational reviews commencing on page 22 of this Integrated Report.

PoliciesThe group’s formal SHEQ policy remains firmly in place with the obligations of employer and employee being clearly defined. During the course of 2011, a group Occupational Health and Safety (OHS) Framework Manual, incorporating the OHS Management System, was completed and distributed to all relevant managers and OHS personnel.

SHEQ committees facilitate the ongoing communication of group policies to all the business units. Representatives from each business unit attend these committee meetings to discuss material SHEQ issues identified and the implementation of methodologies to mitigate such risks.

Any amendments to group SHEQ policies are conveyed to stakeholders by way of SHE inductions, personnel induction sessions, formal workshop sessions with safety personnel, and one-on-one sessions with site personnel and management. Additional channels of communication are SHE DVDs, group intranet, scheduled audits, workplace visits and inspections, and health and safety meetings.

Achievements and accreditationThe graph below illustrates the DIFR levels achieved by the group for the year under review. The 2012 benchmark was set at 0,1, however, the overall group performance was 0,23 (2011: 0,22). The 2013 target remains benchmarked at 0,1.

Consolidated group safety statistics 12-month DIFR – Rolling Average: February 2012

0,35

0,30

0,25

0,20

0,15

0,10

0,05

0,00

Mar

Apr

May

Jun

Jul

Aug

Sep Oct

Nov

Dec Jan

Feb

– – – Building – Mechanical, Electrical & Power– – – Mining Services – Roads & Earthworks– – – Structures – Group– – – DIFR target – Linear (DIFR target)

– Building – Mechanical, Electrical & Power– Mining Services – Roads & Earthworks– Structures – Group– DIFR target – Linear (DIFR target)

The group continued to make progress towards obtaining ISO accreditation across all business units. ISO accreditation is part of Stefanutti Stocks’ sustainability strategy, and the following milestones were achieved during the year under review:

Business unit Detail Date obtained

Building ISO 9001:2008 April 2011ISO 14001 March 2011

MEP In progress

In addition to Structures having reaffirmed its ISO 9001:2008 accreditation, it revised its QMS Systems Manual and was issued a Continual Improvement 2011 certificate. Roads & Earthworks reaffirmed its ISO 19001 accreditation and the Building Western Cape division obtained its ISO 14001 accreditation in March 2011. The objective is to obtain ISO 14001 accreditation for all the other Building divisions during the next financial year.

Health and safety trainingThe safety training spend across the group for 2012 was R1,6 million (2011: R1,7 million) with 3 670 participants (2011: 4 691) attending 134 courses (2011: 155 courses). The pie chart below indicates the attendees per category of safety training:

Safety training attendees per category

l Certi�cationl Developmentl Inductionl Informationl Toolbox talkl Other

319

1 161

50346

1 219

422

56


The group ensures that only accredited trainers facilitate safety-related training. The following training courses were extended to employees within the various business units:

Training courses attended

Advanced safety, health and environmental representative Level 1 Eskom General Mixed

Basic fire and safety Level 1 Petrochemical site-specific industry English

Basic fire fighting Level 1 Safety Foundation Mixed

Basic first aid Level 1 Surface induction English

Confined space Level 2 Anglo basic safety programme English

Cyanide first aid Level 2 Supervisor English

Emergency medical first aid – Level 1 Level 3 Overview legal liability

Examine and make safe mines, quarries Lifting equipment inspector

Fall protection Lock-out procedures

Fall protection plan developer Management responsibilities and hazard identification and risk assessment

Fall protection/working at heights Mine Health and Safety Act

Fire fighting Modern SHEQ Risk Management Distance Programme

First Aid (Levels 1 – 3) National examination board in occupational safety and health

Flagman training National occupational safety, health and environmental risk management conference

Hand tool accidents Occupational Health and Safety Act

Hazardous chemicals Occupational Health and Safety Act and Compensation for Occupational Injuries and Diseases Act

Hazardous chemicals handling Occupational Health and Safety Act and Construction Regulations

Health Module Year 2 Occupational Health and Safety Act – 18001 implementation

Hazard identification and risk assessment Quality systems refresher

HIV/Aids in the workplace Root cause analysis tool

HIV/Aids training Risk assessment

HIV peer educator Road traffic management

Incident investigation Safe lifting practice

Incident management awareness Safe use of lifting equipment

Induction Safety office workshop

Introduction to safety, health and environmental training course Safety, health and environmental induction

Legal liability Safety, health and environmental representative

Legal liability for supervisors course Safety, health and environmental management training course

Level 1 Anglo Basic Safety Programme English Safety, health and environmental quality management

Level 1 Anglo Basic Safety Programme Mixed Stacking and storage

Level 1 Anglo Basic Safety Programme Zulu Stop-and-go training

Level 1 BECSA induction English Transporting dangerous goods


57




Administration 91

Safety auditsConstruction regulations demand that monthly internal safety audits be undertaken by the group, which is in line with Stefanutti Stocks’ strategy of creating a safe working environment for all its stakeholders. These internal audits are performed at all sites and action plans are devised to ensure that issues highlighted by the audit process are adequately addressed. Responsibility is allocated to relevant members of staff with legally appointed safety supervisors following up to ensure that the action plans have been implemented and are producing the desired results.

Injuries and fatalitiesThe ongoing group objective is to achieve “Zero Harm” and in the interim the tolerable DIFR is set at 0,1. All precautions are taken while working on site but, tragically, Roads & Earthworks recorded a fatality at one of its operations as mentioned previously in the 2012 Integrated Report. Lorah Makwatha was flagging the road traffic behind a concrete jersey barrier when a large delivery vehicle struck her.

The following measures were implemented to prevent a recurrence of similar incidents:

h Traffic-calming scenarios have been investigated and tabled with clients for approval.

h Training was conducted for all construction personnel involved in roadwork activities, creating awareness of the associated hazards and actions required to maintain safety levels. Flag personnel have been retrained in the duties and rules associated with a “Flag Person”.

h A change in work activity has taken place with flag personnel being placed within 150 metres of the point of work activity.

h Supervision change in work sites activities has occurred to involve supervision by foremen and traffic safety officers.

Health servicesThe health and wellbeing of employees as fundamentally important stakeholders is a priority for the Stefanutti Stocks group. It is compulsory that all permanent salaried employees join the group medical aid schemes.

The group encourages employees to utilise the health services it offers which includes the opportunity to be tested at annual wellness days for chronic illnesses such as TB, HIV, blood pressure, cholesterol, diabetes, cholera and malaria.

It is imperative that all project employees are in possession of valid medical fitness certificates prior to the commencement of work. The group performs pre-employment medical examinations as well as annual and exit medicals, and provides travel consultations and immunisations to prevent the risk of illness.

HIV/AidsStefanutti Stocks accepts that HIV/Aids is a national pandemic which poses a risk to the general health, wellness and development of all employees. Continuous awareness campaigns and training sessions are held to educate staff on this important subject.

The following programmes were run during the course of the year to heighten awareness:

h A workshop was presented to all employees in the Western Cape.

h The Mining Services business unit included informal HIV/Aids awareness in its induction process.

h The Structures business unit presented HIV/Aids training and education through external clinical consultants.

h On 1 December 2011, the Protec Office Park participated in the HIV/Aids Bannerthon, marking the National HIV/Aids Awareness Day.

The need to raise and build HIV/Aids awareness within Stefanutti Stocks remains imperative and the group has implemented initiatives with the help of clients and medical assessment service providers.

Environmental training and awarenessThe group recognises that the industry in which it operates has an undeniable impact on the environment. The result of this awareness has motivated the group to seek methods to minimise the adverse environmental effects through education and provides numerous training courses, as can be seen from the table on page 56 of this review.

The SHE forum formulates and implements all environmental strategies and innovations, with the view of making continuous improvements thereto. In particular, the SHE forum drafted environmental programmes optimising the waste management systems to ensure the reduction of waste generation. These programmes will be implemented over the next two years.

In addition to the more structured programmes, ongoing informal environmental awareness training is provided as part of the client induction process.

To assist the group with ISO certification, Stefanutti Stocks engaged the services of a consultant regarding ISO 14001 process implementation. Additional surveillance audits were completed to ensure alignment with ISO 14001.

The Structures business unit embarked on developing an internal environmental management system (EMS) based on the requirements of the ISO 14001 international standard. It intends to request certification of the system towards the end of 2012.

58



As part of the development of the EMS, the business unit has adopted an environmental policy in which it is committed to:

h developing, implementing and maintaining an environmental policy, programme and procedures through the establishment of a recognised EMS;

h identifying, assessing and managing the significant environmental aspects of its operations through the setting of clear objectives, targets and programmes;

h preventing pollution, as far as is reasonably practicable, at its operations to reduce the impact on the environment and the communities in which the business unit operates;

h complying with, and continually reviewing, all applicable environmental legislation and industry requirements relative to the business and those to which it subscribes;

h promoting the sustainable use of natural resources; h promoting the reduction, re-use and recycling of waste; and h educating all employees and subcontractors on this policy through training and awareness programmes.

In the MEP business unit, informal environmental awareness training is presented as part of its general induction process. Environmental awareness is also communicated as a topic at daily toolbox talks.

The Structures business unit presented training on the following environmental topics:

h Hazardous Chemical Storage and Management h ISO 14001 – Modern Environmental Management h ISO 14001 – Internal Auditors Course h Implement Environmental Initiative (Unit Standard 114218)

Environmental initiativesThe following measures were introduced to help conserve, recycle and reuse resources:

h Notices were installed at the printers indicating the importance of recycling paper and paper-recycling bins have been strategically placed at head offices forming part of the waste management programme.

h Awareness stickers have been installed in the kitchens and bathrooms making employees aware of reporting water leakages.

h Awareness stickers have been installed at all light switches making employees aware of switching off lights when not in use.

h Toolbox talks were held informing employees to turn computers off before leaving the office for the day.

The following initiatives will remain on the group’s agenda for the coming year:

h Carbon footprint – embarking on an evaluation process to measure the group’s carbon footprint during 2013.

h Emissions and waste management – monitoring and measuring air emissions in accordance with permit requirements.

Over and above the aforementioned initiatives, two environmental focus areas have taken priority, namely measuring energy and water usage. Establishing baselines for these focus areas will be carried out over the next three years. The results of the first year were as follows:

Energy Average (Gigajoules)

Electricity 24 653

Diesel 23 080

Petrol 645

Heavy fuel oil 7,5

Liquefied petroleum gas 36,7

Water Average (Litres)

Surface 1 079 948

Ground 3 333

Rain 128 036

Waste 138 065

Municipal 816 041

Natural resources 5 717 158

There have been no significant fines or non-monetary sanctions for non-compliance with environmental laws and regulations during the course of the year under review.

59




Administration 91

Transformation and corporate social investment Stefanutti Stocks remains dedicated to the principles of transformation. The group drives its strategy through the B-BBEE Forum, a sub-committee of the erstwhile B-BBEE Transformation Committee, which has been incorporated into the newly formed Social and Ethics Committee. This strategy is aimed at a more representative profile, promoting group-wide activities, strengthening processes and improving on business practices that positively impact on the broader society.

The B-BBEE Forum has set targets for each business unit, which are aimed at improving scorecard ratings in line with the Construction Charter codes with forward looking preparation on how to ensure continuous advancement. The B-BBEE Forum has further been tasked to build awareness on the importance and implications of B-BBEE principles across the group.

Over many years, the group has implemented a number of initiatives relating to employment equity, skills development, preferential procurement, enterprise development and corporate social investment.

Group efforts delivered pleasing results during the period under review with an improvement on contributor status moving from a Level 4 to a Level 3 in terms of the Construction Charter B-BBEE rating system, making the group a Value Added Vendor with 138% B-BBEE procurement recognition. The improvement was due to the implementation of rigorous internal systems, and the group will continue to focus on improving performance in all aspects of its scorecard. Effective May 2012, the group’s contributor status further improved to a Level 2 in terms of the Construction Charter B-BBEE rating system.

OwnershipThere has been a marked improvement in this element of the code with a compliance rating of 71% compared with the previous year’s rating of 44%. Towards the end of February 2012, Stefanutti Stocks (Pty) Ltd implemented the Stefanutti Stocks Employee Participation Plan 2012 (SSEPP).

The SSEPP was implemented to enhance the ability of Stefanutti Stocks to attract, retain and reward employees, allowing them to participate in the economic benefits generated by the scheme. This will provide employees with an incentive to promote and align the economic interest of Stefanutti Stocks with their own.

The diagram below illustrates the current shareholding composition of Stefanutti Stocks (Pty) Ltd using the flow-through principles of the “B-BBEE Act” of the company.

Stefanutti Stocks (Pty) Ltd 31,2% (63,7% uncapped)

black ownership 4,5% black women ownership

Stefanutti Stocks Holdings Limited

22,16% black ownership

Stefanutti Stocks Employee

Participation Trust

Management controlStefanutti Stocks has maintained its rating of 51% year-on-year against this element of the scorecard. During the year under review, the Stefanutti Stocks board comprised five independent non-executive directors, two non-executive directors and four executive directors and was chaired by a non-executive chairman. Four of the five independent non-executive directors are black of which two are women with an additional black non-executive director. Of the nine executive committee members, one member is a black male.

The Remuneration and Nominations Committee continuously assesses the composition of the board and should it identify any shortfall in this regard, it makes recommendations to the board on how to address them. After such an assessment, Ms Zanele Matlala was appointed to the board in February 2012.

Employment equityA significant part of transformation is the manner in which a company views employment equity. Stefanutti Stocks believes in equal opportunity and focuses on the upliftment and recruitment of HDIs. This is evident from the improved rating of 42% for 2012 (2011: 35%) with regard to this element of the code.

During the course of 2011, policies were reviewed, setting targets for all business units to meet by means of supporting systems and processes. These targets were disseminated through committee meetings to the workforce and monthly reports were provided by the operations.

HDI candidates were given priority for all new appointments. Recruitment agencies specialising in the placement of black disabled individuals were engaged and six such members of staff were employed across the group.

90% 10%

60



The pie charts below indicate the operations’ comparative employment equity statistics for the years ended February 2011 and 2012:

2012 2011Top management

l African femalel Coloured femalel Indian femalel White femalel African malel Coloured malel Indian malel White malel Foreign femalel Foreign male

0013211

8300

0102212

8102

2012 2011Senior management


012

10821

13400

031

12512

11204

2012 2011Middle management


214

33512828

30907

404

30422828

2810

12

2012 2011Junior management


33129

811 038

9152

3511

11

2988

801 034

9248

3000

12

61




Administration 91

2012 2011Semi-skilled


64152476

1 11415143513

47161876

1 0851913252

11

2012 2011Unskilled


36100

55680100

41200

62583502

2012 2011Permanent employees


1353040

2032 769

14596

9132

21

1213031

2002 793

14996

8042

43

2012 2011Temporary employees


447161

594 694

8613

2280

37

433142

293 582

8910

1371

19

62



Employment equity (%)

Total 86,185,8

Female 71,772,8

Male 87,587,3

20112012

Headcount by ethnic group

8 068

277

152

1 438

African

Coloured

Indian

White

The salary scale ratios, per employee level, for men to women within Stefanutti Stocks are:

Occupational level Ratio Ratio

2012 2011

Senior management 1:0,58 1:0,75

Middle management 1:0,80 1:0,75

Junior management 1:0,89 1:0,82

Semi-skilled 1:0,94 1:1,14

Unskilled 1:0,70 1:1,05

Skills developmentA rating of 80% was maintained for the year under review regarding this element of the scorecard. Specific information on skills development is provided in the “Our employees” section commencing on page 47 of this review.

Preferential procurementGreat emphasis was placed on procuring from B-BBEE-accredited suppliers, with ratings in regard to this element showing positive results of 95% (2011: 90%). For the period under review, 80% of all group vendors provided accredited B-BBEE certificates. Vendors were sourced through a centralised database that was assembled during 2011, which is updated annually. Preference was given to black female-owned suppliers, which comprised 6% of the group’s procurement expenditure, meeting its target for the year.

Enterprise developmentThe group’s enterprise development programme is aimed at supporting small black and medium businesses and is overseen by enterprise development specialists who have been actively involved at business unit level. The greatest challenge faced by these developing companies is survival, which is addressed by mentorship and training offered by the group’s business units.

Developing strategic partnerships with black entrepreneurs, which are based on shared values of safety, quality and performance, will ensure the long-term continuity of both the group and its pool of skilled sub-contractors. The group’s participation in these programmes over the period under review has produced improved ratings of 100% up from 96% in 2011.

Support in the sum of R8,2 million for 2012 (2011: R13,1 million) is itemised in the table below:

Enterprise supported Rand value

Lulatec 1 250Kaghiso’s Transport 17 304La-Mosito Transport 160 694SM Mahlangu 72 844Simon Munyai 15 991Who Else Tours 87 295Jacksons Transport 26 908Molokotwa Construction 1 290 000Kwagga 450 0003Q Mahuma JV 15 000A Re Somang Projects 81 326Allisons Plant Hire CC 26 674Bella M 1 712 753Fundaninathi 79 331Ikhaya Reinforcing 15 000Jayzet Construction 13 379Khulani Construction 39 839Lusweti Civils 1 250M&R Projects 188 984Meva Puggs JV 1 250Miko Technologies 15 000Mohlaleng Construction 1 250Mohlaleng Mining Services Solutions 1 626 250Msiko dot Net 15 000Mulan Plant Hire 1 250Procure-hub 227 959Project Build 1 000Sivivane Construction 15 000SPG 50 000Striving Mines 1 250Thutaka Inspection Services 15 000Umfolozi Building and Construction 5 707Fikile Construction 1 026 400JST Construction 750 000Luvuno Projects 3 825Aburec 139 608

Total 8 191 571

63




Administration 91

Enterprise development case studies

The Structures enterprise development case studies demonstrate how this business unit has come to assist its strategic partners in need. These developing companies understand the group’s stringent requirements in terms of safety, quality and performance and are well suited to working on large projects. Stefanutti Stocks is committed to creating opportunities for those partners who are dedicated to growing their own organisations sustainably while adhering to the group’s core values and standards. Three noteworthy companies are discussed below, including a summary of service offerings and how Stefanutti Stocks has added value to their day-to-day business.

Thutaka Inspection ServicesThis small black-owned company was founded in February 2007 and offers a range of industry-related inspection services. When doing business in the construction sector, it is necessary to establish a credit rating with CIDB. This is one of the initiatives that Stefanutti Stocks is currently assisting Thutaka with. In addition, Stefanutti Stocks provides ongoing mentoring and coaching in the areas of business economics, the understanding of risk and reward, negotiation skills and basic financial concepts.

Thutaka Inspection Services joined the Stefanutti Stocks Enterprise Development programme in March 2011.

Khulani’s Trading EnterprisesKhulani’s Trading Enterprises is a black woman-owned construction business established in 2000. Stefanutti Stocks provides support in the areas of management and labour skills transfer, assisting with issues surrounding the implementation of employment contracts up to and including disciplinary policies and procedures. Coaching is given on the tendering and planning process, technical assistance with a Quality Management Planner, as well as mentoring on contractual knowledge. Guidance is also given on the construction procedures when on site.

Khulani’s Trading Enterprises joined the Stefanutti Stocks Enterprise Development programme in March 2011.

Tswelopelo Civil LaboratoryStarted in 2002, Tswelopelo Civil Laboratory, a fairly new civil laboratory with growth potential, needed assistance with marketing their company. As part of the enterprise development initiative, Stefanutti Stocks helped

Tswelopelo with developing a new business image and branding which distinguishes the company from its competitors within the market. Stefanutti Stocks has further added value by training staff in respect of rates and allowables for the industry and other administrative needs including procurement and human resources.

Tswelopelo is a 100% black women-owned company, and joined the Stefanutti Stocks Enterprise Development programme in May 2011.

Fikile Construction

Fikile ConstructionThe Building business unit has been actively engaged in black empowerment long before the advent of BEE. One such instance was when the company partnered with the late Mr Mandla Ndlovu of Fikile Construction on a number of projects for the Airports Company of South Africa (ACSA).

This working relationship made Fikile Construction the ideal first choice when partnering in enterprise development projects. The intention was to grow Fikile Construction from a medium-sized company to a large one. To achieve this, the group continued adding value in the form of skills transfer and financial support while partnering with Fikile Construction on joint-venture projects. We are proud to be associated with Fikile Construction and, to date, the working relationship has realised successful completion of several joint-venture projects, viz: MSP2 for ACSA, Freedom Park 2 and Freedom Park 2b.

Fikile Construction and Stefanutti Stocks have a common goal and understanding of mutual benefit in terms of enterprise development.

64



Socio-economic development case study

King George V Hospital School

Located on the grounds of the King George V Hospital Complex, the King George V Hospital School caters to both the educational and social needs of in-patient children, receiving treatment for drug resistant Tuberculosis (TB) at the hospital. Without the services of the school, most of these patients would miss out on a large portion of their “foundation phase” education, and as most of these children are receiving full-time care at the hospital, their only real social interaction takes place at the school.

Sadly, due to lack of funding, the school fell into a state of disrepair and the small group of dedicated teachers was challenged to educate these TB-compromised children in conditions that were depressing and demotivating.

This project aligned with the elements used by the group when identifying social projects, namely children’s welfare, health, education and social upliftment of communities. The assistance would make a large impact on the future of these and further learners and, as a result, the group undertook to help with the refurbishment and reconstruction of the King George V Hospital School. The original derelict toilet structure was demolished, the old leaking roof was removed and walls knocked down to make way for a modern, light and well-ventilated facility. A new roof, with a large outdoor teaching area was erected, along with new administration offices, ablutions for all the learners and staff, a sick bay, three equipped classrooms and an art room were constructed. Stefanutti Stocks committed R583 000 to the project, and by leveraging further donations of money, construction materials and manpower, were able to facilitate the building and donated it to King George V Hospital as a modern, functional education building.

Socio-economic developmentGuided by the Construction Charter, the group’s corporate social investment programme is continually reviewed to ensure that it keeps pace with the evolving needs of the communities the group serves.

In 2012, over R1,7 million (2011: R1,8 million) was donated to the projects listed in the table below with the graphic illustrating the various spend categories:

Distribution of contributions (%)

l Educationl Healthl Schoolsl Sportl Disabled

Community

39,2

17,1

34,6

7,71,3 0,1

Institution Category Rand value

Tuks Jool Education 20 000

Field Band Foundation Education 250 000

Fun-D-Mental Finance Education 28 500

Family Life Centre Health 100 000

King George Hospital Health 583 418

Mamelodi School Schools 115 000

Kohin Schools 130 000

JS Mpanza School Schools 90 200

Phegelo High School Schools 55 000

Addington School Schools 163 000

Koringfontein Middelburg Schools 50 000

Sinky Sport Marketing Sport 134 847

Ruiterwacht Disabled 22 085

Boorhanol Community 500

Total 1 742 550

Before

after

65




Administration 91

Socio-economic development case study

Addington Primary School

The official handover of Addington Primary School, Grade R block, took place on Tuesday, 29 November 2011. Stefanutti Stocks was proud to be a part of this project and it has been rewarding to see the excitement and appreciation from the school, the new pupils and the Department of Education alike.

The group’s contribution to this project was valued at over R163 000 and has assisted the future pupils of Addington Primary School by giving them the facilities to gain the necessary grounding and development they need at pre-primary level to prepare them for their future school careers.

Human rightsStefanutti Stocks endeavours to respect and uphold the human rights enshrined in the Human Rights Charter and contained in the Constitution of South Africa. Discrimination, in any form, is unacceptable and not tolerated within the group. Incidents are dealt with in terms of the group’s disciplinary procedures and codes of conduct.

During the period under review, two incidents of sexual harassment took place and disciplinary hearings were conducted. The first hearing resulted in the transgressor being dismissed and the company made arrangement for the employee to receive counselling. Gender equality and sensitising seminars are currently being scheduled for staff members in the affected divisions.

In the second instance, the evidence given at the hearing implicated both parties and as a result neither party was dismissed, however, the parties were asked to act with a level of professionalism, being mindful of the dignity of others.

66


Value added statementfor the year ended 29 February 2012

2012%

2012R’000

2011%

2011

R’000

CONTRACT REVENUE 7 990 718 6 896 418

Less: Costs of materials, services and sub-contractors (5 432 319) (4 582 078)

Value added by operations 98,3 2 558 399 97,3 2 314 340

Investment income 1,6 41 636 2,6 61 591

Share of profit/(loss) from associate companies 0,1 1 768 0,1 2 712

Total value add 100 2 601 803 100 2 378 643

Distributed as follows:

CORPORATE SOCIAL INVESTMENT

Donations and other community investments 0,1 1 743 0,1 1 829

EMPLOYEES

Short-term and post-employment benefit costs 73,6 1 916 596 66,5 1 581 248

Share-based payment and forfeitable share plan costs 0,9 22 697 0,8 19 843

PROVIDERS OF EQUITY

Dividend paid to shareholders 2,4 63 675 4,7 111 987

PROVIDERS OF FINANCE

Interest and finance charges 1,5 37 919 1,1 25 270

Operating lease rentals 0,3 9 098 0,4 9 450

GOVERNMENT

Taxation 3,9 100 257 6,2 148 351

TOTAL VALUE DISTRIBUTED 82,7 2 151 985 79,8 1 897 978

REINVESTED IN THE GROUP 17,3 449 818 20,2 480 665

Reserves available to ordinary shareholders 10,2 264 241 14,0 333 011

Depreciation 7,1 185 577 6,2 147 654

100 2 601 803 100 2 378 643

VALUE ADDED RATIOS

Number of employees in South Africa 9 875 8 520

Contract revenue per employee (R’000) 809 809

Value created per employee (R’000) 263 279

The group did not receive any financial assistance from Government during the year.

67




Administration 91

Remuneration report

IntroductionThe group has performed a detailed comparison of the group’s

practices against the principles required by King III. The exercise

indicated that the principles had largely been applied and those

that have not been applied will be explained hereunder.

The key issues that are addressed in this Remuneration report

are as follows:

h Remuneration and Nominations Committee.

h Remuneration philosophy and policy.

h Components of remuneration.

h Directors’ remuneration (including share incentive schemes,

shareholding and other interests):

• Executive directors; and

• Non-executive directors.

h Prescribed officers’ remuneration.

Remuneration and Nominations CommitteeThe Remuneration and Nominations Committee is responsible

for the development and oversight of the group’s remuneration

philosophy and policy. The composition, mandate, role and

function of the committee are set out in written terms of reference

which have been approved by the board.

The committee comprises Lead Independent Non-executive

Director Mafika Mkwanazi and Independent Non-executive

Directors Kevin Eborall and Herman Mashaba. In addition, the

Chairman, the Chief Executive Officer, Chief Financial Officer and

the Human Resources Executive attend meetings by invitation.

The Chief Executive Officer, Chief Financial Officer and the Human

Resources Executive are excluded from deliberations in respect

of their own remuneration. The Company Secretary attends all

meetings as the secretary of the committee.

The committee has access to independent advisors to ensure

that it receives expert advice on remuneration, both in general

and in industry-specific terms. The advisors used over the past

year included external advisors to advise on non-executive

remuneration. The Chief Financial Officer and the Human

Resources Executive also make recommendations to

the committee.

The written terms of reference are reviewed annually. During the

year under review all remuneration polices were reviewed by

the Remuneration and Nominations Committee to ensure that

the policies remained appropriate and aligned, as far as practically

possible, with the principles of King III and the Companies Act.

The committee’s role and responsibilities in respect of board

members include:

h assessing the composition of the board and any deficiencies

in this regard;

h identifying and recommending nominees to the board (before

a nomination, appropriate background checks are performed

on a proposed new director);

h recommending to the board the total fixed package, benefits,

annual bonuses, performance-based incentives, share-based

incentives and other benefits paid to the executive directors;

h annually reviewing directors’ independence and those directors

standing for re-election at the annual general meeting; and

h determining short- and long-term incentive pay structures for

group executives.

Responsibility for senior management appointments and

remuneration has been assigned to the Chief Executive Officer.

The Chief Executive Officer provides feedback to the committee

and the board in this regard.

The committee met three times during the year. Attendance

at committee meetings is set out on page 44 of this

Integrated Report.

Remuneration philosophy and policyThe company’s philosophy is to employ individuals of the

highest calibre, who subscribe to the group’s culture, values

and philosophy. Stefanutti Stocks strives to provide a working

environment that makes it an employer of choice. The group

rewards executive management and employees for their

contributions by:

h payment of market competitive annual packages (base salary

and benefits);

h variable annual performance rewards; and

h awards to directors in terms of the Forfeitable Share Plan

(FSP), which was approved at the annual general meeting

in August 2009.

The committee considers the above within the overall

remuneration designed to attract, retain, incentivise and drive

the behaviour of the group’s employees over the short,

medium and long term.

Group talent is drawn from the market and retained by payment of

competitive remuneration. To this end, external service providers

are utilised to assist in the benchmarking processes.

68


Remuneration report continued

The key principles of the remuneration policy are as follows:

h Total rewards comprise a fixed and variable component.

h The fixed component includes a base salary, retirement fund

and benefits.

h The variable rewards are designed to achieve group objectives

in the short and long term.

h Long-term share incentive participation aligns director

performance with shareholder expectations.

h Total compensation is targeted at the upper quartile of the

relevant benchmarks.

h The Remuneration and Nominations Committee ensures

that appropriate benchmarking is undertaken.

It has been decided not to submit the remuneration policy to

shareholders for a non-binding advisory vote at the 2012 annual

general meeting, but this matter will be reconsidered for the 2013

annual general meeting.

Components of remunerationGuaranteed remunerationThe group applies a total fixed package (TFP) method of

structuring guaranteed packages. The overall strategy being

that the organisation will strive to pay, on average, at the

75th percentile for all positions, however, not all employees will be

paid as per the guideline in this manner, as other factors, such as

individual performance and supply and demand, are also taken

into account.

For project or operational positions, the benchmark information

used will come from the industry in which the company operates,

and the general South African market for service positions.

Benefits such as pension, medical aid and car allowance are

included in the TFP method of structuring guaranteed packages.

It is compulsory that all permanent salaried employees of Stefanutti

Stocks belong to the group pension scheme, and membership

of SAFRICAN (a funeral policy which is not part of the pension

scheme) is also mandatory for all South African employees.

Stefanutti Stocks Umbrella Pension Fund includes life cover, spouse

life cover, permanent health insurance (disability), dread disease

cover for the member only, family protector (including funeral benefit),

an education benefit and a health premium waiver if the employee

is also a member of Momentum Health Medical Aid.

It is also compulsory for all new salaried employees to join the

group’s prescribed medical aid unless the employee can prove

that he/she is a dependant on their spouse’s medical aid.

The group does not have a defined benefit plan obligation.

Hourly paid employees enjoy relevant and applicable benefits

in terms of industry and/or collective agreements. Membership

of SAFRICAN is also compulsory for Limited Duration Contract

(LDC) employees.

Variable remunerationShort-term incentives

The company implements appropriate incentive schemes

applicable to respective categories of employees. These schemes

will enable employees to earn meaningful incentives for meeting

predetermined goals.

The key principles are as follows:

h The schemes should induce behaviour that will achieve results

that are congruent with the goals of the organisation, ie that

will align employee behaviour with shareholder expectations.

h The schemes should serve to attract and retain

human resources.

h The schemes should serve to motivate participants.

h The schemes should reward participants for delivering against

pre-established performance criteria – good performers will

have the potential to earn more than poor performers.

h The schemes should be fair and equitable, transparent

and defensible.

Different schemes apply to different employees, for example, those

who are project-based have different objectives and have the

ability to influence different outcomes to support staff and head

office employees.

The schemes may have elements of company, division and

individual measures, depending on what is deemed appropriate

under the circumstances.

Long-term incentives

These will be applied to directors who are considered necessary

to meet company objectives and should be retained. The schemes

will be used to attract competent high-performing individuals.

These schemes will be market-related and will enable meaningful

remuneration to be earned.

69




Administration 91

The Key Man Attraction and Retention SchemeThe Remuneration and Nominations Committee approved the

implementation of a Key Man Attraction and Retention Scheme.

The primary purpose of this scheme is to enable the company

to compete for talent on an equal footing with its competitors.

This remuneration is outside of the standard TFP, annual bonus

and long-term incentives. The long-term incentive scheme,

together with the culture of the organisation, is the primary

retention tool and this scheme does not replace those

mechanisms.

This scheme recognises that there are occasions when additional

retention monies may need to be paid, such as:

h in making an employment offer to a third party when he/she

will be relinquishing some long-term incentive by joining

the company and the company may want to compensate

the new employee for such forfeiture; or

h a current employee is being targeted by a third party,

and Stefanutti Stocks wishes to retain the individual with the

group. The potential recruitment cost for replacing such individual

is considered when calculating part of the retention monies.

Directors’ remunerationExecutive directors’ remunerationThe tables showing the breakdown of the annual remuneration

(excluding equity awards) of directors for the years ended

29 February 2012 and 28 February 2011 are set out in note 28

to the annual financial statements, which is included in the inserted

CD to this Integrated Report.

Non-executive directors’ feesNon-executive director remuneration is compared to the company’s

peer group. Recommendations are made by the Chief Financial

Officer and Human Resources Executive, to the Remuneration

and Nominations Committee, for onward review by the board

and submission to shareholders. Non-executive directors are

compensated based on attendance fees. The fees are based on

the size and complexity of the group and also take into account

market practices and fee surveys provided to the committee.

No distinction is made between fees payable to independent

non-executive directors and other non-executive directors,

although the fees of the Chairman and Lead Independent

Director take their expanded roles into account.

The total fees paid to non-executive directors are not limited

to a maximum annual amount, irrespective of the number

of meetings attended. Directors qualify for reimbursement

of expenses incurred in performing their duties for and on

behalf of the company.

Non-executive directors do not have service contracts. Instead,

letters of appointment serve to confirm their terms of

engagement, and include matters such as fees, term of office,

expected time commitment, share dealing and board

performance assessment. The Chairman and Lead Independent

Director have letters of appointment, which are specific to their

roles and functions.

All board directors are appointed for a term of three years and are

obliged to retire at the end of that period, but may offer themselves

for re-election at the annual general meeting.

The fees paid to non-executive directors, as well as the

proposed fees for the next financial year, were approved by

the Remuneration and Nominations Committee, the board

of directors and shareholders at the last annual general

meeting and are set out in note 28 to the annual financial

statements, which is included in the inserted CD to this

Integrated Report.

There is no requirement for non-executive directors to be

shareholders and they do not qualify to participate in any incentive

scheme that is operated by the group.

Directors’ service contractsExecutive directors are employed on permanent contracts of

employment within the group. The contracts of executive directors

or senior executives do not preclude the company from exercising

its normal rights to terminate the contract in the event of

misconduct or poor performance. Executive directors retire from

their positions and from the board at their normal retirement date.

Details of all contracts of employment for executive directors and

the three prescribed officers are not submitted as the group

believes that due to the nature of the construction industry, such

information may place the group at a disadvantage.

70


Remuneration report continued

Post year end share transactionsThe following transactions took place post year end:

Nature of

transactionNumber

of shares Date Price

W Meyburgh Purchase 21 467 22 June 2012 R10,51

DG Quinn Purchase 15 236 22 June 2012 R10,51

SJ Ackerman Purchase 16 106 22 June 2012 R10,51

SJ Ackerman Sale 300 000 22 June 2012 R10,50

As a result of Stephen Pell resigning effective 31 March 2012,

all of his FSP shares were forfeited.

Directors’ share optionsThe details of the directors’ share options are set out in note 28 to

the annual financial statements, which is included in the inserted

CD to this Integrated Report.

Interest of directors in contractsThe directors have certified that they do not have any material

interests in any transactions which are of material significance

and which have significantly affected the business of the group,

the company or any of its subsidiaries. Accordingly, no conflict

of interest with regard to directors’ interests in contracts exists.

There have been no material changes in the aforegoing post

29 February 2012 to date.

Information regarding related-party transactions is set out in

note 28 to the annual financial statements, which is included in the

inserted CD to this Integrated Report.

Directors’ trading in company securitiesAll directors are required to obtain clearance prior to trading in

the company’s securities. Such clearance must be obtained from

the Chairman or, in his absence, from a designated director. The

Chairman consults the Chief Executive Officer or the designated

director prior to his trading in the company’s securities. Directors

are required to inform their portfolio/investment managers not to

trade in the securities of the company unless they have specific

written instructions from that director to do so. Directors also

may not trade in their shares during closed periods. Directors are

further prohibited from dealing in the company’s shares at any

time when they are in possession of unpublished price-sensitive

information in relation to those securities, or otherwise where

clearance to deal is not given.

Directors’ shareholdingThe aggregate beneficial holdings at 29 February 2012 and 28 February 2011, held by the directors of the company, in the issued shares

of the company are detailed below:

29 February 2012 28 February 2011

Number of fully paid shares held

Direct beneficial

%

Indirect beneficial

%Total

%

Direct beneficial

%

Indirect beneficial

%Total

%

B Stefanutti (Chairman) 9,31 – 9,31 24,05 – 24,05

ME Mkwanazi (Lead Independent Director) – 0,02 0,02 – 0,02 0,02

NJM Canca – – – – – –

KR Eborall 0,04 – 0,04 0,04 – 0,04

HSP Mashaba – – – – 0,92 0,92

ZJ Matlala# – – – – – –

LB Sithole – 2,40 2,40 – 2,80 2,80

JWLM Fizelle (Alternate) 0,02 0,86 0,88 0,02 0,88 0,90

W Meyburgh (Chief Executive Officer) 0,46 4,40 4,86 0,43 5,20 5,63

DG Quinn (Chief Financial Officer) 0,30 0,08 0,38 0,12 0,27 0,39

SJ Ackerman 0,28 0,40 0,68 0,26 0,40 0,66

SD Pell* (Chief Operating Officer) 0,70 – 0,70 0,68 – 0,68

*SD Pell resigned 31 March 2012.#ZJ Matlala was appointed 27 February 2012.

71




Administration 91

Prescribed officersPrescribed officers’ remunerationThe group’s prescribed officers consist of operational directors

and senior managers who are not executive directors of the group.

Personal details of the individuals are not disclosed as the

group has confidentiality agreements with the prescribed officers.

The prescribed officers’ remuneration is determined in terms

of the remuneration policy, as set out on pages 67 and 68 of

this report.

The details of the prescribed officers’ remuneration are set out in



Prescribed officers’ beneficial and non-beneficial shareholdingThe aggregate beneficial holdings at 29 February 2012, held by

the prescribed officers of the company, in the issued shares of the

company and details of future entitlements under the share option

schemes and share incentive arrangements are detailed below:

29 February 2012

Number of fully paid shares held

Direct beneficial

%

Indirect beneficial

%Total

%

Prescribed Officer 1 0,56 0,99 1,55

Prescribed Officer 2 0,03 – 0,03

Prescribed Officer 3 0,11 – 0,11

No comparative figures for 2011 are disclosed as the requirement

for prescribed officer information was only introduced as of

1 May 2011 in terms of the Companies Act.

The following transactions took place post year end:

Nature of

transactionNumber

of shares Date Price

Prescribed Officer 1 n/a – n/a –

Prescribed Officer 2 Purchase 11 280 22 June 2012 R10,51

Prescribed Officer 3 Purchase 11 845 22 June 2012 R10,51

Prescribed officers’ share optionsThe details of the prescribed officers’ share options are set out in



Prescribed officers’ share awards in terms of the FSPPrescribed officers’ participation in the group’s FSP is in terms of

the conditions as set out on page 67 of this report and is currently

included in the total remuneration for these prescribed officers.

The details of the prescribed officers’ share awards in terms of

the FSP are set out in note 28 to the annual financial statements,

which is included in the inserted CD to this Integrated Report.

Interests of prescribed officers in contractsThe prescribed officers have certified that they do not have

any material interests in any transaction of material significance

and which significantly affected the business of the group,

the company or any of its subsidiaries. Accordingly, no conflict

of interest with regard to prescribed officers’ interests in

contracts exists. There have been no material changes post

29 February 2012 to date.

Prescribed officers’ trading in company securitiesAll prescribed officers are required to obtain clearance prior to

trading in the company’s securities. Such clearance must be

obtained from the Chief Executive Officer. Prescribed officers are

required to inform their portfolio/investment managers not to trade

in the securities of the company unless they have specific written

instructions from that prescribed officer to do so. Prescribed

officers also may not trade in their shares during closed periods.

Prescribed officers are further prohibited from dealing in the

company’s shares at any time when they are in possession

of unpublished price-sensitive information in relation to those

securities, or otherwise where clearance to deal is not given.

Mafika Mkwanazi

Chairman

18 July 2012

73

Group at a glance 1



Administration 91


Summary of financial statements

p74 Chief Financial Officer’s report

p78 Audit, Governance and Risk Committee report

p80 Directors’ report

Contents

Chief Financial Officer’s report 74

Preparation of annual financial statements 76






Statements of financial position 81

Statements of comprehensive income 82

Statements of changes in equity 83

Statements of cash flows 85

Accounting policies 86

Notes to the summary of financial statements 86

For the comprehensive notes to the annual

financial statements please refer to

www.stefanuttistocks.com or the inserted

CD. Please also note that the references to

the notes in the summary of financial

statements correspond to the notes in the

comprehensive annual financial statements

to ensure consistent use thereof.

74


Chief Financial Officer’s report

“Notwithstanding current difficult trading conditions, early indications for next year are encouraging, evidenced by a 15,3% increase in revenue for the current year, coupled with an increased order book of R9,3 billion at May 2012.”

Financial performanceDespite the satisfactory increase in revenue from R7,0 billion to R8,1 billion, the extremely competitive market saw operating margin reduce to 4,5% (2011: 6,4%).

Net investment income fell to R3,7 million from R36,3 million as a result of generally lower cash balances compounded by increased borrowings throughout the year.

Highlighting the effects of such demanding market conditions, headline earnings per share of 153 cents represents a drop of 20,3% on the prior year.

Business unitsBoth the Structures and Building business units had a good year, generating increased contract revenues, with similar operating profits to those of the previous year.

Roads & Earthworks felt the effects of a particularly tough market with year-on-year contract revenue remaining constant, but operating profit and margin reducing considerably.

Mining Services saw a pleasing contribution from the Mining division in both contract revenue and operating profit, however, this was more than offset by the Electrical & Instrumentation division which experienced some problem contracts and associated restructuring costs.

Financial positionShareholders’ interest, represented by capital and reserves, improved by 14,0% at year end, after having paid dividends of R63,7 million during the year.

Notwithstanding the increase in borrowings to meet the growth and capital expenditure requirements, the financial position of the group remains sound with an interest-bearing debt to equity ratio of 18,6%. After taking into account the net cash of R890,8 million however, net gearing reduces to a nil balance.

CashDespite efforts from management to reduce a negative working capital cycle, by financial year end net amounts held in accounts receivable, accounts payable and contract in progress had increased by R797,8 million.

The net cash position reduced from R1,1 billion to R890,8 million year-on-year due to significantly improved cash generation from operating activities being offset by the increase in working capital as noted above.

Capital expenditureIn order to support the growth being experienced by the group, both locally and outside South Africa, the group spent R297,8 million on capital expenditure during the year. A similar amount has been approved for the next year of which R53,1 million had been committed at the end of May 2012.

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Highlights

Revenue R8,1 billion

Operating profit R359 million

Cash on hand R891 million

DividendAs a result of constraints placed on the group’s cash by working capital consumption, the board has declared a reduced final dividend of 12 cents per share, amounting to a total dividend of 24 cents per share in respect of the current year. This represents a dividend payment ratio of 16,7% of the group’s normalised headline earnings per share for the period.

Non-adjusting events after reporting periodWith effect from March 2012, the group acquired 100% of Cycad Pipelines at a cost of R261,0 million. This acquisition is in line with the group’s growth strategy to broaden its service offering in the construction sector.

In terms of IFRS 3 Business Combinations, the initial accounting for the acquisition has only been determined provisionally as the purchase price allocation has not been completed.

To the extent that Cycad Pipelines’ profit after tax for the next year exceeds R50,0 million, the excess will become payable to the sellers limited to a maximum amount of R30,0 million.

AppreciationThe financial year ended February 2012 proved to be decidedly challenging for all the operating business units within the group, with equivalent demands being placed on the support divisions. I would like to extend a specific note of thanks to all the support personnel for their ongoing, and often unrecognised, effort and commitment over the past year.

Dermot QuinnChief Financial Officer

18 July 2012

76


The annual financial statements, available on the group’s website www.stefanuttistocks.com and the inserted CD, as well as the summary of financial statements contained in this Integrated Report, have been prepared under the supervision of the Chief Financial Officer, DG Quinn, BScEcon, CA(SA). The summary of financial statements has been audited in compliance with the applicable requirements of the Companies Act.


18 July 2012

In terms of section 88(2)(e) of the Companies Act, 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 2012, 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 SomervilleCompany Secretary

18 July 2012

Certificate by the Company Secretary

Preparation of annual financial statements

Independent auditors’ report

The Independent auditors’ report can be found on page 3 of the annual financial statements on the inserted CD as well as on Stefanutti Stocks’ website www.stefanuttistocks.com.

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Directors’ responsibilities and approval

Statement of responsibilityThe directors are required by the Companies Act to maintain adequate accounting records and are responsible for the content and integrity of the summaries of company and group financial statements and related information included in this report. It is their responsibility to ensure that the summary of financial statements fairly present the state of affairs of the company and the group as at the end of the financial year and the results of their operations and cash flows for the year then ended, in conformity with International Financial Reporting Standards. The annual financial statements have been audited by the independent auditors, Mazars, who were given unrestricted access to all financial records and the related data.

The summaries of company and group financial statements are prepared in accordance with International Financial Reporting Standards and are based on appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial controls established for the company and the group, and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the board sets standards for internal control aimed at reducing the risk of error or loss in a cost-effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the company and the group.

The focus of risk management in the company and the group is on identifying, assessing, managing and monitoring all known forms of risk across the company and the group. While operating risk cannot be fully eliminated, the company and the group endeavour to minimise risk by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied upon for the preparation of the summaries of company and group financial statements. However, any system of internal control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The directors have reviewed the company’s and the subsidiaries’ cash flow forecasts for the year ending 28 February 2013 and, in light of this review and current financial position, are satisfied that the company and group have access to adequate resources to continue in operational existence for the foreseeable future. Therefore, the summaries of company and group financial statements have been prepared on the going-concern basis.

ApprovalThe summaries of company and group financial statements, which appear on pages 81 to 88, were approved by the board of directors on 18 July 2012 and are signed on their behalf:

Willie Meyburgh Dermot QuinnChief Executive Officer Chief Financial Officer

18 July 2012Johannesburg

78


Audit, Governance and Risk Committee report

The Audit, Governance and Risk Committee is appointed by the shareholders and, in addition to having specific statutory responsibilities to the shareholders in terms of the Companies Act, it assists the board by advising and making submissions on financial reporting, and internal financial controls, external and internal audit functions and statutory and regulatory compliance of the group.

Terms of referenceThe Audit, Governance and Risk Committee has adopted formal terms of reference that have been approved by the board and these terms of reference are regularly reviewed and updated where necessary. The committee has executed its duties during the past financial year in accordance with these terms of reference.

CompositionThe Audit, Governance and Risk Committee is chaired by Independent Non-executive Director, Nomhle Canca, who has over 20 years’ experience in financial services. It further comprises two independent non-executive directors, namely Kevin Eborall and Zanele Matlala. Joseph Fizelle, alternate to Non-executive Director Bridgman Sithole, also serves on the committee. The board has satisfied itself that the members are suitably skilled and qualified to fulfil their duties.

The Chief Executive Officer, Chief Financial Officer, external and internal auditors are invited to all Audit, Governance and Risk Committee meetings.

MeetingsThe Audit, Governance and Risk Committee held four meetings during the year. Attendance at these meetings is shown in the table set out on page 44 of the Corporate governance report.

Statutory dutiesIn execution of its statutory duties, the Audit, Governance and Risk Committee:

monitors compliance with codes of conduct and the ethical conduct of the company;

evaluates the independence and effectiveness of the external auditors as well as their performance and recommends their appointment;

reviews the draft audited financial statements and Integrated Report, the preliminary profit announcement and interim statements;

reviews, together with the external auditors, the conformity of the audited financial statements and related schedules with IFRS and the company’s accounting policies;

reviews the external audit plan and fees payable to the external auditors;

reviews the external audit findings and reports; approves any non-audit services performed by the external auditors and the policy in this regard;

reviews internal audit policies, plans, reports and findings; monitors compliance with applicable laws and regulations; assesses key risk areas facing the group and recommends risk mitigation measures; and

advises and updates the board on issues ranging from accounting standards to published financial information.

Oversight of risk managementThe committee is integral to the group’s risk management process. Both the Group Risk Officer and Internal Audit Manager report directly to the committee, and all risk identification, measurement and management is addressed through these channels. A Risk Management Plan, Risk Register and Risk Policy were presented to and considered by the committee during the year. The Audit, Governance and Risk Committee further reviewed the findings of an external review and assurance exercise.

The committee satisfied itself that the following areas had been appropriately addressed:

Financial reporting risks. Internal financial controls. Fraud risks as they relate to financial reporting. IT risks as they relate to financial reporting. Reviewed tax and technology risks, in particular how they are managed.

Internal financial controlsThe Audit, Governance and Risk Committee:

reviewed the effectiveness of the group’s system of internal financial controls including receiving assurance from management, internal audit and external audit;

reviewed significant issues raised by the external auditors in their reports; and

reviewed policies and procedures for preventing and detecting fraud.

Based on the processes and assurances obtained, the Audit, Governance and Risk Committee believes that the significant internal financial controls are effective.

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Regulatory complianceThe Audit, Governance and Risk Committee is satisfied that it has discharged its duties as set out in its terms of reference.

External auditThe external auditors are responsible for reporting on whether the annual financial statements are fairly presented in compliance with IFRS. The preparation of the annual financial statements remains the responsibility of the directors. The Audit, Governance and Risk Committee evaluates the independence and effectiveness of the external auditors and considers whether any non-audit services rendered by such auditors substantively impair their independence. In this regard, a non-audit services policy is in place, which is reviewed annually by the Audit, Governance and Risk Committee.

Based on processes followed and assurances received, the Audit, Governance and Risk Committee has no concerns regarding the external auditors’ independence.

Based on the group’s satisfaction with the results of the activities outlined above, it has recommended to the board and to the shareholders, the reappointment of Mazars and Mark Snow as the independent registered audit firm and the individual registered auditor of the company respectively.

In terms of the group’s policy, the external auditors have confirmed to the Audit, Governance and Risk Committee that no non-audit fees were billed during the 2012 financial year.

Internal auditThe Internal Audit Manager heads the formal internal audit function. This is guided by an Internal Audit Charter which sets out the function’s purpose, independence, ethics, duties, responsibilities and scope.

The internal audit function establishes appropriate policies and procedures to guide the internal audit and is tasked with evaluating the group’s exposure to risk while also evaluating the adequacy and effectiveness of controls and risk management processes. Internal audit further assesses Stefanutti Stocks’ corporate governance.

The function ensures that the internal audit resources are appropriate and sufficient for the group and that the team has the appropriate professional qualifications and skills to maintain the internal audit competence.

The Internal Audit Manager reports to the Group Risk Officer on an administrative basis and to the Audit, Governance and Risk Committee on a functional basis. The Internal Audit Manager has unhindered access to the Chief Executive Officer, Chairman of the Audit, Governance and Risk Committee, and the Chairman of the board.

The internal audit plan is overseen by the Audit, Governance and Risk Committee and is based on the key risks identified by executive management.

During the year a comprehensive review commenced, including feedback from management, external auditors and other stakeholders. Exceptions noted were adequately addressed by management.

Where the explanation was deemed insufficient, the exceptions were further investigated and/or corrective action taken.

The Audit, Governance and Risk Committee is entitled to appoint an independent internal review at any time, the results of which are to be reported to the Chief Executive Officer and the committee chairman. In addition, an external review of the internal audit function is conducted every four years by the Institute of Internal Auditors or another suitably qualified independent party.

Chief Financial OfficerThe committee has performed an evaluation and is satisfied that Dermot Quinn has the appropriate expertise and experience to meet the responsibilities of his appointed position as Chief Financial Officer as required by the JSE and that the resources within the finance function are adequate to provide the necessary support to the Chief Financial Officer.

In making these assessments, the committee has also obtained feedback from the external auditors.

Based on the processes and assurances obtained, the committee is satisfied and believes that the accounting practices are effective.

Integrated ReportFollowing the review by the committee of the annual financial statements of Stefanutti Stocks for the year ended 29 February 2012, the committee is of the view that they comply in all material respects with the relevant provisions of the Companies Act and International Financial Reporting Standards and fairly present the consolidated and separate financial positions at that date and the results of the operations and cash flows for the year then ended. The committee has also satisfied itself of the integrity of the remainder of the Integrated Report. Having achieved its objectives, the committee recommended the Integrated Report for approval to the board. The board has subsequently approved this report, which will be open for discussion at the forthcoming annual general meeting.

On behalf of the Audit, Governance and Risk Committee

Nomhle CancaChairman

18 July 2012

80


Directors’ report

The directors present their report which forms part of the summary of financial statements of the company and of the group for the year ended 29 February 2012.

Nature of businessStefanutti Stocks Holdings Limited (Registration No 1996/003767/06) is a holding company. Its multi-disciplinary subsidiaries are involved in concrete structures, rehabilitation and marine construction, piling and geotechnical services, roads and earthworks, mine residue disposal facilities (mainly tailings dams), open-pit contract mining, building works and mechanical, electrical and power line transmission and distribution construction. In addition, the group has established skills to participate in projects on a public-private partnership (PPP) basis. These operations are formally structured into the following key operations: Structures, Roads & Earthworks, Mining Services, Mechanical, Electrical & Power and Building (incorporating international).

Financial resultsThe results for the year are set out in the summary of financial statements presented on pages 81 to 88 of this Integrated Report. The comprehensive annual financial statements can be found on the group’s website www.stefanuttistocks.com as well as on the inserted CD in the front of this Integrated Report.

Year under reviewThe year under review is comprehensively dealt with in the Chief Executive Officer’s report on pages 18 to 21 and the operational reviews of the business units commencing on page 22 of this Integrated Report.

Directors, prescribed officers and Company SecretaryThe names and curriculum vitae of the directors who currently hold office are set out on pages 12 and 13. The prescribed officers of the group are operational directors and senior managers who are not directors of the company.

Details of directors’ and prescribed officers’ remuneration, FSP and options are set out in note 28 to the annual financial statements, which is included in the inserted CD to this Integrated Report.

ResolutionsAt the 2011 annual general meeting, the shareholders of the company passed the following special resolutions:

Approval of directors’ fees. Approval of financial assistance provided by the company to related or inter-related companies or other entities, including, inter alia, its subsidiaries, for any purpose,

and further enabling the directors of the company to pass similar special resolutions for certain of its subsidiaries.

Subsidiary companiesDetails of the principal subsidiary companies are set out in note 5 to the comprehensive annual financial statements, available on the website and the inserted CD in the front of this Integrated Report.

Share option schemesRefer to note 28 for information relating to option schemes and share-based payments.

Non-adjusting events after reporting periodStefanutti Stocks, through its wholly owned subsidiary Stefanutti Stocks (Pty) Ltd, received Competition Commission approval for the acquisition of Cycad Pipelines, a specialised pipeline infrastructure construction company which is a major competitor in the water infrastructure sector, at a cost of R261 million as at 1 March 2012. Details of the acquisition are set out in note 35 to the annual financial statements, which is included in the inserted CD to this Integrated Report.

Litigation statementThe investigation by the Competition Commission into anti-competitive behaviour by companies within the construction sector is ongoing. Stefanutti Stocks is co-operating fully with all relevant Government agencies and has submitted the requisite documentation and awaits formal feedback in this regard.

Material changesThere have been no material changes in the financial or trading position of the company and its subsidiaries between the year ended 29 February 2012 and the posting date of this Integrated Report.

Going concernThe directors consider that the group and company have adequate resources to continue operating for the foreseeable future and that it is therefore appropriate to adopt the going-concern basis in preparing the summary of financial statements of the company and of the group. The directors have satisfied themselves that the group and company are in a sound financial position and that it has access to sufficient borrowing facilities to meet its foreseeable cash requirements.

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Group Company

Notes2012

R’0002011

R’0002012

R’0002011

R’000

ASSETS

Non-current assets 2 226 970 2 111 249 1 118 125 1 381 002

Property, plant and equipment 3 1 019 910 901 671 – –

Investment property 4 57 673 55 422 – –

Investment in subsidiaries 5 – – 1 116 702 1 379 465

Investment in associates 6 15 996 14 539 – –

Goodwill and intangible assets 8 1 124 455 1 132 044 – –

Deferred taxation 9 8 936 7 573 1 423 1 537

Current assets 3 684 062 2 960 137 227 500 73 404

Intergroup loan accounts 10 – – 221 061 62 946

Inventories 11 94 036 78 851 – –

Contracts in progress 12 431 445 175 170 – –

Trade and other receivables 13 2 229 658 1 603 630 3 972 2 463

Taxation 5 579 20 015 – 1 406

Bank balances 14 923 344 1 082 471 2 467 6 589

Total assets 5 911 032 5 071 386 1 345 625 1 454 406

EQUITY AND LIABILITIES

Capital and reserves 2 113 696 1 853 571 1 334 410 1 334 635

Issued capital and reserves attributable to the owners of the parent 2 113 696 1 853 571 1 334 410 1 334 635

Non-current liabilities 281 770 196 644 – –

Other financial liabilities 17 220 566 142 883 – –

Deferred taxation 9 61 204 53 761 – –

Current liabilities 3 515 566 3 021 171 11 215 119 771

Other financial liabilities 17 157 212 118 847 – 3 930

Intergroup loan accounts 10 – – – 104 499

Trade and other payables 18 1 777 647 1 693 285 11 161 11 342

Provisions 19 1 501 990 1 154 475 – –

Taxation 46 199 50 252 54 –

Bank balances 14 32 518 4 312 – –

Total equity and liabilities 5 911 032 5 071 386 1 345 625 1 454 406

Statements of financial positionat 29 February 2012

82


Group Company

Notes2012

R’0002011

R’0002012

R’0002011

R’000

Revenue 20 8 068 483 6 998 207 333 204 314 572

Contract revenue 20 7 990 718 6 896 418 – –

Contract costs (6 954 139) (5 852 862) – –

Contract gross profit 1 036 579 1 043 556 – –

Other income 21 67 179 52 611 25 800 33 000

Operating costs (548 927) (497 982) (35 123) (34 772)

Earnings/(loss) before interest, taxation, depreciation and amortisation 554 831 598 185 (9 323) (1 772)

Depreciation 3 (185 577) (147 654) – –

Impairment of property, plant and equipment 3 (2 652) – – –

Impairment of investments 5 – – (223 153) (157 603)

Amortisation of intangible assets 8 (7 589) (8 202) – –

Operating profit/(loss) before investment income 21 359 013 442 329 (232 476) (159 375)

Investment income 22 41 636 61 591 307 404 281 572

Share of profits from associate companies 6 1 768 2 712 – –

Operating profit before finance costs 402 417 506 632 74 928 122 197

Finance costs 23 (37 919) (25 270) (509) (1)

Profit before taxation 364 498 481 362 74 419 122 196

Taxation 24 (100 257) (148 351) (7 564) (14 754)

Profit for the year 264 241 333 011 66 855 107 442

Other comprehensive income 52 380 (37 372) – –

Exchange differences on translating foreign operations 27 380 (37 372) – –

Gains on property revaluation 3 25 000 – – –

Income tax relating to components of other comprehensive income (2 348) – – –

Taxation relating to gains on property revaluation (2 348) – – –

Total comprehensive income for the year 314 273 295 639 66 855 107 442

Profit for the year attributable as follows:

Equity holders of the company 264 241 333 011 – –

Total comprehensive income attributable to:


Earnings per share (cents) 27 153,23 193,55 – –

Diluted earnings per share (cents) 27 140,49 177,06 – –

Statements of comprehensive incomefor the year ended 29 February 2012

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Sharecapital

andpremium

Share-based

paymentsreserve

Foreigncurrency

trans-lation

reserve

Revalua-tion

surplusreserve

Retainedearnings

Non-controlling

interest Total

Notes R’000 R’000 R’000 R’000 R’000 R’000 R’000

GROUP

Balance at 1 March 2010 1 020 618 47 730 285 4 997 607 827 2 175 1 683 632

Treasury shares acquired 15 (9 423) – – – – – (9 423)

Employee share options 16 – 8 689 – – – – 8 689

Realisation of share-based payments reserve – (113) – – 113 – –

Non-controlling interest acquired – – – – (10 804) (2 175) (12 979)

Total comprehensive income – – (37 372) – 333 011 – 295 639

Profit for the year – – – – 333 011 – 333 011

Exchange differences on translating foreign operations – – (37 372) – – (37 372)

Dividends paid 26 – – – – (111 987) – (111 987)

Balance at 28 February 2011 1 011 195 56 306 (37 087) 4 997 818 160 – 1 853 571

Treasury shares disposed 15 8 648 – – – (1 779) – 6 869


Realisation of share-based payments reserve – (14 632) – – 14 632 – –

Total comprehensive income – – 27 380 22 652 264 241 – 314 273


Exchange differences on translating foreign operations – – 27 380 – – – 27 380

Gains on property revaluation 3 – – – 25 000 – – 25 000

Taxation relating to gains on property revaluation – – – (2 348) – – (2 348)

Dividends paid 26 – – – – (63 675) – (63 675)

Balance at 29 February 2012 1 019 843 44 332 (9 707) 27 649 1 031 579 – 2 113 696

Note 15

Share-based payments reserve comprises the accumulated effect of share-based payments in terms of the employee share scheme.

Foreign currency translation reserve comprises the translation effect of foreign subsidiaries and joint ventures to the reporting currency.

Revaluation surplus reserve comprises the revaluation of land and buildings.

Statements of changes in equityfor the year ended 29 February 2012

84


Statements of changes in equity continued

for the year ended 29 February 2012

Share capital

and premium

Share- based

payments reserve

Retained earnings Total

Notes R’000 R’000 R’000 R’000

COMPANY

Balance at 1 March 2010 1 161 538 45 853 134 309 1 341 700

Employee share options 16 – 7 745 – 7 745

Total comprehensive income and profit for the year – – 107 442 107 442

Dividends paid 26 – – (122 252) (122 252)

Balance at 28 February 2011 1 161 538 53 598 119 499 1 334 635


Realisation of share-based payments reserve – (11 274) 11 274 –


Dividends paid 26 – – (69 590) (69 590)


Note 15

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Group Company

Notes2012

R’0002011

R’0002012

R’0002011

R’000

Cash flows from operating activities (49 003) 64 905 262 422 148 086

Cash receipts from customers 7 442 455 6 816 280 331 695 313 906

Cash paid to suppliers and employees (7 346 396) (6 550 864) (300 465) (310 539)

Cash generated from operations 25 96 059 265 416 31 230 3 367

Interest received 22 41 486 61 393 331 1 732

Finance costs 23 (37 919) (25 270) (509) (1)

Dividends paid 25 (63 798) (111 856) (69 713) (122 121)

Dividends received 6 & 22 950 3 024 307 073 279 840

Taxation (paid)/refunded 25 (78 821) (115 577) 970 (2 506)

Secondary tax on companies and withholding tax paid 25 (6 960) (12 225) (6 960) (12 225)

Cash flows from investing activities (277 822) (300 940) – (14 428)

Expenditure to maintain operating capacity

Property, plant and equipment acquired 3 (87 623) (69 452) – –

Proceeds on disposals of property, plant and equipment 21 570 28 870 1 333

(Advance)/repayment of associate loan (1 611) 3 654 – –

Expenditure for expansion


Development of investment property 4 (2 251) (21 085) – –

Proceeds on other financial assets – 1 901 – –

Net cash for acquisition of subsidiaries and non-controlling interest 25 – (43 663) – (15 761)

Cash flows from financing activities 124 696 1 542 (266 544) (171 493)

Treasury shares disposed/(acquired) 8 648 (9 423) – –

Proceeds from long- and short-term financing 246 630 140 072 – –

Repayment of long- and short-term loans (130 582) (129 107) (3 930) –

Proceeds from intergroup loan accounts 10 – – 26 508 137 493

Intergroup loan accounts granted 10 – – (289 122) (308 986)

Decrease in cash and cash equivalents (202 129) (234 493) (4 122) (37 835)

Cash and cash equivalents at beginning of the year 1 078 159 1 347 604 6 589 44 424

Effect of exchange rate changes on cash and cash equivalents 14 796 (34 952) – –

Cash and cash equivalents at end of the year 14 890 826 1 078 159 2 467 6 589

Statements of cash flowsfor the year ended 29 February 2012

86


Notes to the summary of financial statementsfor the year ended 29 February 2012

Accounting policiesfor the year ended 29 February 2012

Summary of principal accounting policies for the year ended 29 February 2012The principal accounting policies adopted in the preparation of the summary of financial statements are detailed in the annual financial statements, which are included in the inserted CD to this Integrated Report:

Basis of presentation of financial statementsThe summary of the group financial statements are a consolidation of the holding company, its subsidiaries, joint ventures and associates.

The summaries of company and group financial statements have been prepared in accordance with the framework concepts and measurement and recognition requirements of International Financial Reporting Standards and the Interpretations adopted by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB.

The summary of financial statements has been prepared using a combination of the historical cost and fair value basis of accounting.

The accounting policies adopted have been consistently applied throughout the group to all periods presented.

Significant judgements and estimatesEstimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations and future events, and are believed to be reasonable under the circumstances. Actual results may differ from the estimates made by management from time to time.

Notes to the summary of financial statementsFor the comprehensive notes to the summary of financial statements please refer to the inserted CD to this Integrated Report or www.stefanuttistocks.com. Please note that the references to the notes in the summary of financial statements correspond to the notes in the comprehensive annual financial statements to ensure consistent use thereof.

Group Company

2012R’000

2011R’000

2012R’000

2011R’000

25. NOTES TO THE STATEMENTS OF CASH FLOWS

25.1 Cash generated from operationsNet profit before taxation 364 498 481 362 74 419 122 196 Adjusted for:Depreciation 185 577 147 654 – – Impairment of investments (note 5) – – 262 764 157 603 Amortisation of intangible assets 7 589 8 202 – – Impairment of property, plant and equipment (note 3) 2 652 – – – Share-based payments 2 658 8 689 2 510 7 745 Interest received (41 486) (61 393) (331) (1 732)Dividend received (950) (3 024) (307 073) (279 840)Finance costs 37 919 25 270 509 1 Movement in provisions 347 515 (296 383) – – Share of profit of associate companies (1 768) (2 712) – – Other non-cash flow items in profit (1 464) 1 173 – – Profit on disposal of property, plant and equipment (2 858) (2 646) – –

899 882 306 192 32 798 5 973 Movements in working capital:Increase in inventories (15 185) (11 319)Increase in contracts in progress (256 275) (12 575) – – Increase in trade and other receivable (626 028) (152 144) (1 509) (666)Increase/(decrease) in trade and other payables 84 485 135 839 (59) (1 940)Effect of exchange rate changes on working capital 9 180 (577) – –

96 059 265 416 31 230 3 367

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Notes to the summary of financial statements continued


Group Company

2012R’000

2011R’000

2012R’000

2011R’000

25. NOTES TO THE STATEMENTS OF CASH FLOWS (continued)

25.2 Reconciliation of dividends paid during the yearCharged in statement of changes in equity 63 675 111 987 69 590 122 252 Movement in shareholders for dividends 123 (131) 123 (131)

Payments made 63 798 111 856 69 713 122 121

25.3 Reconciliation of taxation paid during the yearCharge against profit 100 257 148 351 7 564 14 754 Adjustment for deferred taxation (6 212) (24 109) (114) 8 Adjustment for deferred taxation – intangible assets 2 119 2 291 – – Secondary taxation on companies (6 960) (12 225) (6 960) (12 225)Movement in taxation balance (10 383) 1 269 (1 460) (31)

Payments made/(refunded) 78 821 115 577 (970) 2 506

25.4 Reconciliation of secondary taxation on companies paid during the yearCharge against profit 6 960 12 225 6 960 12 225

Payments made 6 960 12 225 6 960 12 225

25.5 Net cash required for acquisition of subsidiaries and minoritiesFair value of assets acquired:Property, plant and equipment – 13 645 – – Intangible assets – 450 – – Contracts in progress – 15 887 – – Trade and other receivables – 29 783 – – Taxation – 1 334 – – Bank balances – 65 – – Non-current other financial liabilities – (566) – – Deferred taxation – (1 626) – – Other financial liabilities – (13 213) – – Trade and other payables – (28 987) – – Provisions – (1 123) – – Bank balances – (3 332) – – Taxation – – – –

Total net assets acquired – 12 317 – –

Cash consideration paid 27 831 15 761 Cash consideration paid to acquire loan in subsidiary – 12 565 – – Less: Cash acquired – 3 267 – –

– 43 663 – 15 761

88


Group Company

2012R’000

2011R’000

2012R’000

2011R’000

25. NOTES TO THE STATEMENTS OF CASH FLOWS (continued)25.6 Non-cash transactions

Investment in associate exchanged 1 454 – – – Development property acquired (1 454) – – – Net cash effect – – – –

The investment in Walk Aboard Properties (Pty) Ltd, an associate of the group, was exchanged for development property. At the date of exchange the fair value of the investment in associate was equal to its carrying value. Development property acquired was recognised at the fair value at the date of exchange and has been included in inventory as the property has been acquired exclusively with a view to subsequent disposal in the near future or for development.

35. NON-ADJUSTING EVENTS AFTER REPORTING PERIODCycad Pipelines acquisitionWith effect from 1 March 2012, the group acquired 100% of Cycad Pipelines (Pty) Ltd, a specialised pipeline infrastructure construction company and its related operations (Cycad Pipelines), at a cost of R261 million. This acquisition is in line with the group’s growth strategy to broaden its service offering in the construction sector.In terms of IFRS 3 Business Combinations the initial accounting for the acquisition has only been determined provisionally, as the purchase price allocation, including the final purchase consideration and the valuation of the identifiable intangible assets, have not been completed. The carrying value of assets and liabilities, as noted in the table below, is based on unaudited amounts and approximates the fair value of assets and liabilities before acquisition.

Cycad Pipelines

Acquisition date 1 March 2012Voting equity (%) 100

R’000

Non-current assets 118 140 Property, plant and equipment 86 097 Goodwill 32 011 Other financial assets 32 Current assets 81 393 Contracts in progress and inventories 13 130 Trade and other receivables 45 483 Bank balances 22 780 Non-current liabilities 18 303 Other financial liabilities 3 553 Deferred taxation 14 750 Current liabilities 44 376 Other financial liabilities 6 129 Trade and other payables 21 142 Provisions 2 068 Taxation 15 037

Net asset value acquired 136 854 Cost of acquisition Cash paid 261 030 Goodwill arising on acquisition 124 176 The goodwill arising on acquisition is attributable to the ability to access the pipeline construction market in which the group did not have a presence, as well as acquiring a well-established and reputable company with a skilled and specialised workforce.The carrying value of trade receivables amounting to R45 million approximates their fair value, and the group is of the opinion that all receivables will be recovered.Acquisition-related costs were recognised in the statement of comprehensive income as an expense within operating expenses.To the extent that Cycad Pipelines’ profit after tax for the financial year ending 28 February 2013 exceeds R50 million, the excess will become payable to the sellers, limited to a maximum amount of R30 million.

Notes to the summary of financial statements continued


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Shareholders’ analysis

Shareholder spreadNumber of

shareholdings %Number of

shares %

1 – 1 000 shares 1 314 39,82 632 093 0,341 001 – 10 000 shares 1 337 40,52 5 000 979 2,6610 001 – 100 000 shares 460 13,94 16 221 888 8,62100 001 – 1 000 000 shares 158 4,78 49 903 428 26,531 000 001 and over 31 0,94 116 322 358 61,85

Totals 3 300 100 188 080 746 100

Distribution of shareholdersNumber of


shares %

Banks 20 0,62 2 027 739 1,08Close corporations 48 1,45 195 035 0,10Endowment funds 15 0,45 556 059 0,30Individuals 2 574 78,00 46 480 697 24,70Insurance companies 32 0,97 13 784 578 7,33Investment companies 16 0,48 863 934 0,46Medical aid schemes 10 0,30 954 436 0,51Mutual funds 107 3,24 44 701 764 23,77Nominees and trusts 266 8,07 21 265 985 11,30Other corporations 28 0,85 246 300 0,13Own holdings 1 0,03 6 710 537 3,57Private companies 70 2,12 12 555 388 6,68Retirement funds 110 3,33 29 317 862 15,59Share trusts 3 0,09 8 420 432 4,48

Totals 3 300 100 188 080 746 100

Public/non-public shareholdersNumber of


shares %

Non-public shareholders 133 4,03 76 775 977 40,82Directors and associates of the company 19 0,58 44 300 681 23,55Directors of a subsidiary 110 3,33 17 344 327 9,22Own holdings 1 0,03 6 710 537 3,57Share trusts 3 0,09 8 420 432 4,48Public shareholders 3 167 95,97 111 304 769 59,18

Totals 3 300 100 188 080 746 100

Beneficial shareholders holding 3% or moreNumber of

shares %

Coronation Fund Managers 21 909 822 11,65B Stefanutti 17 505 512 9,31Sanlam Investment Managers 14 981 961 7,97Government Employees Pension Fund 11 108 260 5,91Moputso Investments (Pty) Ltd 14 224 311 7,55W Meyburgh 9 132 006 4,86Stefanutti & Bressan Share Incentive Trust 7 438 550 3,95Stefanutti Stocks Investment Holding Limited 6 710 537 3,57

Totals 103 010 959 54,77

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Shareholders’ diary

Financial year end 29 February 2012Reporting period 1 March 2011 – 29 February 2012Reporting period of previous report 1 March 2010 – 28 February 2011Announcement of annual results 15 May 2012Integrated Report posted 6 August 2012Annual general meeting 7 September 2012Announcement of interim results November 2012

Stakeholder feedbackThe company welcomes written comments and feedback from its stakeholders on this Integrated Report and on other general matters. These should be addressed to: [email protected].

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Notice of annual general meeting

Stefanutti Stocks Holdings Limited(Incorporated in the Republic of South Africa)Registration number: 1996/003767/06Share code: SSKISIN: ZAE000123766(“Stefanutti Stocks” or “the company”)

Notice is hereby given to the shareholders of the company as at 3 August 2012, being the record date to receive notice of the annual general meeting in terms of section 59(1)(a) of the Companies Act, No 71 of 2008, as amended (Companies Act), that the annual general meeting of Stefanutti Stocks will be held at No 9 Palala Street, Protec Park, corner Zuurfontein Avenue and Oranjerivier Drive, Kempton Park, on Friday, 7 September 2012 at 12:00, to (i) consider and, if deemed fit, to pass, with or without modification, the following ordinary and special resolutions, in the manner required by the Companies Act, as read with the JSE Limited (JSE) Listings Requirements (JSE Listings Requirements); and (ii) deal with such other business as may lawfully be dealt with at the meeting, which meeting is to be participated in and voted at by shareholders registered as such as at 31 August 2012, being the record date to participate in and vote at the annual general meeting in terms of section 62(3)(a), read with section 59(1)(b), of the Companies Act.

NB: Section 63(1) of the Companies Act – Identification of meeting participants

Kindly note that meeting participants (including proxies) are required to provide reasonably satisfactory identification before being entitled to attend or participate in a shareholders’ meeting. Forms of identification include valid identity documents, driver’s licences and passports.

Presentation of annual financial statementsThe consolidated annual financial statements of the company and its subsidiaries (as approved by the board of directors of the company), including the directors’ report, the report of the Audit, Governance and Risk Committee and the external auditors’ report for the year ended 29 February 2012, have been distributed as required and will be presented to shareholders.

The comprehensive annual financial statements are set out on pages 7 to 75 to be found on the inserted CD of this Integrated Report of which this notice forms part.

Ordinary resolutionsOrdinary resolution 1: Adoption of annual financial statements“RESOLVED THAT the annual financial statements of the company for the year ended 29 February 2012, including the directors’ report and the report of the Audit, Governance and Risk Committee, be and are hereby received and adopted.”

Percentage of voting rights required to pass this resolution: 50% plus one vote.

Ordinary resolution 2: Re-election of director“RESOLVED THAT DG Quinn, who retires by rotation in terms of the Memorandum of Incorporation of the company and who is eligible and available for re-election, be re-elected as a director of the company.”

A brief curriculum vitae in respect of DG Quinn is included on page 12 of this Integrated Report of which this notice forms part.


Ordinary resolution 3: Re-election of director“RESOLVED THAT NJM Canca, who retires by rotation in terms of the Memorandum of Incorporation of the company and who is eligible and available for re-election, be re-elected as a director of the company.”

A brief curriculum vitae in respect of NJM Canca is included on page 13 of this Integrated Report of which this notice forms part.


Ordinary resolution 4: Re-election of director“RESOLVED THAT LB Sithole, who retires by rotation in terms of the Memorandum of Incorporation of the company and who is eligible and available for re-election, be re-elected as a director of the company.”

A brief curriculum vitae in respect of LB Sithole is included on page 12 of this Integrated Report of which this notice forms part.


Ordinary resolution 5: Confirmation of appointment of a director“RESOLVED THAT the appointment of ZJ Matlala as a director of the company with effect from 27 February 2012 is hereby confirmed.”

A brief curriculum vitae in respect of ZJ Matlala is included on page 13 of this Integrated Report of which this notice forms part.


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Ordinary resolution 6: Appointment of auditors“RESOLVED THAT Mazars be and are hereby reappointed as auditors of the company for the ensuing financial year and the directors be and are hereby authorised to fix the remuneration of the auditors.”


Ordinary resolution 7: Appointment of Audit, Governance and Risk Committee members“RESOLVED THAT the members of the company’s Audit, Governance and Risk Committee set out below be and are hereby appointed with effect from the end of this meeting in terms of section 94(2) of the Companies Act. The membership as proposed by the board of directors is: NJM Canca; KR Eborall; and ZJ Matlala, all of whom are independent non-executive directors.”


Special resolutionsSpecial resolution 1: Directors’ fees“RESOLVED THAT payment to the non-executive directors of the following fees for services as directors with effect from the date of this annual general meeting until the date of the next annual general meeting be authorised:

Fees permeeting

Fees permeeting

2012Rand

2013Rand

Non-executive Director 40 250 40 250

Audit, Governance and Risk Committee chairman 75 000 75 000

Audit, Governance and Risk Committee member 40 250 40 250

Remuneration and Nominations Committee chairman 40 250 40 250

Remuneration and Nominations Committee member 23 000 23 000

Social and Ethics Committee chairman 30 000 33 750

Social and Ethics Committee member 16 000 18 000

Mergers, Acquisitions and Disposals Committee chairman 30 000 33 750

Mergers, Acquisitions and Disposals Committee member 16 000 18 000

Any other committees to be formed:

Committee chairman 30 000 30 000

Committee member 16 000 16 000

The Non-executive Chairman is paid an annual fee of R840 000 (2012: R840 000) and a monthly retainer of R45 000 (2012: R90 000) which is subject to annual review by the Remuneration and Nominations Committee.

The Lead Independent Director’s annual fee amounts to R648 000.

Extraordinary services are paid at a rate of R1 600 per hour.”

Percentage of voting rights required to pass this resolution: 75%.

Reason for and effect of special resolution 1The reason for special resolution 1 is to comply with the provisions of the Companies Act. The effect of the special resolution is that, if approved by the shareholders at the annual general meeting, the fees payable to non-executive directors until the next annual general meeting will be as set out above. Executive directors are not remunerated for their services as directors but are remunerated as employees of the company.

The above rates have been proposed to ensure that the remuneration of non-executive directors remains competitive in order to enable the company to retain and attract persons of the calibre, appropriate capabilities, skills and experience required in order to make meaningful contributions to the company.

Special resolution 2: Financial assistance “RESOLVED THAT to the extent required by the Companies Act, the board of directors of the company may, subject to compliance with the requirements of the company’s Memorandum of Incorporation, the Companies Act and the JSE Listings Requirements, each as presently constituted and as amended from time to time, authorise the company to provide direct or indirect financial assistance by way of loan, guarantee, the provision of security or otherwise, to:

any of its present or future subsidiaries and/or any other company or entity that is or becomes related or inter-related to the company or any of its subsidiaries (and/or any member of such subsidiary or related or inter-related company or entity) for any purpose or in connection with any matter, including, but not limited to, the subscription of any option, or any securities, issued or to be issued by the company or a related or inter-related company, or for the purchase of any securities of the company or a related or inter-related company; and

any of the present or future directors or prescribed officers of the company or of a related or inter-related company or entity (or any person related to any of them or to any company or entity related or inter-related to any of them), or to any other person who is a participant in any of the company’s or group of companies’ share or other employee incentive schemes, for the purpose of, or in connection with, the subscription of any option, or any securities, issued or to be issued by the

Notice of annual general meeting continued

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company or a related or inter-related company, or for the purchase of any securities of the company or a related or inter-related company, where such financial assistance is provided in terms of any such scheme that does not constitute an employee share scheme that satisfies the requirements of section 97 of the Companies Act,

Such authority to endure until the annual general meeting of the company for the year ended February 2013.”


Reason for and effect of special resolution 2Notwithstanding the title of section 45 of the Companies Act, being “Loans or other financial assistance to directors”, on a proper interpretation, the body of the section may also apply to financial assistance provided by a company to related or inter-related companies and other entities, including, inter alia, its subsidiaries, associates, joint ventures, partnerships, collaboration arrangements, etc for any purpose.

Furthermore, section 44 of the Companies Act may also apply to the financial assistance so provided by a company to related or inter-related companies or other entities, in the event that the financial assistance is provided for the purpose of, or in connection with, the subscription of any option, or any securities, issued or to be issued by the company or a related or inter-related company, or for the purchase of any securities of the company or a related or inter-related company.

Both sections 44 and 45 of the Companies Act provide, inter alia, that the particular financial assistance must be provided only pursuant to a special resolution of the shareholders, adopted within the previous 2 (two) years, which approved such assistance either for the specific recipient, or generally for a category of potential recipients, and the specific recipient falls within that category and the board of directors must be satisfied that:

immediately after providing the financial assistance, the company would satisfy the solvency and liquidity test; and

the terms under which the financial assistance is proposed to be given are fair and reasonable to the company.

The company would like the ability to provide financial assistance, if necessary, also in other circumstances, in accordance with section 45 of the Companies Act. Furthermore, it may be necessary or desirous for the company to provide financial assistance to related or inter-related companies and entities to acquire or subscribe for options or securities or purchase securities of the company or another company related or inter-related to it. Under the Companies Act, the company will, however, require the special resolution referred to above to be adopted. In the circumstances and in order to, inter alia, ensure

that the company’s subsidiaries and other related and inter-related companies and entities have access to financing and/or financial backing from the company (as opposed to banks), it is necessary to obtain the approval of shareholders, as set out in special resolution 2.

Sections 44 and 45 contain exemptions in respect of employee share schemes that satisfy the requirements of section 97 of the Companies Act. To the extent that any of the company’s share or other employee incentive schemes do not satisfy such requirements, financial assistance (as contemplated in sections 44 and 45) to be provided under such schemes will, inter alia, also require approval by special resolution. Accordingly, special resolution 2 authorises financial assistance to any of the present or future directors or prescribed officers of the company or of a related or inter-related company or entity (or any person related to any of them or to any company or entity related or inter-related to them), or to any other person who is a participant in any of the company’s share or other employee incentive schemes, in order to facilitate their participation in any such schemes that do not satisfy the requirements of section 97 of the Companies Act.

Special resolution 3: Adoption of new Memorandum of Incorporation“RESOLVED THAT, in terms of section 16(1)(c)(ii) of the Companies Act, and Item 4(2) of Schedule 5 to the Companies Act, the existing Memorandum and Articles of Association of the company be and are hereby substituted in their entirety by the new Memorandum of Incorporation as tabled at the annual general meeting and signed by the chairperson of the annual general meeting on the first page thereof for identification purposes, with effect from the date of filing and acceptance of the required notice of amendment with the Companies and Intellectual Property Commission.”


Reason for and effect of special resolution 3Special resolution 3 is proposed in order to adopt a new Memorandum of Incorporation in substitution for the existing Memorandum and Articles of Association of the company, which new Memorandum of Incorporation is in compliance with, inter alia, the provisions of the Companies Act and the JSE Listings Requirements.

A summary of the new Memorandum of Incorporation, commencing on page 96 of this Integrated Report of which this notice forms part, and copies thereof will be available for inspection by any person who has a beneficial interest in any securities of the company at its registered office, during normal office hours from the date of issue of this notice of annual general meeting up to and including the date of the annual general meeting or any adjourned meeting.

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Summary of applicable rights established in section 58 of the Companies ActFor purposes of this summary, the term “shareholder” shall have the meaning ascribed thereto in section 57(1) of the Companies Act.

1. At any time, a shareholder of a company is entitled to appoint any individual, including an individual who is not a shareholder of that company, as a proxy to participate in, speak and vote at a shareholders’ meeting on behalf of the shareholder.

2. A proxy appointment must be in writing, dated and signed by the relevant shareholder.

3. Except to the extent that the Memorandum of Incorporation of a company provides otherwise –

3.1 a shareholder of the relevant company may appoint two or more persons concurrently as proxies, and may appoint more than one proxy to exercise voting rights attached to different securities held by such shareholder; and

3.2 a copy of the instrument appointing a proxy must be delivered to the relevant company, or to any other person on behalf of the relevant company, before the proxy exercises any rights of the shareholder at a shareholders’ meeting.

4. Irrespective of the form of instrument used to appoint a proxy – 4.1 the appointment of the proxy is suspended at any time

and to the extent that the shareholder who appointed that proxy chooses to act directly and in person in the exercise of any rights as a shareholder of the relevant company; and

4.2 should the instrument used to appoint a proxy be revocable, a shareholder may revoke the proxy appointment by cancelling it in writing, or making a later inconsistent appointment of a proxy, and delivering a copy of the revocation instrument to the proxy and the relevant company.

5. The revocation of a proxy appointment constitutes a complete and final cancellation of the proxy’s authority to act on behalf of the relevant shareholder as of the later of the date –

5.1 stated in the revocation instrument, if any; or 5.2 upon which the revocation instrument is delivered to the

proxy and the relevant company as required in section 58(4)(c)(ii) of the Companies Act.

6. Should the instrument appointing a proxy or proxies have been delivered to the relevant company, as long as that appointment remains in effect, any notice that is required by the Companies Act or the relevant company’s Memorandum of Incorporation to be delivered by such company to the shareholder must be delivered by such company to –

6.1 the shareholder; or 6.2 the proxy or proxies if the shareholder has in writing

directed the relevant company to do so and has paid any reasonable fee charged by the company for doing so.

7. A proxy is entitled to exercise, or abstain from exercising, any voting right of the relevant shareholder without direction, except to the extent that the Memorandum of Incorporation of the relevant company or the instrument appointing the proxy provides otherwise.

8. If a company issues an invitation to shareholders to appoint one or more persons named by such company as a proxy, or supplies a form of instrument for appointing a proxy –

8.1 such invitation must be sent to every shareholder who is entitled to receive notice of the meeting at which the proxy is intended to be exercised;

8.2 the company must not require that the proxy appointment be made irrevocable; and

8.3 the proxy appointment remains valid only until the end of the relevant meeting at which it was intended to be used, unless revoked as contemplated in section 58(5) of the Companies Act.

Any matters raised by shareholders, with or without advance notice to the companyTo deal, at the annual general meeting, with any matters raised by shareholders, with or without advance notice to the company.

Voting and proxiesA shareholder of the company entitled to attend and vote at the annual general meeting is entitled to appoint one or more proxies (who need not be a shareholder of the company) to attend, vote and speak in his/her stead. On a show of hands, every shareholder of the company present in person or represented by proxy shall have one vote only. On a poll, every shareholder of the company present in person or represented by proxy shall have one vote for every share held in the company by such shareholder.

Dematerialised shareholders who have elected own-name registration in the sub-register through a Central Securities Depository Participant (CSDP) and who are unable to attend but wish to vote at the annual general meeting, should complete and return the attached form of proxy and lodge it with the transfer secretaries of the company no later than 12:00 on Thursday, 6 September 2012.

Shareholders who have dematerialised their shares through a CSDP or broker rather than through own-name registration and who wish to attend the annual general meeting must instruct their CSDP or broker to issue them with the necessary authority to attend.

If such shareholders are unable to attend, but wish to vote at the annual general meeting, they should timeously provide their CSDP or broker with their voting instructions in terms of the custody agreement entered into between that shareholder and his/her CSDP or broker.

Notice of annual general meeting continued

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Forms of proxy may also be obtained on request from the company’s registered office. The completed forms of proxy must be deposited at, posted or faxed to the transfer secretaries at the address below, to be received at least 24 hours prior to the meeting.

Any member who completes and lodges a form of proxy will nevertheless be entitled to attend and vote in person at the annual general meeting should the member subsequently decide to do so.

The practical applications of the aforementioned rights are discussed in the notes to the proxy form attached hereto.

By order of the board


18 July 2012

Registered officeNo 9 Palala Street Protec Park Corner of Zuurfontein Avenue and Oranjerivier DriveKempton Park1619PO Box 12394, Aston Manor, 1630Telephone: +27 11 571 4300

Transfer secretariesComputershare Investor Services (Pty) Ltd70 Marshall StreetJohannesburg2001PO Box 61051, Marshalltown, 2107Telephone: +27 11 370 5000Fax: +27 11 688 5238

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Summary of the salient terms of the new Memorandum of Incorporation to be adopted by the company

1. Introduction What is set out below is a summary of the salient points of

the new Memorandum of Incorporation of the company (MOI)

that is proposed to be adopted at the next annual general

meeting of the company on 7 September 2012. The MOI

incorporates changes necessitated by the coming into force

of the Companies Act and the Companies Regulations of

2011 promulgated in terms of the Act (the Regulations),

which replaces the old Companies Act, No 61 of 1973.

The amended MOI is also drafted in order to comply

with the JSE Listings Requirements as well as taking into

consideration the principles encompassed in terms of the

King Code on Corporate Governance for 2009 (the King

Code). Set out below is a summary of the salient terms

of the MOI. Shareholders are advised that the full MOI will

be available at the annual general meeting .

2. Constitution of the company The MOI reflects the constitution of the company in terms

of the Act, in particular in relation to the company being

constituted in accordance with:

2.1 the unalterable and alterable provisions of the

Companies Act which are not amended by the MOI;

2.2 the unalterable and alterable provisions of the

Companies Act subject to the limitations, extensions,

variations or substitutions with respect to such

alterable provisions set out in the MOI;

2.3 the provisions of the MOI; and

2.4 the provisions of the board charter which was

adopted by the board on 18 July 2011.

3. Amendment of the MOI 3.1 The MOI may only be amended by a special resolution

of shareholders, subject to the approval to such

amendments being obtained from the JSE.

3.2 If any proposed amendment to the MOI relates to the

variation of any preferences, rights, limitations and/or

other share terms attaching to any class of shares

other than the ordinary shares, such amendment must

also be approved by a special resolution of holders of

shares in that class at a separate meeting of such

holders of shares.

4. Company records and accounting records The MOI includes provisions incorporating the principles

of section 24, section 26 and the relevant provisions of

the Regulations relating to access to the company’s

accounting and other records by, inter alia, shareholders.

These provisions should be reviewed by shareholders in

respect of their rights in relation to information relating to

the company and the procedure that must be followed

in respect of accessing same.

5. Extended accountability requirements in Chapter 3 of the Companies Act

The provisions of Chapter 3 of the Companies Act, which apply

to the company, are set out in the MOI and encompass the

obligations to:

5.1 appoint a company secretary in accordance with the

Companies Act;

5.2 appoint an auditor in accordance with the

Companies Act and to have its annual financial

statements audited;

5.3 appoint an Audit Committee in accordance with the

Companies Act;

5.4 appoint a Social and Ethics Committee in compliance

with the Companies Act read with the Regulations.

6. Authority to alter the authorised shares The MOI restricts the board’s powers contained in

section 36(3) of the Companies Act, relating to, inter alia,

adjusting the number of authorised shares in the capital

of the company and varying the rights attaching to such

shares. The MOI also makes the ability to engage in

certain transactions involving the share capital of the

company subject to the approval of a special resolution

of shareholders.

7. The issue of securities In terms of the MOI, any issue of shares or securities

convertible into shares, or grant of options contemplated in

section 42 of the Companies Act, or grant of any other rights

exercisable for securities to a:

7.1 director, future director, prescribed officer or future

prescribed officer of the company;

7.2 person related or inter-related to the company, or to

a director or prescribed officer of the company; or

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7.3 nominee of the persons contemplated above,shall,

save where authorisation by special resolution is not

required as envisaged in section 41(2) of the

Companies Act, in accordance with the provisions of

section 41, require the approval of the shareholders of

the company by special resolution. Furthermore, an

issue of shares, securities convertible into shares, or

rights exercisable for shares in a transaction, or series

of integrated transactions, will require the approval of

shareholders of the company by special resolution if

the voting power of the class of shares that are issued

or issuable as a result of the transaction or series of

integrated transactions will be equal to or exceed 30%

of the voting power of all of the shares of that class

held by shareholders of the company immediately

before the transaction or series of transactions.

8. Right of pre-emption on the issue of shares The MOI incorporates provisions relating to a right

of pre-emption of shareholders on the issue of shares,

and it regulates the manner and the time periods in

which these rights can be exercised subject to the

JSE Listings Requirements.

9. Odd-lot offers The MOI includes provisions in accordance with the

JSE Listings Requirements relating to the right of

the company to implement odd-lot offers.

10. Capitalisation shares The MOI includes a provision to the effect that the board

shall have the power and authority to issue capitalisation

shares as envisaged in section 47 of the Companies Act,

subject to compliance with the JSE Listings Requirements,

for so long as the shares of the company remain listed

on the securities exchange operated by the JSE.

11. Financial assistance 11.1 In terms of the MOI, the board may authorise the

company to provide financial assistance for the

purpose of or in connection with the subscription

for any option or securities as contemplated in

section 44 of the Companies Act, subject to and

in accordance with section 44.

11.2 Further, the board may authorise the company to

provide loans or other financial assistance to persons

contemplated in section 45 of the Companies Act,

subject to and in accordance with the requirements

in terms of section 45 of the Companies Act.

11.3 At the same time, the company may provide

any financial assistance whatsoever to any person

without restriction, subject to the requirements of

sections 44 and 45 of the Companies Act on such

terms and subject to such conditions as the board

in its discretion may from to time determine.

12. Securities other than shares (debt instruments) [Section 43 of the Companies Act]

12.1 In terms of the MOI, the board shall be entitled to

authorise and issue any securities which are not

shares, including any debt instruments, upon such

terms and subject to such conditions, as are not

precluded or prohibited by the Companies Act, as it

may in its discretion determine.

12.2 These debt instruments shall not, however, be

issued with special privileges, including the attending

and voting at general meeting and the appointment

of directors.

13. Distributions 13.1 The MOI regulates the declaration and/or payment

of a distribution by the company, subject to

section 46 of the Companies Act.

13.2 In this regard all distributions must comply

with section 46 of the Companies Act and the

JSE Listings Requirements.

13.3 Payments to securities holders must be made in

accordance with the JSE Listings Requirements and

must not provide that capital shall be repaid on the

basis that it may be called up again.

13.4 The board or, on recommendation of the board, the

ordinary shareholders by ordinary resolution, may at

any time authorise and/or declare a distribution which,

for the avoidance of doubt, includes a dividend,

subject to compliance with section 46 of the

Companies Act, to be paid to shareholders of any

class in proportion to the number of shares held by

them in that class.

13.5 No distribution, which for the avoidance of doubt

shall include a dividend, shall be declared by the

shareholders in general meeting that is more than

the amount recommended by the board.

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14. Shareholders’ meetings 14.1 The MOI includes provisions that regulate

shareholders’ meetings and shareholders’ interactions

with the company and seek to ensure compliance

with the Companies Act relating to corporate action

involving shareholders.

14.2 The material changes relate to the notice period

for shareholders’ meetings and the procedure for

exercising voting rights (including the determination

of record dates in respect thereof). Shareholders are

advised to please consult the MOI in respect of their

rights in relation to shareholders’ meetings and the

procedure to be followed in respect thereof.

15. Directors’ proceedings 15.1 The MOI includes provisions that regulate directors’

proceedings and seek to ensure compliance with the

Companies Act.

15.2 The material changes related to the notice period for

directors’ meetings and the procedure for exercising

voting rights, the retirement of directors and their

remuneration.

16. Board committees 16.1 The MOI regulates the establishment of various

committees of the board subject to the terms and

conditions of the board charter.

16.2 It also includes provisions regulating the mandatory

committees that must be established by the company

in terms of the Companies Act read with the

Regulations, for example the Audit Committee and

the Social and Ethics Committee.

17. Indemnification and directors’ insurance The MOI authorises and regulates the provision of insurance

and indemnification for directors’ conduct in accordance with

the provisions of the Companies Act.

18. Notices The MOI includes provisions relating to the giving of notices

for shareholders’ meetings in accordance with the Companies

Act. The required time periods, the manner in which notice

may be given and other requirements relating to shareholders’

meetings including the procedure for exercising voting rights

(including the determination of record dates in respect

thereof) are set out in the MOI.

Summary of the salient terms of the new Memorandum of Incorporation to be adopted by the company continued

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Form of proxy

Stefanutti Stocks Holdings Limited(Incorporated in the Republic of South Africa)Registration number: 1996/003767/06Share code: SSKISIN: ZAE000123766(“Stefanutti Stocks” or “the company”)

For use at the annual general meeting of the company to be held at No 9 Palala Street, Protec Park, corner of Zuurfontein Avenue and Oranjerivier Drive, Kempton Park, on Friday, 7 September 2012 at 12:00 and at any adjournment thereof.

For use by the holders of the company’s certificated ordinary shares and/or dematerialised ordinary shares held through a

I/We _____________________________________________________________________________________________ (full name in block letters)

of ______________________________________________________________________________________________________________ (address)

being a member(s) of Stefanutti Stocks and holding ________________________________________________ ordinary shares in the company,

hereby appoint ______________________________________________of___________________________________________________________

failing him/her _______________________________________________of___________________________________________________________failing him/her the chairman of the annual general meeting, as my/our proxy to act for me/us and on my/our behalf at the annual general meeting which will be held for the purpose of considering and, if deemed fit, passing, with or without modification, the special and ordinary resolutions to be proposed thereat and at any adjournment thereof; and to vote for and/or against the special and ordinary resolutions and/or abstain from voting in respect of the Stefanutti Stocks ordinary shares registered in my/our name(s), in accordance with the following instructions:

Number of votes

For Against Abstain

Ordinary resolutions

1. To adopt the annual financial statements of the company for the year ended 29 February 2012, including the directors’ report and the report of the Audit, Governance and Risk Committee.

2. To re-elect DG Quinn as a director of the company

3. To re-elect NJM Canca as a director of the company

4. To re-elect LB Sithole as a director of the company

5. To confirm the appointment of ZJ Matlala as a director of the company

6. To reappoint the auditors

7. To appoint members of the Audit, Governance and Risk Committee: NJM Canca, KR Eborall and ZJ Matlala

Special resolutions

1. To approve the fees of non-executive directors

2. To approve financial assistance

3. Adoption of new Memorandum of Incorporation

* Please indicate with an “X” in the appropriate spaces above how you wish your votes to be cast. Unless otherwise instructed, my/our proxy may vote as he/she thinks fit.

Signed at __________________________________________________ (place) on __________________________________________ (date) 2012

Member’s signature _________________________________________ assisted by _______________________________________ (if applicable)

Central Securities Depository Participant (CSDP) or broker who have selected own-name registration (own-name dematerialised shareholders). Additional forms of proxy are available from the transfer secretaries of the company.

Not for the use by holders of the company’s dematerialised ordinary shares who are not own-name dematerialised shareholders. Such shareholders must contact their CSDP or broker timeously if they wish to attend and vote at the annual general meeting and request that they be issued with the necessary letter of representation to do so, or provide the CSDP or broker timeously with their voting instructions should they not wish to attend the annual general meeting in order for the CSDP or broker to vote thereat in accordance with their instructions.

100


Notes to the form of proxy

1. This form of proxy is to be completed only by those members who are:

(a) holding shares in a certificated form; or (b) recorded in the sub-register in electronic form in their

own name.2. Members who have dematerialised their shares, other than

own-name dematerialised shareholders, and who wish to attend the annual general meeting must contact their CSDP or broker who will furnish them with the necessary letter of representation to attend the annual general meeting, or they must instruct their CSDP or broker as to how they wish to vote in this regard. This must be done in terms of the agreement entered into between the members and their CSDP or broker.

3. Each member is entitled to appoint one or more individual as a proxy (who need not be a member(s) of the company) to participate in, speak, and, on a poll, vote in place of that member at the annual general meeting.

4. A member wishing to appoint a proxy must do so in writing by inserting the name of said proxy or the name of one alternative proxy of the member’s choice on the form of proxy in the space provided, with or without deleting “the chairman of the annual general meeting”. The person whose name stands first on the form of proxy and who is present at the annual general meeting will be entitled to act as proxy to the exclusion of those whose names follow.

5. A member’s instructions to the proxy must be indicated on the form of proxy by the insertion of the relevant number of votes exercisable by that member in the appropriate box(es) provided. Failure to comply with the above will be deemed to authorise the chairman of the annual general meeting, if the chairman is the authorised proxy, to vote in favour of the ordinary and special resolutions at the annual general meeting, or any other proxy to vote or to abstain from voting at the annual general meeting as he/she deems fit, in respect of all the member’s votes exercisable thereat.

6. The proxy shall (unless this sentence is struck out and countersigned) have the authority to vote, as he/she deems fit, on any other resolution which may validly be proposed at the meeting, including in respect of any proposed amendment to the above resolutions. If the aforegoing sentence is struck out, the proxy shall be deemed to be instructed to vote against any such proposed additional resolution and/or proposed amendment to an existing resolution as proposed in the notice to which this form is attached.

7. A member or his/her proxy is not obliged to vote in respect of all the ordinary shares held by such member or represented by such proxy, but the total number of votes for or against the ordinary resolutions and in respect of which any abstention is recorded may not exceed the total number of votes to which the member or his/her proxy is entitled.

8. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy, unless previously recorded by the company’s transfer office or waived by the chairman of the annual general meeting.

9. The chairman of the annual general meeting may reject or accept any form of proxy which is completed and/or received other than in accordance with these instructions, provided that he is satisfied as to the manner in which a member wishes to vote.

10. Any alterations or corrections to this form of proxy must be initialled by the signatory(ies).

11. The completion and lodging of this form of proxy will not preclude the relevant member from attending the annual general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such member wish to do so.

12. A minor must be assisted by his/her parent/guardian unless the relevant documents establishing his/her legal capacity are produced or have been registered by the company’s transfer secretaries.

13. Where there are joint holders of any shares, only that holder whose name appears first in the register in respect of such shares need sign this form of proxy.

14. Any proxy appointment made in terms of this form of proxy remains valid until the end of the annual general meeting, unless revoked earlier.

15. Forms of proxy must be lodged with the transfer secretaries at the address given below at least 24 hours prior to the annual general meeting:

Computershare Investor Services (Pty) Ltd Ground Floor, 70 Marshall Street, Johannesburg, 2001 PO Box 61051, Marshalltown, 2107 Telephone: +27 11 370 5000 Fax: +27 11 688 5238

101

Group at a glance 1



Administration 91


GRI indexas at 29 February 2012

GRIreference Description

Page number

1. STRATEGY

Chairman’s report 16

Chief Executive’s report 18

2. ORGANISATIONAL PROFILE

2.1 Name of the organisation OFC, 1, IBC

2.2 Primary brands, products and/or services 5, 6 – 7, 22 – 39

2.3 Operational structure of the organisation 6 – 7

2.4 Location of organisation’s headquarters IBC

2.5 Number of countries where the organisation operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report

1

2.6 Nature of ownership and legal form 1, 87, IBC

2.7 Markets served 1, 6 – 7, 22 – 39

2.8 Scale of the reporting organisation, including:• number of employees• number of operations• net sales or net revenues • total capitalisation broken down in terms of debt and equity• quantity of products or services provided• total assets• beneficial ownership

1, 47 – 50, 60 – 626 – 7, 22 – 393, 74 – 75, 823, 74 – 75, 816 – 7, 22 – 393, 81 89

2.9 Significant changes during the reporting period regarding size, structure or ownership 80

2.10 Awards received in the reporting period 24, 28, 34, 38

3. REPORT PARAMETERS

Report profile

3.1 Reporting period 4

3.2 Date of most recent previous report 4

3.3 Reporting cycle 4

3.4 Contact point for questions regarding the report of its contents 90

Report scope and boundary

3.5 Process for defining report content 4

3.6 Boundary of the report 4, 47

3.7 State any specific limitations on the scope or boundary of the report 4

3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organisations

4

3.10 Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement

4

3.11 Significant changes from previous reporting periods in the scope, boundary or measurement methods applied in the report

4, 47, 80

3.12 Table identifying the location of the Standard Disclosures in the report 101

3.13 Policy and current practice with regard to seeking external assurance for the report 4

102


GRI index continued

as at 29 February 2012

GRIreference Description

Page number

4. GOVERNANCE, COMMITMENTS AND ENGAGEMENT

Corporate governance

4.1 Governance structure of the organisation, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organisational oversight

12 – 13, 40 – 45, 47, 67, 78

4.2 Indicate whether the Chair of the highest governance body is also an executive officer 12, 40

4.3 For organisations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members

12 – 13, 40 – 45

4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body

10, 90, IBC

Stakeholder engagement

4.14 List of stakeholder groups engaged by the organisation 10 –11

4.15 Basis for identification and selection of stakeholders with whom to engage 10 – 11, 47

5. MANAGEMENT APPROACH AND PERFORMANCE INDICATORS

Economic performance

EC1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments

66

EC3 Coverage of the organisation’s defined benefit plan obligations DISC (employee benefit) 68, note 21

EC4 Significant financial assistance received from government 66

Environmental performance

EC28 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations

58

Labour practices and decent work performance

LA1 Total workforce by employment type, employment contract and region, broken down by gender

47 – 49, 60 – 62

LA2 Total number and rate of new employee hires and employee turnover by age group, gender and region

49 – 50

LA10 Average hours of training per year per employee by gender and by employee category 50 – 51, 53

LA13 Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership and other indicators of diversity

47 – 49, 60 – 62

LA14 Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation

62

Human rights performance

HR4 Total number of incidents of discrimination and corrective actions taken 65

Corporate information

Company information Stefanutti Stocks Holdings LimitedShare code: SSKISIN: ZAE000123766JSE Sector: ConstructionYear end: 28 February

Registration number 1996/003767/06

Country of incorporation South Africa

Registered office No 9 Palala Street, Protec Park, Cnr Zuurfontein Avenue and Oranjerivier Drive, Kempton Park, 1619

Postal address PO Box 12394, Aston Manor, 1630

Telephone number +27 11 571 4300

Facsimile +27 11 976 3487

Company Secretary WR Somerville20 Lurgan Road, Parkview, 2193Telephone number: +27 11 482 4019

Auditors Mazars 2nd Floor, Mazars House, 5 St Davids Place, Parktown, 2193PO Box 6697, Johannesburg, 2000Telephone number: +27 11 547 4000

Attorneys Webber Wentzel10 Fricker Road, Illovo Boulevard, Johannesburg, 2196PO Box 61771, Marshalltown, 2107Telephone number: +27 11 530 5000

Transfer Secretaries Computershare Investor Services (Pty) LtdGround Floor, 70 Marshall Street, Johannesburg, 2001PO Box 61051, Marshalltown, 2107Telephone number: +27 11 370 5000

Sponsor Bridge Capital Advisors (Pty) Ltd 2nd Floor, 27 Fricker Road, Illovo Boulevard, Illovo, 2196PO Box 651010, Benmore, 2010Telephone number: +27 11 268 6231

Bankers Nedbank Limited The Standard Bank of South Africa LimitedInvestec Bank LimitedAbsa Bank LimitedFirst National Bank, a division of FirstRand Bank LimitedNedbank SwazilandStandard Chartered Bank BotswanaBanco Internacional de MozambiqueMiddle East Barclays BankEmirates BankNBDHSBCFirst Gulf Bank

Investor relations Keyter Rech Investor Solutions CCFountain Grove, 5 2nd Street, Hyde Park, 2195Telephone number: +27 11 447 5204

Website www.stefanuttistocks.com

BASTION GRAPHICS

Stefanutti Stocks Annual Financial Statements 2012

Bridging your expectations

Contents

Preparation of the annual financial statements 1






Statements of financial position 8

Statements of comprehensive income 9

Statements of changes in equity 10

Statements of cash flows 12

Accounting policies 13

Notes to the annual financial statements 31

Shareholders’ analysis 76

Corporate information 77

Company profile

Stefanutti Stocks Holdings Limited and all its subsidiaries (“Stefanutti Stocks”) is one of South Africa’s leading

engineering and construction groups and has been listed on the JSE Main Board in the “Construction and

Materials – Heavy Construction” sector since 2007. The group offers highly diversified services across the full

spectrum of engineering and construction disciplines. The focus areas of the group comprise structures,

buildings, roads, open-pit mining, mechanical, industrial, electrical and power.

All group operations are registered with the Construction Industry Development Board (CIDB) as a

category 9 Contractor, which places no limitations on the size of project the group can tender on.

The group operates in South Africa, sub-Saharan Africa as well as in the Middle East, across the private and public

sectors, with clients spanning governments, State-owned companies and local authorities, industry, large

corporations, financial institutions and property developers. The African countries include Angola, Botswana, Malawi,

Mozambique, Sierra Leone, Swaziland and Zambia, with offices in Doha and Dubai in the Middle East.

Stefanutti Stocks’ headquarters are in Kempton Park, Gauteng, and employs a global workforce of

almost 13 000 with about 10 000 employees throughout South Africa.

1

Annual financial statementsStefanutti Stocks Annual Financial Statements 2012

Preparation of annual financial statements

The annual financial statements, contained in this report, and also available on the group’s website www.stefanuttistocks.com, have been prepared under the supervision of the Chief Financial Officer, DG Quinn, BScEcon, CA(SA). The annual financial statements have been audited in compliance with the Companies Act.


18 July 2012

In terms of section 88(2)(e) of the Companies Act, 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 2012, lodged with the Companies and Intellectual Property Commission all returns and notices required of a public company in terms of the Act and that all such returns and notices are true, correct and up to date.


18 July 2012

Certificate by the Company Secretary

2


Statement of responsibilityThe directors are required by the South African Companies Act to maintain adequate accounting records and are responsible for the content and integrity of the annual financial statements and group annual financial statements and related information included in this report. It is their responsibility to ensure that the annual financial statements present fairly the state of affairs of the company and the group as at the end of the financial year and the results of their operations and cash flows for the year then ended, in conformity with International Financial Reporting Standards. The external auditors are engaged to express an independent opinion on the annual financial statements.

The external auditors are responsible for independently reviewing and reporting on the company’s and group’s annual financial statements. The annual financial statements have been examined by the group’s external auditors and their report is presented on page 3.

The annual financial statements and group annual financial statements are prepared in accordance with International Financial Reporting Standards and are based on appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial controls established for the company and the group, and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the board sets standards for internal control aimed at reducing the risk of error or loss in a cost-effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the company and the group.

The focus of risk management in the company and the group is on identifying, assessing, managing and monitoring all known forms of risk across the company and the group. While operating risk cannot be fully eliminated, the company and the group endeavour to minimise risk by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied upon for the preparation of the annual financial statements and group annual financial statements. However, any system of internal control can provide only reasonable, and not absolute assurance against material misstatement or loss.

The directors have reviewed the company’s and the subsidiaries’ cash flow forecasts for the year ending 28 February 2013 and, in light of this review and current financial position, are satisfied that the company and group have access to adequate resources to continue in operational existence for the foreseeable future. Therefore, the annual financial statements and group annual financial statements have been prepared on the going-concern-basis.

ApprovalThe annual financial statements and group annual financial statements, which appear on pages 7 to 75, were approved by the board of directors on 18 July 2012 for publication on 6 August 2012 and are signed on their behalf by:

Willie Meyburgh Dermot QuinnChief Executive Officer Chief Financial Officer


Directors’ responsibilities and approval

3


Independent auditors’ report to the shareholders of Stefanutti Stocks Holdings Limited

We have audited the group annual financial statements and annual financial statements of Stefanutti Stocks Holdings Limited, which comprise the consolidated and separate statements of financial position as at 29 February 2012, and the consolidated and separate statements of comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes, and the directors’ report, as set out on pages 7 to 75.

Directors’ responsibility for the financial statementsThe company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, these financial statements present fairly, in all material respects, the consolidated and separate financial position of Stefanutti Stocks Holdings Limited as at 29 February 2012, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa.

MAZARSRegistered AuditorPartner: Mark SnowRegistered Auditor


4


h reviews the draft audited financial statements and Integrated

Report, the preliminary profit announcement and interim

statements;

h reviews, together with the external auditors, the conformity of

the audited financial statements and related schedules with

IFRS and the company’s accounting policies;

h reviews external audit plan and fees payable to the external

auditors;

h reviews the external audit findings and reports;

h approves any non-audit services performed by the external

auditors and the policy in this regard;

h reviews internal audit policies, plans, reports and findings;

h monitors compliance with applicable laws and regulations;

h assesses key risk areas facing the group and recommends risk

mitigation measures; and

h advises and updates the board on issues ranging from

accounting standards to published financial information.

Oversight of risk managementThe committee is integral to the group’s risk management process.

Both the Group Risk Officer and Internal Audit Manager report

directly to the committee, and all risk identification, measurement

and management is addressed through these channels. A Risk

Management Plan, Risk Register and Risk Policy were presented

to and considered by the committee during the year. The Audit,

Governance and Risk Committee further reviewed the findings

of an external review and assurance exercise.

The committee satisfied itself that the following areas had been

appropriately addressed:

h Financial reporting risks.

h Internal financial controls.

h Fraud risks as they relate to financial reporting.

h IT risks as they relate to financial reporting.

h Reviewed tax and technology risks, in particular how they

are managed.

Audit, Governance and Risk Committee report

The Audit, Governance and Risk Committee is appointed by

the shareholders and, in addition to having specific statutory

responsibilities to the shareholders in terms of the Companies

Act, it assists the board by advising and making submissions

on financial reporting, and internal financial controls, external

and internal audit functions and statutory and regulatory

compliance of the group.

Terms of referenceThe Audit, Governance and Risk Committee has adopted formal

terms of reference that have been approved by the board and

these terms of reference are regularly reviewed and updated where

necessary. The committee has executed its duties during the past

financial year in accordance with these terms of reference.

CompositionThe Audit, Governance and Risk Committee is chaired by

Independent Non-executive Director, Nomhle Canca, who has

over 20 years’ experience in financial services. It further comprises

two independent non-executive directors, namely Kevin Eborall

and Zanele Matlala. Joseph Fizelle, alternate to Non-executive

Director Bridgman Sithole, also serves on the committee. The

board has satisfied itself that the members are suitably skilled and

qualified to fulfil their duties.

The Chief Executive Officer, Chief Financial Officer, external and

internal auditors are invited to all Audit, Governance and Risk

Committee meetings.

MeetingsThe Audit, Governance and Risk Committee held four meetings

during the year. Attendance at these meetings is shown in the

table set out on page 44 of the Corporate governance report in the

Integrated Report.

Statutory dutiesIn execution of its statutory duties, the Audit, Governance and Risk

Committee:

h monitors compliance with codes of conduct and the ethical

conduct of the company;

h evaluates the independence and effectiveness of the external

auditors as well as their performance and recommends their

appointment;

5


Internal financial controlsThe Audit, Governance and Risk Committee:

h reviewed the effectiveness of the group’s system of internal

financial controls including receiving assurance from

management, internal audit and external audit;

h reviewed significant issues raised by the external auditors

in their reports; and

h reviewed policies and procedures for preventing and

detecting fraud.

Based on the processes and assurances obtained, the Audit,

Governance and Risk Committee believes that the significant

internal financial controls are effective.

Regulatory complianceThe Audit, Governance and Risk Committee is satisfied that it has

discharged its duties as set out in its terms of reference.

External auditThe external auditors are responsible for reporting on whether the

annual financial statements are fairly presented in compliance with

IFRS. The preparation of the annual financial statements remains

the responsibility of the directors. The Audit, Governance and Risk

Committee evaluates the independence and effectiveness of the

external auditors and considers whether any non-audit services

rendered by such auditors substantively impair their independence.

In this regard, a non-audit services policy is in place, which is

reviewed annually by the Audit, Governance and Risk Committee.

Based on processes followed and assurances received, the Audit,

Governance and Risk Committee has no concerns regarding the

external auditors’ independence.

Based on the group’s satisfaction with the results of the activities

outlined above, it has recommended to the board and to the

shareholders, the reappointment of Mazars and Mark Snow as the

independent registered audit firm and the individual registered

auditor of the company respectively.

In terms of the group’s policy, the external auditors have confirmed

to the Audit, Governance and Risk Committee that no non-audit

fees were billed during the 2012 financial year.

Internal auditThe Internal Audit Manager heads the formal internal audit

function. This is guided by an Internal Audit Charter which sets

out the function’s purpose, independence, ethics, duties,

responsibilities and scope.

The internal audit function establishes appropriate policies and

procedures to guide the internal audit and is tasked with evaluating

the group’s exposure to risk while also evaluating the adequacy

and effectiveness of controls and risk management processes.

Internal audit further assesses Stefanutti Stocks’ corporate

governance.

The function ensures that the internal audit resources are

appropriate and sufficient for the group and that the team

has the appropriate professional qualifications and skills to

maintain the internal audit competence.

The Internal Audit Manager reports to the Group Risk Officer

on an administrative basis and to the Audit, Governance and

Risk Committee on a functional basis. The Internal Audit Manager

has unhindered access to the Chief Executive Officer, Chairman

of the Audit, Governance and Risk Committee, and the Chairman

of the board.

The internal audit plan is overseen by the Audit, Governance

and Risk Committee and is based on the key risks identified by

executive management.

During the year a comprehensive review commenced, including

feedback from management, external auditors and other

stakeholders. Exceptions noted were adequately addressed

by management.

Where the explanation was deemed insufficient, the exceptions

were further investigated and/or corrective action taken.

The Audit, Governance and Risk Committee is entitled to appoint

an independent internal review at any time, the results of which

are to be reported to the Chief Executive Officer and the

committee chairman. In addition, an external review of the internal

audit function is conducted every four years by the Institute of

Internal Auditors or another suitably qualified independent party.

6


Chief Financial OfficerThe committee has performed an evaluation and is satisfied

that Dermot Quinn has the appropriate expertise and experience

to meet the responsibilities of his appointed position as Chief

Financial Officer as required by the JSE and that the resources

within the finance function are adequate to provide the necessary

support to the Chief Financial Officer.

In making these assessments, the committee has also obtained

feedback from the external auditors.

Based on the processes and assurances obtained, the committee

is satisfied and believes that the accounting practices are effective.

Integrated ReportFollowing the review by the committee of the annual

financial statements of Stefanutti Stocks for the year ended

29 February 2012, the committee is of the view that they comply in

all material respects with the relevant provisions of the Companies

Act and International Financial Reporting Standards and fairly

present the consolidated and separate financial positions at that

date and the results of the operations and cash flows for the year

then ended. The committee has also satisfied itself of the integrity

of the remainder of the Integrated Report. Having achieved its

objectives, the committee recommended the Integrated Report

and annual financial statements for approval to the board. The

board has subsequently approved the Integrated Report and

annual financial statements, which will be open for discussion at

the forthcoming annual general meeting.

On behalf of the Audit, Governance and Risk Committee

Nomhle Canca

Chairman

18 July 2012

Audit, Governance and Risk Committee report continued

7


Subsidiary companiesDetails of the principal subsidiary companies are set out in note 5 to the annual financial statements.

Share option schemesRefer to note 16 for information relating to option schemes and share-based payments.

Non-adjusting events after reporting periodStefanutti Stocks, through its wholly owned subsidiary Stefanutti Stocks (Pty) Ltd, received Competition Commission approval for the acquisition of Cycad Pipelines, a specialised pipeline infrastructure construction company which is a major competitor in the water infrastructure sector, at a cost of R261 million as at 1 March 2012. Details of the acquisition are set out in note 35 to the annual financial statements.

Litigation statementThe investigation by the Competition Commission into anti-competitive behaviour by companies within the construction sector is ongoing. Stefanutti Stocks is co-operating fully with all relevant Government agencies and has submitted the requisite documentation and awaits formal feedback in this regard.

Material changesThere have been no material changes in the financial or trading position of the company and its subsidiaries between the year ended 29 February 2012 and the posting date of this report.

Going concernThe directors consider that the group and company have adequate resources to continue operating for the foreseeable future and that it is therefore appropriate to adopt the going-concern basis in preparing the summary of financial statements of the company and of the group. The directors have satisfied themselves that the group and company are in a sound financial position and that it has access to sufficient borrowing facilities to meet its foreseeable cash requirements.

Directors’ report

The directors present their report which forms part of the summary of financial statements of the company and of the group for the year ended 29 February 2012.

Nature of businessStefanutti Stocks Holdings Limited (Registration No 1996/003767/06) is a holding company. Its multi-disciplinary subsidiaries are involved in concrete structures, rehabilitation and marine construction, piling and geotechnical services, roads and earthworks, mine residue disposal facilities (mainly tailings dams), open-pit contract mining, building works and mechanical, electrical and power line transmission and distribution construction. In addition, the group has established skills to participate in projects on a public-private partnership (PPP) basis. These operations are formally structured into the following key operations: Structures, Roads & Earthworks, Mining Services, Mechanical, Electrical & Power and Building (incorporating international).

Financial resultsThe results for the year are set out in the annual financial statements presented on pages 8 to 75. The comprehensive annual financial statements can also be found on the group’s website www.stefanuttistocks.com.

Year under reviewThe year under review is comprehensively dealt with in the Chief Executive Officer’s report on pages 18 to 21 and the operational reviews of the business units commencing on page 22 of the Integrated Report.

Directors, prescribed officers and Company SecretaryThe names of the directors who currently hold office are set out in note 28. The prescribed officers of the group are operational directors and senior managers who are not executive directors of the group.

Details of directors’ and prescribed officers’ remuneration, FSP and options are set out in note 28 to the annual financial statements.

ResolutionsAt the 2011 annual general meeting, the shareholders of the company passed the following special resolutions:

h Approval of directors’ fees. h Approval of financial assistance provided by the company to related or inter-related companies or other entities, including, inter alia, its subsidiaries, for any purpose,

and further enabling the directors of the company to pass similar special resolutions for certain of its subsidiaries.

8


Statements of financial positionat 29 February 2012

Group Company

Notes2012

R’0002011

R’0002012

R’0002011

R’000

ASSETS

Non-current assets 2 226 970 2 111 249 1 118 125 1 381 002

Property, plant and equipment 3 1 019 910 901 671 – –

Investment property 4 57 673 55 422 – –

Investment in subsidiaries 5 – – 1 116 702 1 379 465

Investment in associates 6 15 996 14 539 – –

Goodwill and intangible assets 8 1 124 455 1 132 044 – –

Deferred taxation 9 8 936 7 573 1 423 1 537

Current assets 3 684 062 2 960 137 227 500 73 404

Intergroup loan accounts 10 – – 221 061 62 946

Inventories 11 94 036 78 851 – –

Contracts in progress 12 431 445 175 170 – –

Trade and other receivables 13 2 229 658 1 603 630 3 972 2 463

Taxation 5 579 20 015 – 1 406

Bank balances 14 923 344 1 082 471 2 467 6 589

Total assets 5 911 032 5 071 386 1 345 625 1 454 406

EQUITY AND LIABILITIES

Capital and reserves 2 113 696 1 853 571 1 334 410 1 334 635

Issued capital and reserves attributable to the owners of the parent 2 113 696 1 853 571 1 334 410 1 334 635


Other financial liabilities 17 220 566 142 883 – –

Deferred taxation 9 61 204 53 761 – –

Current liabilities 3 515 566 3 021 171 11 215 119 771

Other financial liabilities 17 157 212 118 847 – 3 930

Intergroup loan accounts 10 – – – 104 499

Trade and other payables 18 1 777 647 1 693 285 11 161 11 342

Provisions 19 1 501 990 1 154 475 – –

Taxation 46 199 50 252 54 –

Bank balances 14 32 518 4 312 – –

Total equity and liabilities 5 911 032 5 071 386 1 345 625 1 454 406

9


Statements of comprehensive incomefor the year ended 29 February 2012

Group Company

Notes2012

R’0002011

R’0002012

R’0002011

R’000

Revenue 20 8 068 483 6 998 207 333 204 314 572

Contract revenue 20 7 990 718 6 896 418 – –

Contract costs (6 954 139) (5 852 862) – –

Contract gross profit 1 036 579 1 043 556 – –

Other income 21 67 179 52 611 25 800 33 000

Operating costs (548 927) (497 982) (35 123) (34 772)

Earnings/(loss) before interest, taxation, depreciation and amortisation 554 831 598 185 (9 323) (1 772)

Depreciation 3 (185 577) (147 654) – –

Impairment of property, plant and equipment 3 (2 652) – – –

Impairment of investments 5 – – (223 153) (157 603)

Amortisation of intangible assets 8 (7 589) (8 202) – –

Operating profit/(loss) before investment income 21 359 013 442 329 (232 476) (159 375)

Investment income 22 41 636 61 591 307 404 281 572

Share of profits from associate companies 6 1 768 2 712 – –

Operating profit before finance costs 402 417 506 632 74 928 122 197

Finance costs 23 (37 919) (25 270) (509) (1)

Profit before taxation 364 498 481 362 74 419 122 196

Taxation 24 (100 257) (148 351) (7 564) (14 754)

Profit for the year 264 241 333 011 66 855 107 442

Other comprehensive income 52 380 (37 372) – –

Exchange differences on translating foreign operations 27 380 (37 372) – –

Gains on property revaluation 3 25 000 – – –

Income tax relating to components of other comprehensive income (2 348) – – –

Taxation relating to gains on property revaluation (2 348) – – –

Total comprehensive income for the year 314 273 295 639 66 855 107 442

Profit for the year attributable as follows:


Total comprehensive income attributable to:


Earnings per share (cents) 27 153,23 193,55 – –

Diluted earnings per share (cents) 27 140,49 177,06 – –

10


Notes

Sharecapital

andpremium

R’000

Share-based

paymentsreserveR’000

Foreigncurrency

translationreserveR’000

Re-valuation

surplusreserveR’000

Retainedearnings

R’000

Non-controlling

interestR’000

TotalR’000

GROUP

Balance at 1 March 2010 1 020 618 47 730 285 4 997 607 827 2 175 1 683 632

Treasury shares acquired 15 (9 423) – – – – – (9 423)


Realisation of share-based payments reserve – (113) – – 113 – –

Non-controlling interests acquired – – – – (10 804) (2 175) (12 979)

Total comprehensive income – – (37 372) – 333 011 – 295 639


Exchange differences on translating of foreign operations – – (37 372) – – – (37 372)

Dividends paid 26 – – – – (111 987) – (111 987)

Balance at 28 February 2011 1 011 195 56 306 (37 087) 4 997 818 160 – 1 853 571

Treasury shares disposed 15 8 648 – – – (1 779) – 6 869


Realisation of share-based payments reserve – (14 632) – – 14 632 – –

Total comprehensive income – – 27 380 22 652 264 241 – 314 273


Exchange differences on translating foreign operations – – 27 380 – – – 27 380

Gains on property revaluation 3 – – – 25 000 – – 25 000

Taxation relating to gains on property revaluation – – – (2 348) – – (2 348)

Dividends paid 26 – – – – (63 675) – (63 675)

Balance at 29 February 2012 1 019 843 44 332 (9 707) 27 649 1 031 579 – 2 113 696

Note 15

Share-based payments reserve comprises the accumulated effect of share-based payments in terms of the employee share scheme.

Foreign currency translation reserve comprises the translation effect of foreign subsidiaries and joint ventures to the reporting currency.

Revaluation surplus reserve comprises the revaluation of land and buildings.

Statements of changes in equityfor the year ended 29 February 2012

11


Notes

Sharecapital

andpremium

R’000

Share-based

paymentsreserveR’000

Retainedearnings

R’000Total

R’000

COMPANY

Balance at 1 March 2010 1 161 538 45 853 134 309 1 341 700



Dividends paid 26 – – (122 252) (122 252)



Realisation of share-based payments reserve – (11 274) 11 274 –


Dividends paid 26 – – (69 590) (69 590)


Note 15

12


Statements of cash flowsfor the year ended 29 February 2012

Group Company

Notes2012

R’0002011

R’0002012

R’0002011

R’000

Cash flows from operating activities (49 003) 64 905 262 422 148 086

Cash receipts from customers 7 442 455 6 816 280 331 695 313 906

Cash paid to suppliers and employees (7 346 396) (6 550 864) (300 465) (310 539)

Cash generated from operations 25 96 059 265 416 31 230 3 367

Interest received 22 41 486 61 393 331 1 732

Finance costs 23 (37 919) (25 270) (509) (1)

Dividends paid 25 (63 798) (111 856) (69 713) (122 121)

Dividends received 6 & 22 950 3 024 307 073 279 840

Taxation paid/(refunded) 25 (78 821) (115 577) 970 (2 506)

Secondary taxation on companies and withholding tax paid 25 (6 960) (12 225) (6 960) (12 225)

Cash flows from investing activities (277 822) (300 940) – (14 428)

Expenditure to maintain operating capacity


Proceeds on disposals of property, plant and equipment 21 570 28 870 – 1 333

(Advance)/repayment of associate loan (1 611) 3 654 – –

Expenditure for expansion


Development of investment property 4 (2 251) (21 085) – –

Proceeds on other financial assets – 1 901 – –

Net cash for acquisition of subsidiaries and non-controlling interests 25 – (43 663) – (15 761)

Cash flows from financing activities 124 696 1 542 (266 544) (171 493)

Treasury shares disposed/(acquired) 8 648 (9 423) – –

Proceeds from long- and short-term financing 246 630 140 072 – –

Repayment of long- and short-term loans (130 582) (129 107) (3 930) –

Proceeds from intergroup loan accounts 10 – – 26 508 137 493

Intergroup loan accounts granted 10 – – (289 122) (308 986)

Decrease in cash and cash equivalents (202 129) (234 493) (4 122) (37 835)

Cash and cash equivalents at beginning of the year 1 078 159 1 347 604 6 589 44 424

Effect of exchange rate changes on cash and cash equivalents 14 796 (34 952) – –

Cash and cash equivalents at end of the year 14 890 826 1 078 159 2 467 6 589

13


Accounting policiesfor the year ended 29 February 2012

The principal accounting policies adopted in the preparation of these consolidated annual financial statements are set out below:

1. PRESENTATION OF FINANCIAL STATEMENTS The consolidated financial statements include those of the holding company, its subsidiaries, joint ventures and associates.

The annual financial statements and group annual financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the Companies Act of South Africa.

The annual financial statements have been prepared using a combination of the historical cost and fair value basis of accounting. Those categories to which the fair value basis of accounting has been applied are indicated in the individual accounting policy notes below.

In the current year, the group has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for the year ended 29 February 2012.

The principal accounting policies are set out below. The accounting policies are consistent with the previous year except for where new policies have been adopted. Refer to note 2.

1.1 Significant judgements and estimates Estimates and judgements are continually evaluated and are based on historical experience and other factors, including

expectations and future events, and are believed to be reasonable under the circumstances. Actual results may differ from the estimates made by management from time to time. In the process of applying the group’s accounting policies, the directors have made the following judgements that have an effect on the amounts recognised in the annual financial statements:

Allowance for doubtful debts Debtor accounts are written off when they are delinquent. An allowance is raised on accounts based on management’s

assessment of the likelihood of collecting receivables outstanding.

Allowance for slow-moving, damaged and obsolete inventory An allowance account is used to write inventory down to the lower of cost or net realisable value. Management has made

estimates of the selling price and direct cost to sell on certain inventory items.

Share-based payments and options granted Management uses a variant of the binomial pricing model to determine the estimated fair value of the options at issue date.

Additional details regarding the estimates are included in the note relating to share-based payments.

Property, plant and equipment, goodwill, intangible assets and impairments Impairment testing Management used the value-in-use method to determine the recoverable amount of goodwill and intangible assets as there is no

active market in identifying assets that may have been impaired. Additional disclosure of these estimates is included in the note relating to goodwill and intangible assets. Future events could cause management to conclude that impairment indicators exist.

Residual value The group is required to measure the residual value of an item of property, plant and equipment. An estimate is made of the

amount it would receive currently for the asset if the asset was already of the age and condition expected at the end of its useful life. IAS 16 requires residual values (if material) to be estimated first at the date of acquisition and thereafter to be reviewed at each reporting date.

Useful life The useful life of an asset is the period over which the group expects to use the asset, and not necessarily the asset’s

economic life. Useful lives of assets are reviewed annually. If these change from the prior period, the depreciation charge is adjusted prospectively. The group uses the following indicators to determine useful lives:

h Expected usage of assets. h Expected physical wear and tear. h Technical and commercial obsolescence.

14


Accounting policies continued


1. PRESENTATION OF FINANCIAL STATEMENTS (continued) 1.1 Significant judgements and estimates (continued) Property, plant and equipment, goodwill, intangible assets and impairments (continued) Investment property In the application of accounting policies, which is described in the note relating to the investment property, management is required

to make judgements, estimates and assumptions about the fair value of the investment property that are not readily apparent from other sources. The estimates and assumptions are based on historical experience and other factors that are considered to be relevant. The fair value of the investment property is determined after taking into account prevailing market rentals and occupation levels. An appropriate capitalisation rate is used that reflects the risk associated with that particular building.

Provisions Provisions are raised when deemed necessary by management, and an estimate of expected outflows is made based on the

information available at the time. Additional disclosures of these estimates of provisions are included in the note relating to provisions.

Deferred taxation Management may need to assess, from time to time, the extent to which it is probable that taxable profit will be available

against which deductible temporary differences can be utilised.

Contingent liabilities Management may assess and determine, based on expert advice received from time to time, whether an item is a contingent

or actual liability.

Fair value of assets acquired in business combinations Fair values are attributed to the identifiable assets, intangible assets, liabilities and contingent liabilities acquired during a

business combination. These fair values are determined by reference to active market values, or where these are unavailable, by reference to current market prices of similar assets or liabilities, or by applying a discounted cash flow model to the expected future cash flows to be generated.

Contracting profit or loss recognition When applying the percentage of completion method, estimates are made of the total expected costs of individual contracts.

1.2 Investments in subsidiaries Group annual financial statements The group annual financial statements comprise the consolidated annual financial statements of the company, its subsidiaries

and results of associates and jointly controlled operations. The annual financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

All intergroup balances, transactions, income and expenses are eliminated in full in the consolidated annual financial statements.

Subsidiaries are consolidated from the date of acquisition, which is the date on which the group obtains control of the subsidiary, and continue to be consolidated until the date that control ceases.

Subsidiaries, which are those entities in which the group has an interest of more than one half of the voting rights or otherwise has the power to govern the financial and operating policies, are consolidated. The results of the subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal.

Non-controlling interest included on the statement of financial position represents the portion of profit or loss and net assets in subsidiaries not held by the group. Non-controlling interest is presented separately in the statement of comprehensive income and within equity in the statement of financial position. Losses of subsidiaries attributable to non-controlling interests are allocated to the non-controlling interest even if this results in a debit balance being recognised for non-controlling interests.

15


1. PRESENTATION OF FINANCIAL STATEMENTS (continued) 1.2 Investments in subsidiaries (continued) Company annual financial statements Investments in subsidiaries in the company’s separate annual financial statements are initially recognised at cost. The cost of an

investment in a subsidiary is the aggregate of the fair value, at the date of exchange, of assets acquired, liabilities incurred or assumed and shares issued.

Investments in subsidiaries are subsequently measured at cost less any accumulated impairment.

1.3 Investments in joint ventures Group annual financial statements The group has interests in certain jointly controlled operations and jointly controlled entities, and recognises its interest by way

of proportionate consolidation. Proportionate consolidation is where the group combines and recognises: h the assets that it controls and the liabilities that it incurs; h the expenses that it incurs and its share of the income that it earns from the sale of goods or services by the joint venture; and h the cash flows on a line-by-line basis with similar items in the group’s financial statements

Results of joint ventures are included when two or more joint-venture parties combine their operations, resources and expertise in order to manufacture/build a particular product. The joint venture is derecognised when the combined operations cease.

1.4 Investments in associates Group annual financial statements Investments in associates are accounted for using the equity method. Associates are entities in which the group has significant

influence and which are neither subsidiaries nor joint ventures.

Under the equity method, the investments are initially recognised at cost and the carrying amounts are increased or decreased to recognise the group’s share of the profits or losses of the associates after their acquisition dates. An associate’s carrying amount includes any loan(s) receivable from the associate, as settlement is neither planned nor likely in the foreseeable future. An impairment is recognised when there is objective evidence that the investment in the associate is impaired. The use of the equity method is discontinued from the date on which the group ceases to have significant influence over an associate. Significant influence is the power to participate in the financial and operating policy decisions of the associate, not control or joint control over those policies.

Impairment losses are deducted from the carrying amount of the investment in an associate.

Profits or losses resulting from transactions with associates are recognised only to the extent of unrelated investors’ interests in the associate.

1.5 Property, plant and equipment The cost of an item of property, plant and equipment is recognised as an asset when:

h it is probable that future economic benefits associated with the item will flow to the group; and h the cost of the item can be measured reliably.

Property, plant and equipment is initially recognised at cost. The cost of property, plant and equipment includes amounts incurred initially to acquire or construct an item of property, plant and equipment. Amounts incurred subsequently to add to, or replace part of the asset, are also recognised at cost. Each part of an item of property, plant and equipment with a cost that is significant to the total cost of the item is depreciated separately. Replacement costs include the cost of major inspections. If the replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised. Day-to-day servicing costs, such as labour and consumables, are expensed in the statement of comprehensive income.

Property, plant and equipment, other than land and buildings, is subsequently measured at cost less accumulated depreciation and any accumulated impairment losses.

Land and buildings are carried at a revalued amount, being the fair value of the property at the date of revaluation, less any accumulated impairment losses subsequent to the date of the revaluation. The residual value exceeds the carrying value, therefore no depreciation is recognised. Land is not depreciated as it is deemed to have an indefinite useful life. Residual values are determined as described in note 1.1 above.

16




1. PRESENTATION OF FINANCIAL STATEMENTS (continued) 1.5 Property, plant and equipment (continued) Any increase in the assets’ carrying amounts, as a result of a revaluation, is credited directly to other comprehensive income

in the revaluation surplus reserve. The increase is recognised in the statement of comprehensive income to the extent that it reverses a revaluation decrease of the same asset previously recognised in the statement of comprehensive income.

Any decrease in the assets’ carrying amounts, as a result of a revaluation, is recognised in the statement of comprehensive income in the year in which it arises. However, the decrease is debited directly against the revaluation surplus reserve in other comprehensive income to the extent that it reverses any revaluation previously credited to this reserve for a specific asset.

Except for the aircraft which is depreciated on the diminishing balance method, depreciation is provided on property, plant and equipment to write down the cost, less residual value, on the straight-line basis over their estimated useful lives as follows:

Building 50 years Plant and equipment 5 – 10 years Transport and motor vehicles 5 years Furniture, fittings, office and computer equipment 3 – 8 years Leasehold improvements 4 years Aircraft 5 000 hours flying time

Where a part of an item of property, plant and equipment is significant in relation to the cost of the item, that part is depreciated separately. The depreciation charge is recognised as an expense in the statement of comprehensive income.

The residual values, useful lives and depreciation methods applied to property, plant and equipment are reviewed, and adjusted if necessary, at each year end. These changes are accounted for as a change in estimate.

An item of property, plant and equipment is derecognised upon disposal or where no future economic benefits are expected from its use or disposal. The gain or loss arising from the derecognition of an item of property, plant and equipment is included in the statement of comprehensive income and is calculated as the difference between the net disposal proceeds, if any, and the carrying amount of the item at the date of derecognition.

When a decision is made to sell an item of property, plant and equipment during the year, and it meets the requirements of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, the asset is carried at the lower of its carrying amount or fair value less costs to sell, and depreciation on that asset ceases. Any impairment is recognised directly in the statement of comprehensive income.

If the fair value of property, plant and equipment under construction is not determinable at the statement of financial position date, it is measured at cost until the earlier of the date it becomes determinable or construction is complete.

1.6 Investment property Investment property is any land, building or part thereof that is either owned or leased by the group under a finance lease for

the purpose of earning rentals or for capital appreciation, or both, rather than for use in the production or supply of goods or services, for administrative purposes, or sale in the ordinary course of business. This classification is performed on a property-by-property basis.

Investment property is recognised as an asset when it is probable that future economic benefits that are associated with the investment property will flow to the group, and the cost of the investment property can be measured reliably.

Investment property is initially recognised at cost including all transaction costs, and subsequently measured at fair value. All subsequent expenditure relating to investment property that has been recognised is added to the carrying amount of the investment property when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing investment property, will flow to the enterprise.

Investment property is derecognised when it has either been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected therefrom.

17


1. PRESENTATION OF FINANCIAL STATEMENTS (continued) 1.6 Investment property (continued) Fair value At the statement of financial position date, all investment property is measured at fair value as determined by the directors.

A gain or loss arising from a change in fair value is included in the statement of comprehensive income for the period in which it arises. Any gain or loss on the derecognition of an investment property is recognised in the statement of comprehensive income in the year of derecognition.

1.7 Goodwill and intangible assets Goodwill Goodwill arises from business combinations and is initially measured at cost. Cost represents the excess of the purchase

consideration over the fair value of the group’s share of the identifiable assets, intangible assets, liabilities and contingent liabilities acquired at the date of acquisition. Fair values of the identifiable assets, intangible assets, liabilities and contingent liabilities are determined by reference to market values of those or similar items, where available, or by discounting expected future cash flows to achieve present values. Subsequently, goodwill is measured at cost less any accumulated impairment losses.

Where the fair value of the group’s share of the identifiable assets, intangible assets, liabilities and contingent liabilities acquired in a business combination is greater than the cost of the combination, the gain is recognised in the statement of comprehensive income immediately.

Goodwill is reviewed for impairment at each year end or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired.

At the acquisition date, goodwill is allocated to each of the cash-generating units expected to benefit from the synergies of a combination. Impairment is determined by assessing the recoverable amount of the cash-generating unit to which goodwill relates. The recoverable amount is determined as the value in use of each cash-generating unit by estimating the expected future cash flows in each unit and choosing a suitable discount rate in order to calculate the present value of those cash flows.

Where the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, an impairment loss is recognised in the statement of comprehensive income beginning with the write-off of the goodwill allocated to such cash-generating unit. Where the goodwill is insufficient to cover the amount of the impairment adjustment, the remaining assets in the cash-generating unit are impaired on a pro rata basis.

Where goodwill forms part of a cash-generating unit and that unit is disposed of, the goodwill is included in the carrying amount of the operation when determining the gain or loss on disposal of that operation.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is determined on the basis of the relative value of the operation disposed of and the portion of the cash-generating unit retained. This goodwill is included in the carrying amount of the operation when determining the gain or loss on disposal of that operation.

Goodwill recognised on the acquisition of a joint venture is included in goodwill on the statement of financial position. Goodwill recognised on the acquisition of an associate company is included in investments in associates.

An impairment loss recognised for goodwill is not subsequently reversed.

Common control transactions Business combinations in which all of the combining entities or businesses are ultimately controlled by the same party or

parties both before and after the business combination (and where control is not transitory) are referred to as common control transactions. The accounting policy for the acquiring entity would be to account for the transaction at book values in its consolidated financial statements. The book values of the acquired entity are the consolidated book values as reflected in the consolidated financial statements of the selling entity. Where comparative periods are presented, the financial statements and financial information presented are not restated.

18




1. PRESENTATION OF FINANCIAL STATEMENTS (continued) 1.7 Goodwill and intangible assets (continued) Intangible assets Intangible assets are initially recognised at cost.

The cost of an intangible asset includes its purchase price and any directly attributable cost of preparing the asset for its intended use.

Where an intangible asset is acquired in a business combination, the cost of that intangible asset is its fair value at the acquisition date.

Amortisation is provided for all intangible assets with finite lives on a straight-line basis so as to write down the cost of the intangible assets, less their residual values, on the straight-line basis over their useful lives as determined when the purchase price allocation is done.

Useful lives of intangibles are as follows: Contract- and customer-related intangible assets 1 – 3 years Trade names-related intangible assets 1 – 10 years Technology-related intangible assets 1 – 3 years

The amortisation charge is recognised as an expense in the statement of comprehensive income. The amortisation period and amortisation method applied to an intangible asset with a finite useful life is reviewed, and adjusted if necessary, on an annual basis. These changes are accounted for as a change in estimate.

Intangible assets are derecognised upon disposal or when no future economic benefits are expected from its use. The gain or loss arising from the derecognition of an intangible asset is included in the statement of comprehensive income and is calculated as the difference between the net disposal proceeds, if any, and the carrying amount of the asset at the date of derecognition.

1.8 Impairment of assets The group assesses at each reporting date whether there is any indication that an asset may be impaired. If any such indication

of possible impairment exists, the group estimates the recoverable amount of the asset as follows:

Goodwill and intangible assets Irrespective of whether there is any indication of impairment, the group also tests goodwill acquired in a business combination

for impairment at each year end by comparing its carrying amount with its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.

An impairment loss is recognised for cash-generating units if the recoverable amount of the unit is less than the carrying amount of the unit. The impairment loss is allocated to reduce the carrying amount of the assets of the unit by first reducing the goodwill allocated to the cash-generating unit (if any) and then to the other assets of the unit, pro rata on the basis of the carrying amount of each asset in the unit.

Intangible assets are tested for impairment, when there is an indication that it may be impaired, by determining the recoverable amount of the assets either individually or at the cash-generating unit level. Where this assessment is performed at the cash-generating unit level, the impairment is determined by assessing the recoverable amount of the cash-generating unit to which the intangible asset relates. In such instances, the recoverable amount is determined as the value in use of the cash-generating unit by estimating the expected future cash flows of the unit and choosing a suitable discount rate in order to calculate the present value of those cash flows.

19


1. PRESENTATION OF FINANCIAL STATEMENTS (continued) 1.8 Impairment of assets (continued) Goodwill and intangible assets (continued) Where the recoverable amount is less than the carrying amount of the asset or the cash-generating unit, an impairment loss is

recognised in the statement of comprehensive income.

The group assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for assets may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of those assets are estimated. The increased carrying amount of an asset attributable to a reversal of an impairment loss may not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years.

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill is recognised immediately in the statement of comprehensive income. Any reversal of an impairment loss of a revalued asset is either treated as a revaluation increase, or as a reversal of an impairment loss in the statement of comprehensive income.

1.9 Financial instruments Initial recognition for financial assets and financial liabilities The group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability

or an equity instrument in accordance with the substance of the contractual arrangement. Financial assets, financial liabilities and equity instruments are recognised on the group’s statement of financial position when the group becomes party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially recognised at fair value plus direct transaction cost.

Loans to/(from) group companies: Loans and receivables These include current accounts as well as loans to/(from) holding companies, subsidiaries, joint ventures and associates.

Loans payable where there are no determinable terms of repayment are included in current liabilities and are considered repayable on demand.

Loans to/(from) group companies are subsequently measured at amortised cost less any impairment.

Trade and other receivables: Loans and receivables Trade and other receivables are subsequently measured at amortised cost using the effective interest rate method less any

impairment. This results in interest income being recognised in the statement of comprehensive income over the period of the deferral.

Trade and other payables: Other financial liabilities Trade and other payables are subsequently measured at amortised cost using the effective interest rate method.

Bank overdrafts: Other financial liabilities Bank overdrafts are subsequently measured at amortised cost using the effective interest rate method.

Cash and cash equivalents: Loans and receivables Cash and cash equivalents comprise cash on hand and other short-term deposits. Cash and cash equivalents are short, highly

liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are subsequently recorded at amortised cost.

For the purpose of the cash flow, the net amount of the statement of financial position of bank balances are used.

Other financial liabilities: Loans and borrowings After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective

interest rate method. Gains or losses are recognised in the statement of comprehensive income when the liabilities are derecognised as well as through the effective interest rate method.

20




1. PRESENTATION OF FINANCIAL STATEMENTS (continued) 1.9 Financial instruments (continued) Amortised cost Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral

part of the effective interest rate method. The effective interest rate amortisation is included in finance cost in the statement of comprehensive income.

Derecognition of financial assets and liabilities Financial assets are derecognised when all the risks and rewards of ownership of the financial asset have been transferred.

Financial liabilities are derecognised when the obligation under the liability is discharged or cancelled or expires.

Impairment of financial instruments Loans to group companies: Loans and receivables On loans receivable an impairment loss is recognised in the statement of comprehensive income when there is objective

evidence that the loan receivable is impaired. Significant financial difficulties, probability that the company will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered objective evidence of impairment.

The impairment is measured as the difference between the carrying amount and the recoverable amount. If the recoverable amount is lower than the carrying amount, the impairment will be recognised. The recoverable amount is the fair value of the loans/receivables based on estimated future cash flows discounted to their present value using the pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the financial instrument. Impairment losses are reversed in subsequent periods when an increase in the loans’ recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the loan at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Gains or losses are recognised in the statement of comprehensive income when loans and receivables are derecognised or impaired, as well as through the amortisation process.

Trade and other receivables: Loans and receivables An estimate of any impairment is made to an allowance account on individual receivables. Allowances for estimated

irrecoverable amounts are recognised in the statement of comprehensive income when there is objective evidence that the collection of the full amount under the original terms of the invoice is no longer probable. Objective evidence would include indicators such as probable insolvency or significant difficulties in the debtor. An allowance recognised is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the effective interest rate computed at initial recognition. Impaired debts are derecognised when they are assessed as uncollectible.

Contract receivables To minimise the risks related to contract receivables, management may, at its discretion, request collateral in the form of

payment guarantees and builder’s liens for such receivables. In determining the estimate of any impairment for these receivables, an allowance is recognised and measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the effective interest rate computed at initial recognition. The calculation takes into account the existence of any collateral held against contract receivables, where applicable.

If the amount of the impairment decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the reversal for the previously recognised impairment is recognised within the statement of comprehensive income.

Derivatives The group uses derivative instruments to reduce exposure to fluctuations in foreign currency exchange rates. These instruments

mainly comprise foreign exchange contracts. Foreign exchange contracts protect the group from movements in exchange rates by fixing the rate at which a foreign currency asset or liability will be settled. It is the policy of the group not to trade in derivative financial instruments for economically speculative purposes. Derivative instruments are recognised initially at fair value and reported subsequently at fair value in the statement of financial position. Changes in fair value are recognised in the statement of comprehensive income.

21


1. PRESENTATION OF FINANCIAL STATEMENTS (continued) 1.10 Share capital Share capital issued by the company is recorded as the proceeds received, net of issue costs.

Treasury shares When shares held in the group through subsidiary companies reduce the group’s share capital, those equity instruments, held at

cost (treasury shares), are presented as a deduction against the group’s equity. No gain or loss is recognised in the statement of comprehensive income. The share capital is reduced for the par value of the shares and the balance against the share premium.

Subsidiary companies include share incentive trusts set up for the benefit of the group’s employees. Such trusts are consolidated in the group results because the group effectively controls the trust through the specific mechanisms that were established when the trust was formed. Shares issued to or held by these trusts are treated as treasury shares until such time when participants pay for or take delivery of such shares.

1.11 Taxation Current taxation Current and deferred taxes are recognised as income or an expense and included in the statement of comprehensive income,

except to the extent that it relates to items recognised in other comprehensive income or directly in equity. The current tax payable is based on taxable profit. Taxable profit differs from profit reported in the statement of comprehensive income where there are items of income or expense that are taxable or deductible in other years and it also excludes items that are not taxable or deductible under existing tax legislation.

Secondary taxation on companies is provided in respect of declared dividends, net of dividends received or receivable, and is recognised as a taxation charge in the statement of comprehensive income in the year the related dividend is declared.

Current tax for current and prior periods is, to the extent unpaid, recognised as a tax payable in the statement of financial position. If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as a tax receivable in the statement of financial position.

Current tax liabilities and current tax assets are measured at the amount expected to be paid to/(recovered from) the tax authorities, using the tax rates and tax legislation that have been enacted or substantively enacted at the reporting date.

Deferred taxation assets and liabilities A deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from

the initial recognition of goodwill, or the initial recognition of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither accounting profit/(accounting loss) nor taxable profit/(taxable loss).

A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised. A deferred tax asset is not recognised when it arises from the initial recognition of an asset or liability in a transaction that, at the time of the transaction, affects neither accounting profit/(accounting loss) nor taxable profit/(taxable loss) and is not a business combination.

A deferred tax asset is recognised for all taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except to the extent that the group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

A deferred tax asset is recognised for the carry forward of unused tax losses (and unused secondary taxation on companies’ credits) to the extent that it is probable that future taxable profit will be available against which the used tax losses and secondary taxation on companies’ credits can be utilised. The carrying amount of deferred tax asset in the statement of financial position is reviewed annually and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax legislation) that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and liabilities reflect the tax consequences that would follow from the manner in which the company expects to recover or settle the carrying amounts of its assets and liabilities at the reporting date.

22




1. PRESENTATION OF FINANCIAL STATEMENTS (continued) 1.11 Taxation (continued) Deferred taxation assets and liabilities (continued) Deferred tax assets and liabilities are offset for presentation in the statement of financial position where the company has a

legally enforceable right to do so and the income taxes relate to the same tax authority.

Deferred tax assets and deferred tax liabilities arising in the group annual financial statements from different subsidiaries are not offset as there is no allowance within South African tax legislation that allows income tax from different entities to be offset.

Value added taxation A value added taxation liability is recognised in the statement of financial position where the amount of output exceeds the

input and a value added taxation asset is recognised when the input exceeds the output value.

1.12 Leases Leases of assets where the group assumes substantially all the benefits and risks of ownership are classified as finance leases.

Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. When an arrangement is or contains a lease, that lease is recognised in terms of the lease policy below.

Finance leases – Lessee Assets leased under a finance lease are recognised as assets and liabilities in the statement of financial position at amounts

equal to the fair value of the leased asset or, if lower, the present value on the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Subsequent measurement is at amortised cost. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the terms of the lease.

Income from leases is disclosed within other income in the statement of comprehensive income.

Operating leases Rentals payable under operating leases are expensed in the statements of comprehensive income on a straight-line basis over

the term of the relevant lease.

1.13 Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis and comprises

the cost to purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completing and the estimated costs necessary to make the sale.

The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

1.14 Construction contracts A construction contract is a contract specifically negotiated for the construction of an asset or a combination of assets that are

closely interrelated or interdependent in terms of their design, technology and functions, or their ultimate purpose of use.

A group of contracts are treated as a single construction contract when the group of contracts are negotiated as a single package, the contracts are so interrelated that they are in effect part of a single project with an overall profit margin and the contracts are performed concurrently or in a continuous sequence.

An agreement for the construction of real estate is a construction contract when the buyer is able to specify the major structural elements of the design of the real estate before construction begins and/or specify major structural changes once construction is in progress. Revenue in such cases is determined in accordance with the percentage of completion of the contract. In all other contracts revenue is recognised on delivery of the constructed assets. If the entity is not required to provide materials, but only to construct the real estate, the supply is the rendering of services, and revenue is recognised on the percentage of completion basis.

23


1. PRESENTATION OF FINANCIAL STATEMENTS (continued) 1.14 Construction contracts (continued) When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract

costs incurred where it is probable those costs will be recovered. Contract costs on these contracts are recognised when incurred.

When the outcome of a construction contract can be estimated reliably, contract revenue is recognised by using the percentage of completion method as set out in note 1.18. Costs are recognised in the statement of comprehensive income as incurred. However, costs incurred in the year in connection with future activity on a contract are excluded and shown as contracts in progress. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Where recognised revenue using the percentage of completion method exceeds billed work, the balance is also shown under contracts in progress. Where billed work exceeds recognised revenue using the percentage of completion method, the balance is shown as contracting provisions.

1.15 Employee benefits Short-term employee benefits The cost of short-term employee benefits are recognised in the period in which the service is rendered and is not discounted.

The expected cost of accrued leave is recognised as an expense as the employees render service that increases their entitlement or, in the case of non-accumulating leave, when the absence occurs. Accrued leave is measured as the amount that the company expects to pay as a result of unused entitlement that has accumulated to the employees at the reporting date.

The expected cost of bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance.

Post-employment benefits Payments to a defined contribution retirement plan are charged as an expense as the related service is rendered.

The group requires monthly paid employees to partake in a group retirement fund and hourly paid employees in the relevant industry funds. These funds are managed by various portfolio managers and are governed by the Pension Funds Act.

1.16 Share-based payments Share trusts Goods or services received or acquired in a share-based payment transaction where the group settles the consideration for

those goods or services by issuing shares are classified as equity-settled share-based payments. These include share-based payment transactions where employees (including the directors) receive remuneration for services rendered to the company in the form of shares or share options, as well as share-based payment transactions where employees (including the directors) receive share options in the group share incentive scheme as a result of their employment within the group.

Goods or services received or acquired in a share-based payment transaction are recognised when the goods are received or as the services are rendered. A corresponding increase in equity is recognised if the goods or services were received in an equity-settled share-based payment transaction. When the goods or services are received or acquired in a share-based payment transaction do not qualify for recognition as assets, they are recognised as expenses in the statement of comprehensive income. Transactions with employees (including directors) are recognised as an employee cost in the statement of comprehensive income.

For share-based payment transactions with employees (including directors), the fair value of the transaction is measured as the fair value of the share options granted at the grant date.

The fair value of share options is determined using a binomial model, such as the Black-Scholes model, taking into account the terms and conditions upon which the share options were granted. The fair value of the units issued is based on the strike price at grant date.

If the share-based payments granted do not vest until the employee completes a specified period of service or achieves specified performance conditions, the group accounts for those services as they are rendered by the employee during the vesting period. The fair value that is accounted for over the vesting period is determined on the grant date of the share-based payment. The cumulative expense that is recognised at each reporting date reflects the extent to which the vesting conditions have expired or been met and the group’s best estimate of the number of share options that will ultimately vest.

24




1. PRESENTATION OF FINANCIAL STATEMENTS (continued) 1.16 Share-based payments (continued) Share trusts (continued) In the event that an employee leaves the employment of the group, the individual forfeits his right to exercise the said share-

based payment. The share-based payment is therefore cancelled and the underlying share remains under the control of the trust allowing for further reallocation thereof. To the extent that the share-based payment has not been reallocated, the share-based payment expense relating thereto ceases.

Forfeitable Share Plan (FSP) The group operates a FSP whereby the consideration for goods or services received or acquired from executive directors and selected

employees, in a share-based payment transaction, is settled, at the group’s own election, either by purchase of shares in the market, or by issuing new shares to settle the benefits. The shares may not be disposed or otherwise encumbered during the vesting period of three years. The cash cost is expensed over the vesting period in the statement of comprehensive income. In the event of resignation, voluntary termination or dismissal of the employee before the vesting period has expired, entitlement to the shares are forfeited by the individual. Upon forfeiture the shares are disposed of in the open market and the cash recovery is recognised in the statement of comprehensive income. Similarly, the cost of the unvested portion of the forfeited shares is expensed. Involuntary termination of the employment of the employee, results in the vesting period ceasing and the shares vesting on a pro rata basis.

1.17 Provisions and contingencies Provisions are recognised when the group has a present obligation as a result of a past event, it is probable that an outflow of

resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the obligation.

The amount of a provision is the present value of the best estimate of the expenditure required to settle the obligation. The amount of the provision is discounted using a pre-tax discount rate when the effect of the expected future cash outflow related to the provision is not expected to occur soon after the reporting date and the effect of discounting is material. Provisions are reviewed annually to reflect current best estimates of the expenditure required to settle the obligations.

The group raises a provision for warranties calculated at the best estimate of the costs of warranty claims. The group uses past history to estimate the volume of claims and expected costs of repairs under the warranty clause in the contract.

Contingent assets and contingent liabilities are disclosed in the notes to the annual financial statements when the fair value cannot be measured reliably.

Contingent liabilities acquired in a business combination are recognised in the annual financial statements when their fair value can be measured reliably. Subsequently, any contingent liabilities that are recognised separately in the financial statements are measured at the higher of the amount that would be recognised as a provision and the amount initially recognised less cumulative amortisation.

1.18 Revenue Contract revenue Revenue from construction contracts is recognised in accordance with the accounting policy for construction contracts and

receivables.

Revenues relating to contracts are accounted for using the percentage of completion method and are measured at the fair value of the consideration received or receivable and include variations and claims. The stage of completion is measured by reference to the survey of work performed. When the survey of work performed cannot be determined reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.

Revenue from the rendering of services is recognised when: h the amount of revenue can be measured reliably; h it is probable that the economic benefits associated with the transaction will flow to the entity; h the costs incurred can be measured reliably; and/or h the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

Operating leases Revenue from rental agreements is recognised in accordance with the accounting policy for operating leases.

25


1. PRESENTATION OF FINANCIAL STATEMENTS (continued) 1.18 Revenue (continued) Other income Interest is recognised on a time proportion basis using the effective interest rate method.

Dividend revenue is recognised in the statement of comprehensive income when the group’s right to receive payment has been established. This normally coincides with the declaration of the dividend.

1.19 Borrowing costs Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised

as part of the cost of that asset until such time as the asset is ready for its intended use. The amount of borrowing costs eligible for capitalisation is determined as the aggregate of actual borrowing costs on funds specifically borrowed for the purpose of obtaining a qualifying asset (less any temporary investment of those borrowings) and the weighted average of the borrowing costs applicable to the entity on funds generally borrowed for the purpose of obtaining a qualifying asset. The borrowing costs capitalised may not exceed the total borrowing costs incurred.

The capitalisation of borrowing costs commences when expenditures for the asset have occurred, when borrowing costs have been incurred, and the activities that are necessary to prepare the asset for its intended use or sale are in progress.

The capitalisation of borrowing costs is suspended during extended periods in which active development is interrupted and the capitalisation of borrowing costs finally ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.

All other borrowing costs arising on the borrowing of funds are recognised as an expense in the statement of comprehensive income, in the finance costs line item, in the period in which they are incurred.

Borrowing costs incurred on the investment property are expensed in terms of the transitional provisions of IAS 23 Borrowing Costs.

1.20 Dividends Dividends declared by the company to holders of the company’s shares are recognised in the statement of changes in equity.

Dividends that have not been declared at the reporting date are not accounted for in the current period. Such dividends are disclosed where the declaration occurred after the reporting date, but before these annual financial statements are approved for issue.

1.21 Translation of foreign currencies The functional currency of the group is South African Rand.

In the group annual financial statements, the results and financial position of a foreign operation are translated into Rand using the following procedures:

h Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position. h Income and expenses for each statement of comprehensive income are translated at exchange rates at the dates of the transactions or, where exchange differences did not fluctuate significantly, at the average exchange rates for the period. h All resulting exchange differences are recognised as a separate component of equity and included in the foreign currency translation reserve.

Exchange differences arising on a monetary item that forms part of a net investment in a foreign operation are recognised initially in the foreign currency translation reserve in the group annual financial statements and recognised in the statement of comprehensive income on disposal of the net investment. These exchange differences are recognised in the statement of comprehensive income in the group’s annual financial statements.

1.22 Segment reporting IFRS 8 requires an entity to adopt a “management approach” to reporting the financial performance of its segments. Segment

reporting is done in a manner consistent with the internal reporting provided to the Executive Committee, with reportable operating segments being reported at business unit level.

26




2. NEW ACCOUNTING PRONOUNCEMENTS ADOPTED 2.1 Standards and Interpretations effective and adopted in the current year In the current year, the group has adopted the following Standards and Interpretations that are effective for the current year and

that are relevant to its operations:

Amendment to IFRS 3 Business Combinations The major changes to IFRS 3 Business Combinations are as follows: IFRS 3 (2008) included a consequential amendment to IAS 39 that brought contingent consideration balances within the scope

of that standard. This means that instead of changes in the amount of contingent consideration being accounted for as an adjustment to the cost of the original business combination, they are now accounted for in accordance with IAS 39 and recognised in the statement of comprehensive income. The amendment clarifies that the change in scope of IAS 39 is applied to business combinations on a prospective basis, meaning that where a business combination took place before the date of adoption of IFRS 3 (2008), changes in contingent consideration are accounted for as an adjustment to the cost of the original business combination.

The amendment clarifies that the option to measure non-controlling interest (NCI) at either fair value, or the proportionate share

of the acquisition date fair value of the acquiree’s identifiable net assets that are recognised by the acquirer, applies only to instruments that give the NCI a present ownership interest and entitle the holder to a proportionate share of net assets in the event of liquidation. All other components of NCI are measured at their acquisition date fair value, unless another measurement is required by IFRS.

IFRS 3 (2008) currently contains guidance on the attribution of the market-based measure of an acquirer’s share-based payment awards that are issued in exchange for acquiree awards between consideration transferred and post-combination compensation cost when an acquirer is obliged to replace the acquiree’s existing awards. IFRS 3 is amended so that the guidance for such awards also applies to voluntarily replaced unexpired acquiree awards.

The amendment is effective for periods beginning on or after 1 January 2011.

The amendment did not impact the group’s annual financial statements.

Amendment to IFRS 7 Financial Instruments: Disclosures IFRS 7 was amended as part of the annual improvements to clarify the existing disclosure requirements. The amendments

encourage qualitative disclosures in the context of the quantitative disclosure that is required to help users to form an overall picture of the nature and extent of risks arising from financial instruments. This amendment also clarifies the required level of disclosure around credit risk and collateral held and provides relief from disclosure of renegotiated loans.

The amendment is effective for periods beginning on or after 1 January 2011.

Adoption of the standard resulted in disclosure changes for financial instruments. Amendment to IAS 1 Presentation of Financial Statements The amendment clarifies that an entity may present the analysis of other comprehensive income by item either in the statement

of changes in equity or in the notes to the financial statements.

The standard is effective for periods beginning on or after 1 January 2011.

Adoption of the standard resulted in disclosure changes. Items of other comprehensive income are presented in the statement of changes in equity.

Amendment to IAS 21 The Effects of Changes in Foreign Exchange Rates Consequential amendments from changes to IAS 27 Consolidated and Separate Financial Statements (Clarification on the

transition rules in respect of the disposal or partial disposal of an interest in a foreign operation).

The standard is effective for periods beginning on or after 1 July 2010.


27


2. NEW ACCOUNTING PRONOUNCEMENTS ADOPTED (continued) 2.1 Standards and Interpretations effective and adopted in the current year (continued) Amendment to IAS 24 Related Party Disclosure The major changes to IAS 24 Related Party Disclosure are as follows: IAS 24 has been amended to provide for a partial exemption of related party disclosures for transactions between government-

related entities as well as with the government itself. For these entities, the general disclosure requirements of IAS 24 (eg, disclosing the amount of the transactions, the amount of outstanding balances, including commitments, provisions for doubtful debts, expenses in respect of bad or doubtful debt or commitments with related parties) will not apply.

The inconsistencies in the definition of a related party have been removed such that the disclosure going forward would focus on individually or collectively significant transactions and related outstanding balances.


Adoption of the standard resulted in related party disclosure changes.

Amendments to IAS 27 Consolidated and Separate Financial Statements The amendment clarifies that the consequential amendments from IAS 27 made to IAS 21 The Effect of Changes in Foreign

Exchange Rates, IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures apply prospectively for annual periods beginning on or after 1 July 2009 or earlier when IAS 27 is applied earlier.



Amendments to IAS 28 Investments in Associates Consequential amendments from changes to IAS 27 Consolidated and Separate Financial Statements (Clarification on the




Amendments to IAS 31 Interest in Joint Ventures Consequential amendments from changes to IAS 27 Consolidated and Separate Financial Statements (Clarification on the




Amendments to IAS 34 Interim Financial Reporting The amendment provides guidance to illustrate how to apply disclosure principles in IAS 34 and add disclosure requirements

around: h the circumstances likely to affect fair values of financial instruments and their classification; h transfers of financial instruments between different levels of the fair value hierarchy; h changes in classification of financial assets; and h changes in contingent liabilities and assets.



28




2. NEW ACCOUNTING PRONOUNCEMENTS ADOPTED (continued) 2.2 Standards and Interpretations issued and not yet effective The group has chosen not to early adopt the following Standards and Interpretations, which have been published and are

mandatory for the group’s accounting periods beginning on or after 1 March 2012 or later periods. Management is currently assessing the impact of these amendments and new Interpretations. However, management believes that neither the new nor the revised Standards and Interpretations will have a significant impact on the group’s accounting policies.

Accounting Standard/Interpretation Type

Effective date annual periods beginning on or after

IFRS 1 First-time Adoption of International Financial Reporting Standards Amendment 1 July 2011

Guidance provided for entities emerging from severe hyperinflation and starting or resuming presentation of IFRS-compliant financial statements.

Fixed date of 1 January 2004 relating to the retrospective application of the derecognition requirements of IAS 39 removed. Relief for first-time adopters from calculating day 1 gains on transactions that occurred before the date of adoption.

Amendment 1 July 2011

Government loans with below market rate of interest not required to retrospectively apply IFRS 9 and IAS 20.

Amendment 1 January 2013

IFRS 7 Financial Instruments: Disclosures Amendment 1 July 2011

Amendments require additional disclosure on transfer transactions of financial assets, including the possible effects of any residual risks that the transferring entity retains. The amendments also require additional disclosures if a disproportionate amount of transfer transactions are undertaken around the end of a reporting period.

Offsetting financial assets and financial liabilities Amendment 1 January 2013

Mandatory effective date for offsetting financial assets and financial liabilities amendment deferred to year that IFRS 9 is first applied.


IFRS 9 Financial Instruments New 1 January 2013

New standard that forms the first part of a three-part project to replace IAS 39 Financial Instruments: Recognition and Measurement.

Mandatory effective date deferred to years beginning on or after 1 January 2015.


29


2. NEW ACCOUNTING PRONOUNCEMENTS ADOPTED (continued) 2.2 Standards and Interpretations issued and not yet effective (continued)



IFRS 10 Consolidated Financial Statements New 1 January 2013

New standard that replaces the consolidation requirements in SIC-12 Consolidation – Special Purpose Entities and IAS 27 Consolidated and Separate Financial Statements. This standard builds on existing principles by emphasising the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard also provides additional guidance to assist in the determination of control where this is difficult to assess.

IFRS 11 Joint Arrangements

New standard that deals with the accounting for joint arrangements and focuses on the rights and obligations of the arrangement, rather than its legal form. Standard requires an equity accounting for interests in joint ventures.

New 1 January 2013

IFRS 12 Disclosure of Interests in Other Entities New 1 January 2013

New standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose entities and other off-balance sheet entities.

IFRS 13 Fair Value Measurement New 1 January 2013

New standard providing guidance on fair value measurement and disclosure requirements.

IAS 1 Presentation of Financial Statements Amendment 1 July 2012

Entity to group together items within other comprehensive income (OCI) that may be reclassified to profit or loss, and those that may not, in order to facilitate the assessment of their impact on the overall performance of an entity.

IAS 12 Income Taxes Amendment 1 January 2012

A rebuttable presumption introduced that an investment property will be recovered in its entirety through sale.

IAS 19 Employee Benefits Amendment 1 January 2013

h change in definition of short-term employee benefits;

h elimination of corridor approach for defined benefit plans (DBFs);

h actuarial gains or losses in DBFs to be recognised in OCI;

h enhanced disclosures for DBFs; and

h recognition and measurement of termination benefits.

30




2. NEW ACCOUNTING PRONOUNCEMENTS ADOPTED (continued) 2.2 Standards and Interpretations issued and not yet effective (continued)



IAS 27 Separate Financial Statements Amendment 1 January 2013

Consequential amendments resulting from the issue of IFRS 10, IFRS 11 and IFRS 12. Consolidation requirements now contained in IFRS 10.

IAS 28 Investments in Associates and Joint Ventures Amendment 1 January 2013

Consequential amendments arising as a result of issuing IFRS 10, IFRS 11 and IFRS 12.

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine Amendment 1 January 2013

31


Notes to the annual financial statementsfor the year ended 29 February 2012

Group

3. PROPERTY, PLANT AND EQUIPMENT

Cost/valuation

R’000

Accumulated depreciation

R’000

Carrying valueR’000

Owned and leased assets

2012

Land and buildings 265 956 – 265 956

Transport and motor vehicles 115 940 (56 774) 59 166

Plant and equipment 1 196 264 (522 151) 674 113

Furniture, fittings, office and computer equipment 67 023 (46 348) 20 675

1 645 183 (625 273) 1 019 910

2011

Land and buildings 225 899 – 225 899

Aircraft 600 – 600

Transport and motor vehicles 98 494 (48 142) 50 352

Plant and equipment 985 547 (379 495) 606 052

Furniture, fittings, office and computer equipment 51 304 (37 290) 14 014

Leasehold improvements 5 429 (675) 4 754

1 367 273 (465 602) 901 671

The carrying amount of owned property, plant and equipment of the group can be reconciled as follows:

Carryingvalue at

beginningof yearR’000

Re-valuation

R’000

Currencytrans-lationR’000

AdditionsR’000

DisposalsR’000

Depre-ciation R’000

Impair-ment

R’000

Carryingvalue

at endof yearR’000

Owned assets

2012

Land and buildings 225 899 25 000 – 18 599 (890) – (2 652) 265 956

Aircraft 600 – – – (600) – – –

Transport and motor vehicles 46 261 – 197 32 123 (5 491) (17 089) – 56 001

Plant and equipment 587 004 – 4 345 226 815 (5 581) (152 601) – 659 982

Furniture, fittings, office and computer equipment 14 014 – 108 17 993 (140) (11 300) – 20 675

Leasehold improvements 4 754 – – – (4 754) – – –

878 532 25 000 4 650 295 530 (17 456) (180 990) (2 652) 1 002 614

On 29 February 2012 all land and buildings have been revalued in terms of the accounting policy of the group. This revaluation resulted in a gain on property of R25 million (2011: Rnil) and an impairment of R3 million (2011: Rnil). The valuations were done by an independent valuer and include a review of title deed information, town planning conditions, property descriptions and improvements as well as locality. Market conditions, demand, comparable sales and vacant land values were also taken into consideration when performing the valuations.

Had land and buildings been carried on the cost model, the carrying value of land and buildings would have been R244 million for the 2012 financial year.

No impairment losses were recognised or reversed directly into the statement of changes in equity.

32


Notes to the annual financial statements continued


Group

2012R’000

2011R’000

3. PROPERTY, PLANT AND EQUIPMENT (continued)

The split between land and buildings is as follows:

Land 75 591 43 692

Buildings 190 365 182 207

265 956 225 899

A detailed register of land and buildings is kept at the registered office of the group. A copy thereof is available on written request.

Carryingvalue at


Re-valuation

R’000


AdditionsR’000

DisposalsR’000


Impair-ment

R’000

Carryingvalue


2011

Buildings 170 751 – – 55 316 (168) – – 225 899

Aircraft 600 – – – – – – 600

Transport and motor vehicles 50 366 – 70 15 610 (7 528) (12 257) – 46 261

Plant and equipment 526 296 – (633) 197 684 (13 648) (122 695) – 587 004

Furniture, fittings, office and computer equipment 17 848 – (15) 3 827 (158) (7 488) – 14 014

Leasehold improvements 8 495 – – – (3 066) (675) – 4 754

774 356 – (578) 272 437 (24 568) (143 115) – 878 532

The carrying amount of leased property, plant and equipment of the group can be reconciled as follows:

Carryingvalue at


AdditionsR’000

DisposalsR’000


Impair-ment

R’000

Carryingvalue


Leased assets

2012

Transport and motor vehicles 4 091 – – (926) – 3 165

Plant and equipment 19 048 – (1 256) (3 661) – 14 131

23 139 – (1 256) (4 587) – 17 296

2011

Transport and motor vehicles 4 060 1 477 (395) (1 051) – 4 091

Plant and equipment 13 449 10 348 (1 261) (3 488) – 19 048

17 509 11 825 (1 656) (4 539) – 23 139

33


Group

3. PROPERTY, PLANT AND EQUIPMENT (continued)

The carrying amount of owned and leased property, plant and equipment of the group can be reconciled as follows:

Carryingvalue at


Re-valuation

R’000


AdditionsR’000

DisposalsR’000


Impair-ment

R’000

Carryingvalue


Owned and leased assets

2012

Owned assets 878 532 25 000 4 650 295 530 (17 456) (180 990) (2 652) 1 002 614 Leased assets 23 139 – – – (1 256) (4 587) – 17 296

Total assets 901 671 25 000 4 650 295 530 (18 712) (185 577) (2 652) 1 019 910

2011

Owned assets 774 356 – (578) 272 437 (24 568) (143 115) – 878 532 Leased assets 17 509 – – 11 825 (1 656) (4 539) – 23 139

Total assets 791 865 – (578) 284 262 (26 224) (147 654) – 901 671

Additions can be split as follows:

2012 2011

Additions

Additions due to

businesscombi-nations Total Additions

Additionsdue to

businesscombi-nations Total

Land 18 599 – 18 599 53 254 2 062 55 316

Transport and motor vehicles 32 123 – 32 123 13 216 3 871 17 087 Plant and equipment 226 815 – 226 815 200 566 7 466 208 032 Furniture, fittings, office and computer equipment 17 993 – 17 993 3 581 246 3 827

295 530 – 295 530 270 617 13 645 284 262

The group’s obligations under instalment sale agreements and finance leases are secured by certain transport and motor vehicles as well as plant and equipment (refer to notes 17.3 and 17.4). These assets have a net book value at year end amounting to R379 million (2011: R300 million).

All disposal of assets result from the scrapping or sale and replacement thereof in the normal course of business.

The carrying amount of property, plant and equipment of the company can be reconciled as follows:

Company

Carryingvalue at


Re-valuation

R’000Additions

R’000Disposals

R’000


Carryingvalue


Owned assets

2012

Furniture, fittings, office and computer equipment – – – – – –

2011

Furniture, fittings, office and computer equipment 1 333 – – (1 333) – –

1 333 – – (1 333) – –

34


Group Company

2012R’000

2011R’000

2012R’000

2011R’000

4. INVESTMENT PROPERTY

Carrying value at beginning of the year 55 422 34 337 – –

Additions at cost 2 251 21 085 – –

Carrying value at year end 57 673 55 422 – –

Land and buildings 57 673 55 422

Total directors’ valuation of investment property 57 673 55 422 – –

Details of the property are as follows:

PwC Office Park, Thabo Mbeki Drive, Lusaka, Zambia

It is the policy of the directors to have all investment properties valued every five years by an independent valuer. The directors estimate the fair value of the investment property at R58 million (2011: R55 million), and take into account prevailing market rentals, occupation levels and capitalisation rates. The capitalisation rate applied to the property was based on a weighted average cost of capital of 8,6% (2011: nil).

5. INVESTMENT IN SUBSIDIARIES

Subsidiaries

Proportion held directly and Company

Name of company

voting rights Cost

Country of incorporation

2012%

2011%

2012R’000

2011R’000

Stefanutti Stocks International Holdings (Pty) Ltd South Africa 100 100 9 437 9 437

Stefanutti Stocks Civils KZN (Pty) Ltd South Africa 100 100 – 83 700

Stefanutti Stocks Building Gauteng (Pty) Ltd South Africa 100 100 – –

Stefanutti Stocks Civils Gauteng (Pty) Ltd South Africa 100 100 – 37 243

Stefanutti Stocks Earthworks (Pty) Ltd South Africa 100 100 – 28 400

Stefanutti Stocks Building Western Cape (Pty) Ltd South Africa 100 100 – –

Pegasus Properties (Pty) Ltd South Africa 70 70 * *

Stefanutti Stocks Material Handling (Pty) Ltd South Africa 100 100 * *

Civil & Coastal Construction (Pty) Ltd South Africa 100 100 – 65 233

Skelton & Plummer Investment Holding Company (Pty) Ltd South Africa 100 100 – 48 187

Stefanutti Stocks Investments (Pty) Ltd South Africa 100 100 * *

Stefanutti Stocks (Pty) Ltd South Africa 100 100 1 087 574 1 087 574

Apollo E&I Construction (Pty) Ltd South Africa 100 100 19 691 19 691

1 116 702 1 379 465

*Amount below R1 000.

With effect from 1 March 2010 the South African business operations were restructured, in terms of which certain operations, previously held in subsidiary companies, commenced operations as divisions of Stefanutti Stocks (Pty) Ltd.

As part of the restructuring process, a dividend in specie was declared from these subsidiary companies to the holding company, resulting in a dividend received of R237,5 million (2011: R157,6 million). The investments held in these subsidiaries were impaired due to the resulting zero net asset values of these companies. The impairment of R223,2 million (net of share premium) (2011: R157,6 million) was offset against the cost of the investments.



35


Group

6. INVESTMENT IN ASSOCIATES

Investment in associate companies

Country of incorporation

Nature of business

Number of shares owned

Unlisted associates

Ukumba Brick & Quarry (Pty) Ltd South Africa Quarry 64 ordinary shares of R1 each

Broad Brush Investments (Pty) Ltd South Africa Property development 50 ordinary shares of R1 each

Bongwe Investments (Pty) Ltd Botswana Concession 1 055 ordinary shares of no par value

Plot 21 Investments (Pty) Ltd Botswana Concession 436 ordinary shares of no par value

Stobech Facilities Management (Pty) Ltd Botswana Facilities management 33 ordinary shares of BWP1 each

Percentage held and voting rights

Share of profit/(loss) for the year

Dividend received Share value* Loans

Total value of investment

Investment in associate companies

2012%

2011%

2012R’000

2011R’000

2012R’000

2011R’000

2012R’000

2011R’000

2012R’000

2011R’000

2012R’000

2011R’000

Unlisted associates

Ukumba Brick & Quarry (Pty) Ltd 32 32 800 1 840 800 1 840 – – – – – –

Begane Mobile Crushers (Pty) Ltd – – – 625 – 806 – – – – – –

Broad Brush Investments (Pty) Ltd 50 50 (595) (125) – – 985 1 580 5 492 2 682 6 477 4 262

Walk Aboard Properties (Pty) Ltd – 25 – – – – – 1 454 – – – 1 454

Bongwe Investments (Pty) Ltd 34 34 610 (503) – – 1 364 754 3 905 4 849 5 269 5 603

Plot 21 Investments (Pty) Ltd 33 33 516 327 – – 2 642 2 126 720 642 3 362 2 768

Stobech Facilities Management (Pty) Ltd 33 33 437 548 – 180 888 452 – – 888 452

1 768 2 712 800 2 826 5 879 6 366 10 117 8 173 15 996 14 539

* Share value represents cost of shares plus profit/(loss) from the associate less dividend received and takes into account any forex translation transactions, and approximates the fair value of the investment.

The investment in Walk Aboard Properties (Pty) Ltd has been exchanged for development property. Broad Brush Investments (Pty) Ltd is regarded as an associate as the group only has significant influence, ie the power to participate in the financial and operating policy decisions of the investee, and no control or joint control over those policies.

36




Group

2012R’000

2011R’000

6. INVESTMENT IN ASSOCIATES (continued)

AGGREGATE FINANCIAL INFORMATION:

Statement of financial position

Group’s share of assets and liabilities:

Assets

Non-current assets 80 476 81 083

Current assets 20 974 20 677

101 450 101 760

Equity and liabilities

Shareholders’ interest 10 018 10 826

Non-current liabilities 84 513 81 982

Current liabilities 6 919 8 952

101 450 101 760

Statement of comprehensive income

Group’s share of income and expenditure:

Revenue 12 946 14 984

Profit before taxation 2 404 3 889

Taxation 636 1 177

Profit after taxation 1 768 2 712

7. JOINT VENTURES

A proportion of the group’s operations are performed through joint ventures as unincorporated arrangements such as partnerships and contracts.

The group’s aggregate proportionate share of joint ventures included in the consolidated statements of financial position is as follows:

Current assets 985 425 774 854

Current liabilities 852 340 671 468

Net assets 133 085 103 386

The group’s aggregate proportionate share of joint ventures included in the consolidated statements of comprehensive income is as follows:

Revenue 1 999 942 1 324 003

Profit after taxation 201 582 207 198

37


Group

7. JOINT VENTURES (continued)

Nature ofjoint venture

Group’s% interest

Details of significant joint venture operations:Stefanutti & Bressan Civils/Concor – Goedgevonden Structures 50Concor/Stefanutti & Bressan Civils – Gauteng Freeway Structures 50Kusile Civils Works Joint Venture Structures 25Stefanutti/Wramatshe Joint Venture Structures 70Stefanutti Stocks Cycad Cerimele Pipeline Joint Venture – Komati Water Scheme Structures 50Stefanutti Stocks Namibia Construction Joint Venture Structures 58WBHO/Civil & Coastal Construction – Ben Schoeman Dock Structures 40Saldanha Access Platforms Joint Venture Structures 50Stefanutti Stocks/Franki – Piling at Kusile Power Station Structures 50Stefanutti Basil Read – Khangela Bridge Structures 33,33Group 5/WBHO/Stefanutti Stocks/Pandev – Walter Gilbert Road Structures 20Kusile Silos Joint Venture Structures 44One Tree Hill Joint Venture Structures 50Sierra Leone Pepel Port Marine Works Structures 50Group 5/WBHO/Stefanutti & Bressan/Pandev – Durban Stadium Structures and building 20Stefanutti & Bressan Building Inland/CA Brand – Houghton Apartments Building 50Stefanutti & Bressan Building Inland/Trencon Construction – Standard Bank Office Park Building 65Fikile/Stocks Joint Venture 6 – Freedom Park Building 70Fikile/Stocks Joint Venture 7 – OR Tambo Multi-storey Parkade Building 80Grinaker/Stocks Joint Venture – Michelangelo Towers Building 50JR-Stocks-Modisc Joint Venture – Mmabatho Legislator Building 70JR-Stocks-Madona Joint Venture – Vryburg Hospital Building 75JST – Stefanutti Stocks Joint Venture – Moruleng Stadium/Mini Garona Office Park Building 70Fikile/Stocks Joint Venture 3 – Mohale’s Gate Building 70Luvano Project Joint Venture – Joshco Building 60JST – Stefanutti Stocks Joint Venture 2 – Lebone 2 College Minor Works Building 85Lumkani Construction/Stefanutti Stocks Joint Venture – Mpumalanga Archive Building Building 80Fikile Stocks Joint Venture 8 – Nelspruit Disaster Management Building 60Stefanutti Stocks Vlaming Norse Joint Venture – Illanga Mall Building 60Sikhuphe International Airport Building 55Burgersfort Joint Venture – Burgersfort houses Building 50Stefanutti Stocks Basil Read Kusile Building Joint Venture – Kusile Building 50JR Stocks Madona – Kanonibo – Brits Hospital Building 100Biyana Stefanutti Stocks Joint Venture – MTN Doornfontein Building 70Stefanutti Stocks WBHO Portside Joint Venture – Portside Building 50Stefanutti Stocks CMH Joint Venture – Cecilia Makiwane Hospital Building 75Stefanutti Stocks Housing/Timbela Joint Venture – ITC2 Building Building 70S&B Building/Innotim/Wilmo Construction Joint Venture Building 60S&B Building/Frontline Joint Venture Building 85Stefanutti Stocks Mmatshepe Joint Venture – Tshituni to Makushu Road Roads and earthworks 70Stefanutti Stocks Mmatshepe Joint Venture – Mapela to Bakenburg Road Roads and earthworks 70Details of significant joint venture companies:Al-Tayer Stocks LLC Interior fit-out 50Zener Steward LLC Electrical 50Both companies are incorporated in Dubai.

38




Group

8. GOODWILL AND INTANGIBLE ASSETS

GoodwillR’000

Contract and customer-

related R’000

Trade names and patents

R’000Technology

R’000Total

R’000

Cost

Balance at 1 March 2010 1 065 578 44 009 73 338 1 958 1 184 883

Acquisitions (note 33) 13 249 – 450 – 13 699

Balance at 28 February 2011 1 078 827 44 009 73 788 1 958 1 198 582

Balance at 1 March 2011 1 078 827 44 009 73 788 1 958 1 198 582

Acquisitions – – – – –

Balance at 29 February 2012 1 078 827 44 009 73 788 1 958 1 198 582

Amortisation

Balance at 1 March 2010 (1 992) (43 568) (12 094) (682) (58 336)

Amortisation for the year – (441) (7 358) (403) (8 202)

Balance at 28 February 2011 (1 992) (44 009) (19 452) (1 085) (66 538)

Balance at 1 March 2011 (1 992) (44 009) (19 452) (1 085) (66 538)

Amortisation for the year – – (7 359) (230) (7 589)

Balance at 29 February 2012 (1 992) (44 009) (26 811) (1 315) (74 127)

Carrying amounts

At 1 March 2011 1 076 835 – 54 336 873 1 132 044

At 29 February 2012 1 076 835 – 46 977 643 1 124 455

At 1 March 2010 1 063 586 441 61 244 1 276 1 126 547

At 28 February 2011 1 076 835 – 54 336 873 1 132 044

Contract and customer-related intangible assets relates to existing contracts with customers acquired as part of business combinations, as well as future pipeline orders. Technology-related intangible assets encompass technology that was acquired. The average remaining amortisation periods for trade names, patents and technology-related intangibles range between 2,8 and 6,3 years (2011: 3,8 and 7,3 years). There are no impairment losses for the periods presented.

Impairment testing for cash-generating units containing goodwill

For the purpose of impairment testing, goodwill is allocated to the group’s operating divisions which represent the lowest cash-generating unit within the group at which the goodwill is monitored for internal management purposes.

39


Group

2012R’000

2011R’000

8. GOODWILL AND INTANGIBLE ASSETS (continued)

The aggregate carrying amounts of goodwill allocated to each unit are as follows:

Carrying values of goodwill per cash-generating unit

Structures business unit 50 704 50 704

Stefanutti Stocks Marine 16 167 16 167

Stefanutti Stocks Civils KZN 34 537 34 537

Building business unit 912 023 912 023

Stefanutti Stocks Building 789 700 789 700

Stefanutti Stocks Housing 122 323 122 323

Roads & Earthworks business unit 22 573 22 573

Stefanutti Stocks Roads & Earthworks 22 573 22 573

Mining Services business unit 58 926 58 926

Stefanutti Stocks Mining 58 926 58 926

Mechanical, Electrical & Power business unit 32 609 32 609

Mechanical, Electrical & Power 21 547 21 547

Apollo E&I Construction (Pty) Ltd 11 062 11 062

1 076 835 1 076 835

Discounted cash flow forecasts are done by management as the basis for determining the estimated recoverable amount. Appropriate growth and discount rates, given the industry and location of the cash-generating unit and its operations, are applied in the forecast. The recoverable amount of each unit mentioned above was based on its value in use, and was determined to be higher than its carrying amount. No impairment loss was recognised for any cash-generating unit. Although Mechanical, Electrical & Power is disclosed separately as a business unit above, it is aggregated with the Mining Services business unit for operating segment disclosure puposes.

40




Group

8. GOODWILL AND INTANGIBLE ASSETS (continued)

The value in use of the different business units was determined by discounting the future cash flow generated from the continuing use of the unit and was based on the following key assumptions:

Constant growth rate (a)

Average anticipated annual

revenue growth in % (b) WACC

2012%

2011%

2012%

2011%

2012%

2011%

Structures business unit

Stefanutti Stocks Marine 3 3 17,04 23,2 8,1 11,8

Stefanutti Stocks Civils KZN 3 3 17,95 19,6 10,7 12,6

Building business unit

Stefanutti Stocks Building 3 3 17,29 18,3 10,5 12,1

Stefanutti Stocks Housing 3 3 20,87 18,3 9,1 12,7

Roads & Earthworks business unit

Stefanutti Stocks Roads & Earthworks 3 3 12,79 17,5 9,3 11,6

Mining Services business unit

Stefanutti Stocks Mining Services 3 3 10,0 12,2 8,6 10,2

Mechanical, Electrical & Power business unit

Mechanical, Electrical & Power 3 3 20,06 39,4 8,7 11,8

Apollo E&I Construction (Pty) Ltd 3 3 49,89 28,6 20,1 12,6

Cash flows were projected based on actual operating results and four-year forecasts. Cash flows beyond this were extrapolated using a constant growth rate of (a) percent, which does not exceed the long term average growth rate for the industry. Appropriate growth and discount rates, given the industry and location of the cash-generating unit and its operations, are applied to the forecast.

Revenue forecasts were used as the basis for determining the value assigned to each cash-generating unit. The anticipated annual revenue growth included in the cash flow projections was an average of (b) percent for the years 2013 to 2016. The values assigned to the key assumptions represent management’s assessment of the businesses and are based on both external sources and internal sources. A sensitivity analysis has been performed adjusting both the growth rate and WACC by 1%. This analysis did not result in any material impact on the valuation of goodwill. Although Mechanical, Electrical & Power is disclosed separately as a business unit above, it is aggregated with the Mining Services business unit for operating segment disclosure puposes.

41


Group Company

2012R’000

2011R’000

2012R’000

2011R’000

9. DEFERRED TAXATION9.1 Deferred tax assets

The balance comprises:Property, plant and equipment (12) – – – Provisions 7 200 2 723 1 423 1 537 Retentions – 424 – – Future expenditure allowances 697 – – – Income overclaimed – 3 557 – – Prepaid expenses – (29) – – Assessed losses 1 051 898 – –

8 936 7 573 1 423 1 537 Balance at beginning of the year 7 573 45 303 1 537 1 529 Movements during year attributable to:Temporary differences 1 365 (37 730) (114) 8 Revaluation of property (9) – – – Currency translation 7 – – –Balance at end of the year 8 936 7 573 1 423 1 537

All companies with deferred tax asset balances are currently trading and expect to make profits that will enable them to recover the deferred tax assets.

9.2 Deferred tax liabilitiesThe balance comprises:Property, plant and equipment 91 848 77 378 – – Intangible assets 9 190 15 064 – – Provisions (289 559) (163 940) – – Provision for bad debts (8 283) (7 586) – – Retentions 34 332 36 071 – – Future expenditure allowances 245 483 147 824 – – Income overclaimed (49 184) (54 218) – – Work in progress 19 544 (647) – – Fair value adjustments – 2 366 – – Revaluation of properties 2 339 1 641 – – Other 5 494 (192) – –

61 204 53 761 – – Balance at beginning of the year 53 761 68 252 – – Movements during year attributable to:Temporary differences 7 576 (13 621) – – Intangible assets (2 119) (2 291) – – Arising from acquisitions – 1 626 – – Revaluation of property 2 339 – – – Currency translation (353) (205) – – Balance at end of the year 61 204 53 761 – –

Use and sales rate

The deferred tax rate applied to the fair value adjustments of investment property/financial assets is determined by the expected manner of recovery. Where the expected recovery of the investment property/financial asset is through sale, the capital gains tax rate of 18,67% (2011: 14,00%) is used. If the expected manner of recovery is through use, the normal tax rate of 28,00% (2011: 28,00%) is applied. If the manner of recovery is partly through use and partly through sale, a combination of capital gains tax rate and normal tax rate is used.

42




Group Company

2012R’000

2011R’000

2012R’000

2011R’000

10. INTERGROUP LOAN ACCOUNTSStefanutti Stocks International Holdings (Pty) Ltd – – – 1 Stefanutti & Bressan Share Incentive Trust – – 36 438 46 615 Stefanutti Stocks (Pty) Ltd – – 184 623 (104 499)Apollo E&I Construction (Pty) Ltd – – – 16 330

– – 221 061 (41 553)

Current assets – – 221 061 62 946 Current liabilities – – – (104 499)

– – 221 061 (41 553)

SubsidiariesCredit quality of loans to group companiesThe loans to group companies are neither past due nor impaired and the credit quality can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates. Based on the aforementioned, the company is of the opinion that the credit quality of intergroup loan accounts is good. The fair value of these loans equals their carrying value due to the short-term nature of the loans.

Fair value of intergroup loan accounts – – 221 061 (41 553)

11. INVENTORIESConsumables 94 036 78 851 – –

12. CONTRACTS IN PROGRESSCosts incurred plus profits recognised, less the sum of recognised losses and progress billings relating to contracts in progress at year end 431 445 175 170 – –

13. TRADE AND OTHER RECEIVABLESFinancial instrumentsContract receivables 1 663 590 1 209 355 – – Retention debtors 278 084 197 927 – – Allowance for doubtful debts (51 283) (48 309) – – Other receivables 95 905 73 970 – – Amounts due by joint ventures 166 170 98 858 – –

2 152 466 1 531 801 – – Non-financial instrumentsPrepayments 52 890 33 146 3 972 2 463 VAT 24 302 38 683 – –

2 229 658 1 603 630 3 972 2 463

Ageing of contract receivablesAs at 29 February 2012 the ageing analysis of contract receivables is as follows:Not past due and not provided for

1 078 010 667 691 – – 224 585 205 962 – –

1 302 595 873 653 – –

43


Group Company

2012R’000

2011R’000

2012R’000

2011R’000

13. TRADE AND OTHER RECEIVABLES (continued)Past due but not impaired

69 135 90 180 – – 65 693 95 888 – –

171 933 97 887 – – 306 761 283 955 – –

Impaired 54 234 51 747 – – 1 663 590 1 209 355 – –

The average credit period is 60 days. Interest is charged as per agreements reached with individual clients and is as per signed contracts. The group has the right to waive interest as it deems necessary. Before accepting a new client, the group runs thorough credit and background checks in order to determine the potential customer’s creditworthiness. All contracts and clients’ creditworthiness are assessed on an individual and ongoing basis and the assessment includes a review of past default rates where such information is available. As a result of these policies and procedures, the credit quality of contract receivables that are not past due and not provided for is considered to be good.

The information relating to debtors of which the payment terms were renegotiated during the year is as follows:

As at 29 February 2012 an amount of R18,0 million (2011: R31,9 million) was overdue by more than 120 days. In December 2010 a payment plan was accepted whereby the debt would be repaid in equal quarterly instalments of R3,6 million which commenced in December 2010 with a final payment in March 2013.

Movement in allowance for doubtful debtsBalance at beginning of the year (48 309) (92 119) – – Amounts provided for during the year (9 772) (19 254) – – Amounts written off as uncollectible 6 677 – – – Amounts recovered during the year 121 – – – Unused amounts reversed – 63 064 – – Balance at end of the year (51 283) (48 309) – –

The group has provided for individual receivables based on estimated cash flows, determined by reference to past default experience. The carrying amount of impaired contract receivables is R54,2 million (2011: R51,7 million) before any provisions for doubtful debt.

Collateral held for contract receivablesContract receivables 93 000 93 873 – – Collateral held in the form of:Payment guarantee 128 370 79 183 – – Builder’s lien 1 942 737 – –

Terms and conditions associated with use of collateral

Payment guaranteeGuarantees are received from clients on signing the construction contract when required. Payment guarantees can be called on when the client is in default on negotiated terms. Guarantees are issued for specified periods and expire on final completion of the contract.

Builder’s lien This is the right the contractor has over the construction (the building) when the client is in default on negotiated terms. The builder’s lien is not readily convertible into cash, because of the nature of the collateral. The group will hold the right until payment is received should there not be a market for disposing of such an asset.

44




Group Company

2012R’000

2011R’000

2012R’000

2011R’000

14. BANK BALANCES

Current assets

Bank balance 923 344 1 082 471 2 467 6 589

Current liabilities

Bank balance (32 518) (4 312) – –

890 826 1 078 159 2 467 6 589

Credit facilities, inclusive of overdrafts, asset-based finance and guarantees extended by bankers to the group, are as follows:

Currency CU’000 CU’000

Nedbank Limited R 1 381 180* 981 180*

Absa Bank Limited R 170 000* 170 000*

The Standard Bank of South Africa Limited R 15 000 15 000

First National Bank, a division of FirstRand Bank Limited R 446 000* 180 460*

Banco Internacional de Mozambique MZN 125 000 –

Barclays Bank – Dubai AED 10 000 7 500

Standard Chartered Bank AED 55 000 50 500

Standard Chartered Bank AED 1 530 –

First Gulf Bank AED – 5 450

Emirates NBD AED 5 050 2 525

HSBC QAR 5 000* 6 000*

HSBC AED 30 250 –

The banking facilities of the companies and group are secured by way of cross deeds of suretyship provided by all group companies.

*The company signed suretyships for the above facilities.

45


Group Company

2012R’000

2011R’000

2012R’000

2011R’000

15. SHARE CAPITAL AND PREMIUM

Authorised

400 000 000 ordinary shares of 0,00025 cents each (2011: 400 000 000 ordinary shares of 0,00025 cents each) 1 1 1 1

1 1 1 1

Issued

188 080 746 ordinary shares of 0,00025 cents each (2011: 188 080 746 ordinary shares of 0,00025 cents each) * * * *

Issued shares remained the same during the year (2011: nil shares issued).

Treasury shares at the reporting date amounted to 15 130 969 (2011: 16 380 097).

Share premium

1 011 195 1 020 618 1 161 538 1 161 538

8 648 (9 423) – –

1 019 843 1 011 195 1 161 538 1 161 538

*Less than R1 000.

16. EMPLOYEE SHARE INCENTIVE SCHEMES

The group has four share-based payment schemes, namely The Stefanutti & Bressan Share Incentive Trust, The Stocks Building Africa Employees Share Trust, The Housing Africa Employees Share Trust and the Forfeitable Share Plan. All the share-based payment schemes were formed with the objective of attracting, retaining and rewarding key staff by allocating shares in the company to them.

16.1 Share-based payments reserve

The Stefanutti & Bressan Share Incentive Trust

Options are granted to employees at a price based on a weighted average price. Vesting periods are as follows:

Employees are permitted to exercise options four times per annum, on predetermined dates which do not fall within the company’s closed periods. Unexercised options expire after 10 years from the grant date. In the event of resignation, voluntary termination of the employment or dismissal of the option holder, unexercised options will automatically expire and be cancelled. Upon the involuntary termination of employment of the option holder, the option granted and not vested will be deemed to automatically meet all vesting conditions and may be exercised immediately. Upon retirement of an employee who is an option holder, the retiree can retain the options granted. However, the same vesting periods will apply as when the options were granted.

46




16. EMPLOYEE SHARE INCENTIVE SCHEMES (continued)

16.1 Share-based payments reserve (continued)

The Stefanutti & Bressan Share Incentive Trust (continued)

Number of shares held by trust

Weighted average

exercise price2012

Quantity2011

Quantity

Outstanding at beginning of the year R6,83 8 347 747 8 597 747

Awarded during the year – – –

Expired during the year – – –

Forfeited during the year R10,00 (11 400) –

Exercised during the year R6,01 (1 186 450) (250 000)

Outstanding at end of the year R6,83 7 149 897 8 347 747

Exercise price at end of the year R7,11 R6,83

Options exercisable at year end 7 149 897 5 565 165

Remaining contractual life 5 years 6 years

Information on options granted during the yearFair value was determined by Moores Stephens Corporate Finance using a variant of the binomial option pricing model. The following inputs were used:

Current/spot price, exercise/strike price, option life, risk-free rate, volatility, dividends.

Option lifeOption holders exercise their options not on price, but mainly on holding periods. Executives, on average, exercise their options between two years after vesting, while staff exercise their options almost immediately upon vesting.

Risk-free rateThe risk-free rate was based on the prevailing yield on long-term government stock (R153) as at the respective grant date.

VolatilityExpected volatility was based on two different approaches. For valuations performed in terms of grants Nos 1 and 2, the volatility of similar large construction companies were considered. Average volatility for six similar entities amounted to 28,44%. Historic volatility for grants Nos 3 and 4 were determined by using the 360-day rolling volatility for Stefanutti Stocks to the date of grant, being 35,72%.

Dividend yieldAn average dividend yield of 1,24% based on the average dividend yield for six similar entities has been used in performing the valuation for all the options.

The Stocks Building Africa Employees Share TrustThe trust was formed with the objective of allowing employees to be allocated shares in the company. Units are allocated to specific employees identified by management. After three years these units are converted to shares based on the growth in value of the units from grant date to exercise date. Shares are redeemable at the end of the vesting period. In the event of resignation, voluntary termination of the employee or dismissal as well as involuntary termination of employment (including retrenchment, death and permanent disability) before the vesting period has expired will result in the forfeiture of any entitlement to the shares.

As part of the Stocks acquisition, the allocated shares in the trust were converted to Stefanutti Stocks Holdings Limited shares.

47




The Stocks Building Africa Employees Share Trust (continued)

The Stocks Building Africa Employees Share Trust was acquired on 31 July 2008, the effective date of the Stocks acquistion.

Number of units in issue2012

Quantity2011

Quantity

Outstanding at beginning of the year 415 000 715 000

Awarded during the year – –

Expired during the year – –

Forfeited during the year – –

Exercised during the year – (300 000)

Outstanding at end of the year 415 000 415 000

Units exercisable at year end 415 000 415 000

Remaining contractual life – –

Grant date – exercise date Number of units

Value at grant date

(R)

29 September 2007 – 30 September 2010 415 000 6,50

The Housing Africa Employees Share TrustThe trust has been formed with the objective of allowing employees to be allocated shares in the company. Units are allocated to specific employees identified by management. After two years these units are converted to shares based on the growth in value of the units from grant date to exercise date. Shares are redeemable at the end of the vesting period. In the event of resignation, voluntary termination of the employee or dismissal as well as involuntary termination of employment (including retrenchment, death and permanent disability) before the vesting period has expired will result in the forfeiture of any entitlement to the shares. As part of the Stocks acquisition, the allocated shares in the trust were converted to Stefanutti Stocks Holdings Limited shares.

The Housing Africa Employees Share Trust was acquired on 31 July 2008, the effective date of the Stocks acquistion.

Number of units in issue2012

Quantity2011

Quantity

Outstanding at beginning of the year – 390 000

Awarded during the year – –

Expired during the year – –

Forfeited during the year – –

Exercised during the year – (390 000)

Outstanding at end of the year – –

Units exercisable at year end – –

Remaining contractual life – –

Grant date – exercise date Numberof units

Value at grant date

(R)

1 May 2008 – 28 February 2011 210 000 16,50

Share-based paymentsAn expense of R2,7 million (2011: R8,7 million) which related to equity-settled share-based payment transactions was recognised in the current year for the group, the company expense amounted to R2,5 million (2011: R7,7 million).

48




Group Company

2012R’000

2011R’000

2012R’000

2011R’000



The Housing Africa Employees Share Trust (continued)

Fair value of employee share options (note 21) 2 658 8 689 2 510 7 745

16.2 Forfeitable Share Plan (FSP)

The FSP is to be operated together with the existing schemes, complementing and enhancing the ability of the group to attract, retain and reward key staff. The FSP will include participation by executive directors and selected employees of the group. In terms of the plan, the group can, at its election, purchase shares in the market or issue new shares to settle benefits. Shares may not be disposed of or otherwise encumbered during the vesting period of three years. In the event of resignation, voluntary termination of the employee or dismissal before the vesting period has expired, will result in the forfeiture of entitlement to the shares. Upon the involuntary termination of employment of an employee, the vesting period will cease and shares will immediately vest.

Number of shares:2012

Quantity2011

Quantity

Outstanding at beginning of the year 3 062 349 1 490 763

Awarded during the year 1 933 570 1 735 633

Forfeited during the year (368 470) (164 047)

Exercised during the year – –

Outstanding at end of the year 4 627 449 3 062 349

Grant price R12,11 R11,62

Fair value at grant date (R’000) 23 410 20 164

Contractual life of each award 3 years 3 years

Forfeitable Share Plan costsAn expense of R20,0 million (2011: R11,2 million) which related to Forfeitable Share Plan costs was recognised in the current year for the group, while the company expense amounted to R1,4 million (2011: R0,9 million).

Group Company

2012R’000

2011R’000

2012R’000

2011R’000

Fair value of Forfeitable Share Plan costs 20 039 11 154 1 395 944

49


Group Company

2012R’000

2011R’000

2012R’000

2011R’000

17. OTHER FINANCIAL LIABILITIES

17.1 Long-term loans – Interest-bearing

Nedbank Limited 13 842 14 907 – –

Less: Current portion (1 170) (1 070) – –

Loan is secured and bears interest at 9,00% (2011: 10,00%). The loan is repayable in monthly instalments of R197 000 (2011: R197 000).

Secured by a mortgage bond on Erf 2470 in the township of Terenure Extension 42, Kempton Park, Gauteng.



Loan is secured and bears interest at 7,25% (2011: 8,00%). The loan is repayable in monthly instalments of R157 000 (2011: R157 000).

Secured by a mortgage bond on Erf 2470 in the township of Terenure Extension 42, Kempton Park, Gauteng.



No minimum payments are required, interest is settled monthly and is charged at prime less 0,75% (2011: prime less 0,75%).

Secured by a bond on Terenure Erf 68, Portion 17, Kempton Park, Gauteng.

Investec Bank Limited – 1 326 – –

Less: Current portion – (100) – –

Loan was settled during the year.

Secured by a bond on 7 Sole Sands, Richards Bay, KwaZulu-Natal.

Investec Bank Limited – 2 064 – –

Less: Current portion – (435) – –

Loan was settled during the year.

Secured by a bond on Richards Bay office at 35 Bauxited Bay, Richards Bay, KwaZulu-Natal.

Nedbank Limited 1 809 – – –

Less: Current portion (354) – – –

Loan is secured and bears interest at 9,00%. The loan is repayable in monthly instalments of R41 863.

Secured by a bond on Lot 238, Industrial Sites, Matsapha, Swaziland.

50




Group Company

2012R’000

2011R’000

2012R’000

2011R’000

17. OTHER FINANCIAL LIABILITIES (continued)

17.1 Long-term loans – Interest-bearing (continued)

Nedbank Limited 419 – – –


Loan is secured and bears interest at prime less 2,3%. The loan is repayable in monthly instalments of R27 000.

Secured by a bond on Erf 2395, Portion 15, Van Riebeeckpark, Ext 24, Kempton Park, Gauteng.

Nedbank Limited 587 864 – –

Less: Current portion (145) (282) – –

Loan is secured and bears interest at prime less 1,00% (2011: prime less 1,00%). The loan is repayable in monthly instalments of R28 000 (2011: R28 107).

Secured by a bond on Erf 339, Portion 1, 9 Hoop Street, Middelburg, Mpumalanga.

Nedbank Limited 661 – – –


Loan is secured and bears interest at prime less 1,35%. The loan is repayable in monthly instalments of R29 000.

Secured by computer software.

Enoline Builders Limited 16 587 13 915 – –

Loan relates to project finance in respect of investment property, bears interest at 9,50% (2011: 9,50%) per annum with no fixed repayment terms.

17.2 Long-term loans – Non-interest-bearing

Vendors of SS Construcoes (Moc) Lda, formerly S&B Construcoes (Moc) Lda 2 443 4 525 – –

Loan is unsecured, interest free and is repayable over a period of two years.

Other long-term loans 5 050 4 648

Loans are interest free with no fixed repayment terms.

17.3 Instalment sale agreements

Various financial institutions

The group purchased plant, equipment, transport and motor vehicles under instalment sale agreements payable over three to five years at an effective interest rate ranging from 8,00% to 10,00%. (2011: 8,00% to 12,00%). All instalment sale agreements have fixed monthly repayment terms. 305 611 183 521 – –

Less: Current portion of instalment sale agreement (130 448) (94 443) – –

51


Group Company

2012R’000

2011R’000

2012R’000

2011R’000

17. OTHER FINANCIAL LIABILITIES (continued)

The group’s obligations under instalment sale agreements are secured by certain transport and motor vehicles as well as plant and equipment (refer to note 3). These assets have a net book value at year end amounting to R360 million (2011: R277 million).

17.4 Finance leases

Various financial institutions

The group purchased plant, equipment, transport and motor vehicles under finance leases payable over three to five years at an effective interest rate ranging from 9,00% to 20,00% (2011: 8,00% to 22,75%). All finance leases have fixed monthly repayment terms. 8 222 16 575 – –

Less: Current portion of finance leases (5 369) (7 996) – –

The group’s obligations under finance leases are secured by certain transport and motor vehicles as well as plant and equipment (refer to note 3). These assets have a net book value at year end amounting to R17 million (2011: R23 million).


17.5 Current liabilities

Current portion of other financial liabilities 145 412 111 674 – –

Other current liabilities 9 357 984 – –

Vendors of Apollo E&I Construction (Pty) Ltd. The loan is unsecured, bears interest at prime less 2,00% and is payable by 25 May 2011. – 3 930 – 3 930

Vendors of SS Construcoes (Moc) Lda. The loan is unsecured, interest free and is payable by March 2013. 2 443 2 259 – –

Current liabilities 157 212 118 847 – 3 930

Non-current and current liabilities 377 778 261 730 – 3 930

Minimum instalment sale and finance lease payments due

Within one year 146 572 110 350 – –

Second to fifth year 201 467 109 018 – –

More than five years – 276 – –

Total value of instalments 348 039 219 644 – –

Finance charges (34 206) (19 548) – –

313 833 200 096 – –

Interest-bearing liabilities have increased due to additional funding required for capital expenditure mainly by the Roads & Earthworks and Mining Services business units and the expansion of the group’s offices.

52




Group Company

2012R’000

2011R’000

2012R’000

2011R’000

18. TRADE AND OTHER PAYABLES

Financial instruments

Trade payables include:

Trade and other payables 1 256 917 1 000 936 667 2 615

Retention creditors 69 067 136 892 – –

1 325 984 1 137 828 667 2 615

Non-financial instruments

Accrued expenses 416 902 519 142 10 477 8 268

VAT 34 744 36 175 – 319

Shareholders for dividends 17 140 17 140

451 663 555 457 10 494 8 727

1 777 647 1 693 285 11 161 11 342

Trade and other payables are settled within normal business terms.

Group

19. PROVISIONS

Carrying value at

beginning of yearR’000

Additionalprovisions

R’000

Used during

the yearR’000

Carrying value at

end of year

R’000

Contracting 1 019 899 1 403 146 (1 019 899) 1 403 146

Warranty 134 576 98 844 (134 576) 98 844

1 154 475 1 501 990 (1 154 475) 1 501 990

Contracting provisionsRelate to the provision for future contract costs and are expected to be realised over the next 12 months.

Warranty provisionsRelate to claims in respect of ongoing contracts and are expected to be realised over the next 12 months.

53


Group Company

2012R’000

2011R’000

2012R’000

2011R’000

20. REVENUE

Contract revenue comprises turnover, which excludes Value Added Tax and represents the invoice value of goods and services supplied:

Contract revenue 7 990 718 6 896 418 – –

Other income 36 129 40 198 25 800 33 000

Investment income (note 22) 41 636 61 591 307 404 281 572

8 068 483 6 998 207 333 204 314 572

21. OPERATING PROFIT/(LOSS) BEFORE INVESTMENT INCOME

Includes:

Income 67 179 52 611 25 800 33 000

Profit on disposal of property, plant and equipment 2 880 3 048 – –

Profit on foreign exchange 9 333 2 183 – –

Rent received 17 114 12 406 – –

Rent received – investment property 7 081 3 596 – –

Project management fee 11 934 24 196 – –

Other income 18 837 7 182 25 800 33 000

Expenditure

Auditors’ remuneration

– Audit fee 7 922 7 703 180 65

– Other services 382 – – –

Employee costs 1 939 293 1 601 091 22 192 39 709

– Short-term employee benefit costs 1 828 907 1 519 727 16 555 29 441

– Post-employment benefit costs 87 689 61 521 1 732 1 579

– Forfeitable Share Plan costs (note 16) 20 039 11 154 1 395 944

– Share-based payments (note 16) 2 658 8 689 2 510 7 745

Loss on disposal of property, plant and equipment 22 402 – –

Operating lease rentals 9 098 9 450 – –

– Premises 7 450 9 184 – –

– Plant and equipment 157 266 – –

– Vehicles 1 491 – – –

Direct operating expenses arising from investment property generating rental income 264 1 137 – –

– Electricity and water – 32 – –

– Insurance 84 73 – –

– Commission – 945 – –

– Other sundry expenses 180 87 – –

54




Group Company

2012R’000

2011R’000

2012R’000

2011R’000

22. INVESTMENT INCOME

Interest income from financial instruments

– Bank accounts 33 742 46 543 284 638

– Trade receivables and loans 3 466 364 – 913

– Joint ventures 3 847 13 877 – –

– Staff loans 192 274 – –

Other interest 239 335 47 181

Total interest received 41 486 61 393 331 1 732

Dividends received 150 198 307 073 279 840

Dividends 150 198 69 590 122 252

Dividends in specie – – 237 483 157 588

41 636 61 591 307 404 281 572

23. FINANCE COSTS

Interest paid on financial instruments

– Bank overdrafts and bonds 8 648 5 507 – –

– Instalment sale and finance lease agreements 24 375 17 628 – –

– Financing agreements 4 227 – 509 –

– Trade payables 315 374 – –

Other interest 354 1 761 – 1

37 919 25 270 509 1

24. TAXATION

24.1 South African normal tax

Current taxation

– Current year 65 973 70 788 490 2 537

– Overprovision previous year (5 343) – – –

Deferred taxation 4 753 24 105 114 (8)

– Current year 1 314 26 396 114 (8)

– Underprovision previous year 5 558 – – –

– Intangible amortisation (2 119) (2 291) – –

Secondary taxation on companies 6 960 12 225 6 960 12 225

South African tax 72 343 107 118 7 564 14 754

24.2 Swaziland normal tax

Current taxation 5 473 15 278 – –

Withholding tax on dividends – 2 157 – –

Swaziland tax 5 473 17 435 – –

55


Group Company

2012R’000

2011R’000

2012R’000

2011R’000

24. TAXATION (continued)

24.3 Botswana normal tax

Current taxation

– Current year 2 089 1 424 – –

– Underprovision previous year 312 – – –

Deferred taxation 800 (2 287) – –

Botswana tax 3 201 (863) – –

24.4 Mozambique normal tax


24.5 Mauritius normal tax

Current taxation

– Current year 1 625 1 205 – –

– Underprovision previous year 313 – – –

Deferred taxation (217) – – –

Mauritius tax 1 721 1 205 – –

24.6 Namibia normal tax


Deferred taxation (1 142) – – –

Namibia tax 3 057 4 395 – –

Total taxation 100 257 148 351 7 564 14 754

24.7 Reconciliation of tax charge

South African normal tax rate 74 145 93 547 20 837 34 215

Swaziland normal tax rate 5 473 17 435 – –

Botswana normal tax rate 3 201 (863) – –

Mozambique normal tax rate 14 462 19 061 – –

Mauritius normal tax rate 1 721 1 205 – –

Namibia normal tax rate 3 057 4 395 – –

Adjusted for:

– Disallowable expenditure 5 132 3 705 65 543 46 843

– Exempt income (385) (1 598) (85 980) (78 355)

– Assessed losses utilised (1 930) (148) 174 (174)

– Deferred taxation assets not raised on losses 564 – – –

– Foreign tax rate differential (11 764) (2 770) – –

– Other (379) – 30 –

Secondary taxation on companies 6 960 12 225 6 960 12 225

Withholding taxes – 2 157 – –

Effective tax 100 257 148 351 7 564 14 754

56




Group Company

2012R’000

2011R’000

2012R’000

2011R’000

25. NOTES TO THE STATEMENTS OF CASH FLOWS

25.1 Cash generated from operations

Net profit before taxation 364 498 481 362 74 419 122 196

Adjusted for:

Depreciation 185 577 147 654 – –

Impairment of investments (note 5) – – 262 764 157 603

Amortisation of intangible assets 7 589 8 202 – –

Impairment of property, plant and equipment (note 3) 2 652 – – –

Share-based payments 2 658 8 689 2 510 7 745

Interest received (41 486) (61 393) (331) (1 732)

Dividend received (950) (3 024) (307 073) (279 840)

Finance costs 37 919 25 270 509 1

Movement in provisions 347 515 (296 383) – –

Share of profit of associate companies (1 768) (2 712) – –

Other non-cash flow items in profit (1 464) 1 173 – –

Profit on disposal of property, plant and equipment (2 858) (2 646) – –

899 882 306 192 32 798 5 973

Movements in working capital:

Increase in inventories (15 185) (11 319)

Increase in contracts in progress (256 275) (12 575) – –

Increase in trade and other receivables (626 028) (152 144) (1 509) (666)

Increase/(decrease) in trade and other payables 84 485 135 839 (59) (1 940)

Effect of exchange rate changes on working capital 9 180 (577) – –

96 059 265 416 31 230 3 367

25.2 Reconciliation of dividends paid during the year

Charged in statement of changes in equity 63 675 111 987 69 590 122 252

Movement in shareholders for dividends 123 (131) 123 (131)

Payments made 63 798 111 856 69 713 122 121

25.3 Reconciliation of taxation paid during the year

Charge against profit 100 257 148 351 7 564 14 754

Adjustment for deferred taxation (6 212) (24 109) (114) 8

Adjustment for deferred taxation – intangible assets 2 119 2 291 – –

Secondary taxation on companies (6 960) (12 225) (6 960) (12 225)

Movement in taxation balance (10 383) 1 269 (1 460) (31)

Payments made/(refunded) 78 821 115 577 (970) 2 506

25.4 Reconciliation of secondary taxation on companies paid during the year

Charge against profit 6 960 12 225 6 960 12 225

Payments made 6 960 12 225 6 960 12 225

57


Group Company

2012R’000

2011R’000

2012R’000

2011R’000

25. NOTES TO THE STATEMENTS OF CASH FLOWS (continued)

25.5 Net cash required for acquisition of subsidiaries and minorities

Fair value of assets acquired:

Property, plant and equipment – 13 645 – –

Intangible assets – 450 – –

Contracts in progress – 15 887 – –

Trade and other receivables – 29 783 – –

Taxation – 1 334 – –

Bank balances – 65 – –

Non-current other financial liabilities – (566) – –

Deferred taxation liabilities – (1 626) – –

Other financial liabilities – (13 213) – –

Trade and other payables – (28 987) – –

Provisions – (1 123) – –

Bank balances – (3 332) – –

Taxation – – – –

Total net assets acquired – 12 317 – –

Cash consideration paid 27 831 15 761

Cash consideration paid to acquire loan in subsidiary – 12 565 – –

Less: Cash acquired – 3 267 – –

– 43 663 – 15 761

25.6 Non-cash transactions

Investment in associate exchanged 1 454 – – –

Development property acquired (1 454) – – –

Net cash effect – – – –

The investment in Walk Aboard Properties (Pty) Ltd, an associate of the group, was exchanged for development property. At the date of exchange the fair value of the investment in associate was equal to its carrying value. Development property acquired was recognised at the fair value at the date of exchange and has been included in inventory as the property has been acquired exclusively with a view to subsequent disposal in the near future or for development.

58




Group Company

2012R’000

2011R’000

2012R’000

2011R’000

26. DIVIDENDS PAID

Final dividend of 45 cents per share declared on 14 May 2010 and payable on 28 June 2010 – 84 636 – 84 636

Interim dividend of 20 cents per share declared on 10 November 2010 and payable on 13 December 2010 – 37 616 – 37 616

Final dividend of 25 cents per share declared on 24 May 2011 and payable on 4 July 2011 47 020 – 47 020

–

Interim dividend of 12 cents per share declared on 15 November 2011 and payable on 12 December 2011 22 570 – 22 570 –

69 590 122 252 69 590 122 252

Dividends relating to treasury shares (5 915) (10 265) – –

63 675 111 987 69 590 122 252

A final dividend of 12 cents per share has been declared on 15 May 2012, payable 9 July 2012. This dividend has not been included as a liability in these financial statements.

Group

2012R’000

2011R’000

27. EARNINGS PER SHARE, HEADLINE EARNINGS RECONCILIATION AND ASSET VALUE PER SHARE

27.1 Earnings per share and headline earnings reconciliation

Earnings per share

Profit for the year attributable to equity holders of the company 264 241 333 011

Weighted average shares in issue 172 448 040 172 051 492

Diluted weighted average shares in issue 188 080 746 188 080 746

Earnings per share (cents) 153,23 193,55

Diluted earnings per share (cents) 140,49 177,06

Earnings per share is calculated by dividing earnings attributable to ordinary equity holders of the company by the weighted average number of shares in issue.

Diluted earnings per share is calculated by dividing earnings attributable to ordinary equity holders of the company by the diluted weighted average number of shares in issue.

59


Group

2012 2011

Gross R’000

Net R’000

Gross R’000

Net R’000

27. EARNINGS PER SHARE, HEADLINE EARNINGS RECONCILIATION AND ASSET VALUE PER SHARE (continued)

27.1 Earnings per share and headline earnings reconciliation (continued)

Headline earnings reconciliation

Profit for the year attributable to equity holders of the company 264 241 333 011

Adjusted for:

Net profit on disposal of property, plant and equipment (2 858) (2 057) (2 646) (1 905)

Impairment of assets 2 652 2 157 – –

Headline earnings 264 341 331 106

Normalised headline earnings reconciliation

Headline earnings 264 341 331 106

Adjusted for:

Amortisation of intangible assets 7 589 5 470 8 202 5 911

Normalised headline earnings 269 811 337 017


Diluted weighted average shares in issue 188 080 746 188 080 746

Headline earnings per share (cents) 153,29 192,45

Diluted headline earnings per share (cents) 140,55 176,04

Normalised headline earnings per share (cents) 156,46 195,88

Diluted normalised headline earnings per share (cents) 143,45 179,19

Headline earnings per share is calculated by dividing headline earnings attributable to ordinary equity holders of the company by the weighted average number of shares in issue.

Diluted headline earnings per share is calculated by dividing headline earnings attributable to ordinary equity holders of the company by the diluted weighted average number of shares in issue.

Normalised headline earnings per share is calculated by dividing normalised headline earnings attributable to ordinary equity holders of the company by the weighted average number of shares in issue.

Diluted normalised headline earnings per share is calculated by dividing normalised headline earnings attributable to ordinary equity holders of the company by the diluted weighted average number of shares in issue.

Group

2012R’000

2011R’000

Reconciliation of shares for earnings per share and headline earnings per share purposes

Number of shares in issue at year end 188 080 746 188 080 746

Adjusted for shares held by share trusts (8 928 498) (9 854 718)

Adjusted for shares held by investment subsidiary (6 704 208) (6 174 536)


60




Group

2012R’000

2011R’000

27. EARNINGS PER SHARE, HEADLINE EARNINGS RECONCILIATION AND ASSET VALUE PER SHARE (continued)

27.2 Net asset value per share

Net shares in issue 172 949 777 171 700 649

Total shares in issue 188 080 746 188 080 746

Net asset value per share (cents) 1 222,14 1 079,54

Net tangible asset value per share (cents) 571,98 420,22

Diluted net asset value per share (cents) 1 123,82 985,52

Diluted net tangible asset value per share (cents) 525,97 383,63

Reconciliation of shares for net asset value per share purposes

Number of shares in issue at year end 188 080 746 188 080 746

Adjusted for shares held by share trusts (8 420 432) (9 690 060)

Adjusted for shares held by investment subsidiary (6 710 537) (6 690 037)

Net shares in issue 172 949 777 171 700 649

Company

28. RELATED PARTIES

Related parties are those parties that control or have a significant influence over the group (ie key management personnel), and parties that are controlled or significantly influenced by the group (including subsidiaries, joint ventures and associates). Stefanutti Stocks Holdings Limited has no holding company, nor is there a major shareholder that has a significant influence over the group.

Group companies have entered into transactions in the ordinary course of business with each other, and/or other institutions/individuals that are also shareholders or key management personnel. The majority of these transactions relate to property leases, delivery of services and other services. All such transactions have been concluded under terms that are consistent with those entered into with third parties. Details of transactions between the group and other related parties are disclosed below.

61


Company

2012R’000

2011R’000

28. RELATED PARTIES (continued)

Relationships

Subsidiaries Refer to note 5

Associates Refer to note 6

Joint ventures Refer to note 7

Key management personnel Refer below

Interests in contracts and transactions with key management personnel Refer below

Related party balances – Subsidiaries

Amounts owing by/(to) subsidiary companies Refer to note 10 221 061 (41 553)

Included in trade and other receivables – 3 260

Included in trade and payables – (23)

Balances are unsecured and receivable/(payable) within normal business terms. Settlements are done in cash.

Related party transactions – Intergroup

Administration fees received from group companies 25 800 33 000

Interest paid to group companies 509 –

Dividend received from group companies 307 073 279 840

Intergroup revenue 115 660 387 448

Guarantees Refer to note 14

Interests in contracts and transactions with key management personnel

Begane Mobile Crusher (Pty) Ltd (DG Quinn, director of holding company)

– Final distribution dividend received and loans repaid 13 269

Ukumba Brick & Quarry (Pty) Ltd (DG Quinn, director of holding company, has 5% interest)

– Loan account 165 188

– Dividend received 123 288

Piazza Trust (Family trust of B Stefanutti, director of holding company)

– Rental income received 546 546

Acquisition of minorities

SS Construcoes (Moc) Lda, formerly S&B Construcoes (Moc) Lda – 12 979

62




Company


Directors’ remuneration

Executive directors’ remuneration

The following table discloses a breakdown of the annual remuneration (excluding equity awards) of executive directors for the years ended 29 February 2012 and 28 February 2011:

W Meyburgh Chief

Executive Officer

R’000

DG Quinn Chief

Financial Officer

R’000

SD Pell* Chief

Operating Officer R’000

SJ AckermanR’000

Total R’000

2012

Basic salary 3 258 2 210 2 616 2 516 10 600

Other benefits 776 3 792 639 586 5 793

Pension 371 260 256 156 1 043

Incentive bonus 1 922 1 239 1 291 1 967 6 419

Total remuneration 6 327 7 501 4 802 5 225 23 855

* SD Pell resigned 31 March 2012.

2011

Basic salary 2 948 1 921 2 278 2 343 9 490

Other benefits 851 658 692 5 203 7 404

Pension 337 228 223 146 934

Incentive bonus 2 874 1 821 1 585 1 973 8 253


Non-executive directors’ fees

Non-executive directors’ remuneration is compared to the company’s peer group. Recommendations are made by the Chief Financial Officer and Human Resources Executive, to the Remuneration and Nominations Committee, for onward review by the board and submission to shareholders. Non-executive directors are compensated based on attendance fees. The fees are based on the size and complexity of the group and also take into account market practices and fee surveys provided to the committee. No distinction is made between fees payable to independent non-executive directors and other non-executive directors, although the fees of the Chairman and Lead Independent Director take their expanded roles into account.

The total fees paid to non-executive directors are not limited to a maximum annual amount, irrespective of the number of meetings attended. Directors qualify for reimbursement of expenses incurred in performing their duties for and on behalf of the company.

Non-executive directors do not have service contracts. Instead, letters of appointment confirm their terms of engagement, and include matters such as fees, term of office, expected time commitment, share dealing and board performance assessment. The Chairman and Lead Independent Director have letters of appointment, which are specific to their roles and functions.

The fees paid to non-executive directors, as well as the proposed fees for the next financial year, were approved by the Remuneration and Nominations Committee, the board of directors and shareholders at the last annual general meeting.

63


Company


Attendance fees

R’000

Annual fees

R’000 Retainer

R’000

Year ended 29 February

2012 R’000

Year ended 28 February

2011 R’000

Non-executive directors

B Stefanutti (Chairman)# – 840 1 080 1 920 4 793

ME Mkwanazi (Lead Independent Director) – 648 – 648 648

NJM Canca 590 – – 590 350

KR Eborall 453 – – 453 350

HSP Mashaba 330 – – 330 235

ZJ Matlala* – – – – –

LB Sithole 137 – – 137 108

JWLM Fizelle (Alternate to LB Sithole) 258 – – 258 292

Total 1 768 1 488 1 080 4 336 6 776 # B Stefanutti received executive remuneration of R2,9 million for the year ended 28 February 2011.

* Appointed 27 February 2012.

There is no requirement for non-executive directors to be shareholders of the company and they do not qualify to participate in any incentive scheme that is operated by the group.

The company’s directors are appointed for a term of three years and are obliged to retire at the end of that period, but may offer themselves for re-election at the annual general meeting.

Directors’ service contracts

The contracts of employment of executive directors or senior executives do not preclude the company from exercising its normal rights to terminate the contract in the event of misconduct or poor performance. Executive directors retire from their positions and from the board at their normal retirement date.

Details of all contracts of employment for executive directors and the three prescribed officers are not disclosed as the group operates in a highly competitive environment and the disclosure could be detrimental to its efforts to retain its employees.

Directors’ share options

Details of the executive directors’ share options are as follows:

Options granted

– opening balance

Strike price

Options exercised

during the year

Exercise price

Options granted

– closing balance

DG Quinn 400 000 6,00 – – 400 000

No share options were awarded during the year. All share options granted are exercisable from 19 July 2011 and expire on 19 July 2017.

Directors’ share awards in terms of the FSP Scheme

Directors participate in the group’s long-term FSP and profit incentive schemes, which are designed to recognise the contributions that senior staff have made to the growth in the value of the group’s equity and to retain key employees. In terms of the FSP, an amount is awarded to the directors in proportion to their contribution to the business, as reflected by their seniority and the company’s performance, within the limits imposed by the scheme. This amount is used to buy shares in the open market, the ownership of such shares being restricted for a period of three years. The restriction on the ownership of the shares is lifted after a three-year period in terms of the scheme rules. These amounts are included under "Other benefits” in the executive directors’ annual remuneration. Forfeitures are dealt with in accordance with accounting policies note 1.16.

The details of the FSP can be found in note 16.2 on page 48.

64




Company


Details of share awards made in terms of the FSP are as follows:

Year ended 29 February 2012


Total shares

awarded

Value of shares

R’000

Total shares

awarded

Value of shares

R’000

W Meyburgh 41 541 527 53 463 621

DG Quinn 329 085 3 554 36 767 427

SJ Ackerman 30 639 388 441 197 5 003

SD Pell* 33 494 425 41 197 479

* SD Pell resigned 31 March 2012

These amounts are included under “Other benefits” in the executive directors’ annual remuneration.

Prescribed officers

Prescribed officers’ remuneration

The group’s prescribed officers consist of operational directors and senior managers who are not executive directors of the group.

The prescribed officers’ remuneration is determined in terms of the remuneration policy, as set out on pages 67 to 70 of the Integrated Report.

The table below discloses the total remuneration of the prescribed officers for the year ended 29 February 2012. Personal details of the individuals’ remuneration are not disclosed as the group operates in a highly competitive environment and the disclosure could be detrimental to its efforts to retain its prescribed officers.

Prescribed Officer 1

R’000


R’000


R’000

2012 Total R’000

2011Total

R’000

2012

Basic salary 2 437 1 543 1 962 5 942 4 833

Other benefits 633 1 731 872 3 236 1 081

Pension 223 141 213 577 320

Incentive bonus 2 578 1 662 1 489 5 729 4 432


Prescribed officers’ share options

Details of the prescribed officers’ share options are as follows:

Options granted

– opening balance

Strike price

Options exercised

during the year

Exercise price

Options granted

– closing balance

Prescribed Officer 1 – – – – –

Prescribed Officer 2 250 000 6,00 (250 000) 11,85 –

Prescribed Officer 3 350 000 6,00 (100 000) 10,80 250 000

No share options were awarded during the year. All share options granted are exercisable from 19 July 2011 and expire on 19 July 2017. No share options were awarded or exercised during the prior year.

65


Company


Prescribed officers’ share awards in terms of the FSP

Prescribed officers’ participation in the group’s FSP is in terms of the conditions as set out on page 70 of the Integrated Report and is currently included in the total remuneration for these prescribed officers.



Total shares

awarded

Value of shares

R’000

Total shares

awarded

Value of shares

R’000

Prescribed Officer 1 – – – –

Prescribed Officer 2 18 191 231 23 671 275

Prescribed Officer 3 24 841 315 30 127 350

These amounts are included under “Other benefits” in the prescribed officers’ annual remuneration.

All other significant intergroup transactions are contract related and are disclosed in note 34 as intersegment contract revenue. Unless specifically disclosed, these transactions occurred under terms that are consistent with those entered into with third parties. Further, key management personnel are defined as executive directors of the company and members of the Executive Committee and include partners and children.

Group Company

2012R’000

2011R’000

2012R’000

2011R’000

29. GUARANTEES AND CONTINGENT LIABILITIES

Guarantees

Total insurance policies ceded to third parties on behalf of the group for:

Subsidiaries 2 212 670 1 477 621 – –

2 212 670 1 477 621 – –

It is the opinion of the directors that the possibility of any loss is improbable and it is not anticipated that any material liabilities will arise.

Contingent liabilities

The investigation by the Competition Commission into anti-competitive behaviour by companies within the construction sector is currently ongoing. Stefanutti Stocks is co-operating fully with the Competition Commission and all regulatory authorities. It has submitted the requisite documentation in this regard, and awaits feedback from the Commissioner.

The outcome may result in the imposition of an administrative penalty to Stefanutti Stocks, but current indications are that the outcome of this process will only be known during the latter part of 2012 and therefore no provision has been made in this regard.

66




Group Company

2012R’000

2011R’000

2012R’000

2011R’000

30. CAPITAL COMMITMENTSApproved by the directors and contracted for – 6 594 – – Approved by the directors not yet contracted for 228 208 302 489 – –

228 208 309 083 – –

Capital expenditure will be financed from internal resources and existing facilities.

The capital commitments relate primarily to the acquisition of project-related capital expenditure.

At the reporting date the group had the following outstanding commitments under operating leases:

Group

Less than 1 year R’000

Between 2 and 5 years

R’000

More than5 years R’000

Rental commitments2012Properties 1 663 214 – Plant and equipment 4 315 1 902 – Transport and motor vehicles 391 – – Furniture, fittings, office and computer equipment 247 198 –

6 616 2 314 –

Details of significant leasing arrangementsProperty rented for business purposes have terms between two to three years, which are payable monthly, and have options to renew at market-related rentals. No leases contain contingent rent provisions or covenants.

31. FINANCIAL INSTRUMENTS

Details of the group’s financial instruments are set out below:

Carrying and fair values of financial instruments by classAt 29 February 2012, the carrying amounts of bank balances, trade receivables and trade payables approximate their fair values due to the short-term maturity of these assets and liabilities. There is no significant difference between the carrying amounts of intergroup loan accounts, other financial assets and liabilities and their fair values due to the effective interest rate method used. As a result, no fair value hierarchy is appliable or disclosed. The net fair value of the group’s financial instruments are stated below:

Group Company

Note2012

R’0002011

R’0002012

R’0002011

R’000

Financial assets, loans and receivablesBank balances 14 923 344 1 082 471 2 467 6 589 Trade and other receivables 13 2 152 466 1 531 801 – – Intergroup loan accounts 10 – – 221 061 62 946

Other financial liabilitiesBank balances 14 32 518 4 312 – – Trade and other payables 18 1 325 984 1 137 828 667 2 615 Intergroup loan accounts 10 – – – 104 499 Other financial liabilities 17 377 778 261 730 – 3 930

Exposure to interest rate and credit risk arises in the normal course of the group’s business.

67


Group

32. RISK MANAGEMENT

The group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk and cash flow interest rate risk), credit risk and liquidity risk.

Group treasury identifies, evaluates and hedges financial risks in close co-operation with the group’s operating units. The board provides written principles for overall risk management, as well as policies governing specific areas, such as foreign exchange risk, interest rate risk, credit risk and capital risk management.

Capital risk managementThe primary objective of the group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 29 February 2012 and 28 February 2011.

In setting the ideal mix between debt and equity, the group seeks to optimise its returns on shareholders’ equity while maintaining prudent financial gearing. The group monitors capital using a gearing ratio, which is net debt divided by total capital. Generally the objective is to operate at a gearing ratio of not greater than 35%. During the year the group achieved this objective, assisted in part by increasing its dividend cover. The group retains excess capital to fund future growth.

The group includes within net debt, interest-bearing loans and borrowings.

Capital is considered to consist of share capital, share premium, other reserves and retained earnings. The group is subject to externally imposed capital requirements by certain of their bankers which, in the event of non-compliance, may have an impact on the liquidity risk of the group. At year end all such requirements were met.

Gearing ratios at 29 February 2012 and 28 February 2011 were as follows:

2012R’000

2011R’000

Net debt 392 328 253 626

Total equity 2 113 696 1 853 571

Share capital and share premium 1 019 843 1 011 195

Other reserves 62 274 24 216

Retained earnings 1 031 579 818 160

Gearing ratio 19% 14%

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash on hand and the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, group treasury maintains flexibility in funding by maintaining availability under committed credit lines and ensuring that adequate unutilised borrowing facilities are maintained.

Liquidity risk mainly results from funds available/unavailable to cover future commitments. The group manages liquidity risk through an ongoing review of future commitments and credit facilities, and by ensuring that adequate unutilised borrowing facilities are maintained.

Cash flow forecasts are prepared and borrowing facilities are monitored.

68




Group

32. RISK MANAGEMENT (continued)

Liquidity risk (continued)

Exposure to liquidity risk is set out in the maturity analysis table below:

Contractual cash flows

Carrying amount

R’000Total

R’000

On demand

R’000

Less than 1 yearR’000

Between 2 and

5 yearsR’000

More than5 years

R’000

2012

Other financial liabilities 377 778 395 133 – 164 130 220 925 10 078

Trade and other payables 1 325 984 1 325 984 – 1 325 984 – –

Bank balances – 32 518 – 32 518 – –

1 703 762 1 753 635 – 1 522 632 220 925 10 078

2011

Other financial liabilities 261 730 296 164 – 131 959 135 703 28 502

Trade and other payables 1 137 828 1 137 828 – 1 137 828 – –

Bank balances 4 312 4 312 – 4 312 – –

1 403 870 1 438 304 – 1 274 099 135 703 28 502

Company

Contractual cash flows

Carrying amount

R’000Total

R’000

On demand

R’000

Less than 1 yearR’000

Between 2 and

5 yearsR’000

More than5 years

R’000

2012

Trade and other payables 667 667 – 667 – –

667 667 – 667 – –

2011

Intergroup loan accounts 104 499 104 499 104 499 – – –

Other financial liabilities 3 930 3 930 – 3 930 – –

Trade and other payables 2 615 2 615 – 2 615 – –

111 044 111 044 104 499 6 545 – –

69


Group

32. RISK MANAGEMENT (continued)Credit riskCredit risk management policy is set on a group basis, while the management of this risk is done at group as well as operating entity level. Exposure per financial instrument class is represented in detail in note 31, without taking into account any collateral held or other netting agreements.

Credit risk exposure arises mainly from the possibility that parties holding cash deposits, cash equivalents and trade receivables will not meet their commitments to the group. Each business in the group is responsible for the management of credit risk in receivables and does so through ongoing credit evaluations and credit control policies and procedures. Management does not consider there to be any material credit risk exposure that is not already covered by an impairment for doubtful debts. The group only deposits cash with major banks with high-quality credit ratings.

Trade receivables Trade receivables comprise a widespread customer base. This customer base is primarily in South Africa, but also exists in the rest of Africa and Dubai. The majority of the customers are concentrated in the industrial, public and private development sectors. Concentration of credit risk is limited to mining houses, private developers and certain public sector areas. The concentration of credit risk is determined and evaluated by taking into account the contribution and margins of construction contracts. Management evaluates credit risk relating to customers on an ongoing basis, and any change in the credit quality of the the trade receivable is considered from date credit was granted up to the reporting date. If customers are independently rated, these ratings are used. Alternatively, if there is no independent rating, risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Exposure to trade receivables is mitigated by the request for collateral. Details of collateral held is disclosed in note 13.

Group

2012R’000

2011R’000

Foreign currency risk

Profit for the year included in the financial statements that is subject to foreign currency risk 112 652 87 562

Unhedged monetary assets and liabilities exposed to foreign currency risk 354 796 259 383

The group operates both cross-border and offshore and is exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities.

Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the group’s functional currency.

The group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk.

The group manages its risk by reviewing its foreign currency exposure, including commitments on an ongoing basis.

The exchange rates at year end were as follows:

2012 2011

USD – US Dollar R7,540 R6,973AED – United Arab Emirates Dirham R2,053 R1,926BWP – Botswana Pula R1,049 R1,086MZN – Mozambique New Metical R0,276 R0,222ZMK – Zambian Kwacha R0,001 – MWK – Malawi Kwacha R0,045 R0,048QAR – Qatari Rial R2,071 – SLL – Sierra Leone Leone R0,002 –

70




Group


Sensitivity analysis

The following table represents the profit or loss in currencies other than the group’s functional currency. Based on the net exposure, it is estimated that a simultaneous change in foreign currency and exchange rates against the Rand (the functional currency) will impact the net profit after taxation as set out below:

2012R’000

2011R’000

US Dollar

Net profit for the year included in financials 53 745 43 758

Average rate used for conversion R7,38 R7,22

Effect on profit:

Increase/(decrease) of R1 7 282 6 060

United Arab Emirates Dirham



Effect on profit:

Increase/(decrease) of R0,25 170 138

Botswana Pula

Net profit for the year included in financials 7 121 631


Effect on profit:

Increase/(decrease) of R0,15 1 008 87

Mozambique New Metical



Effect on profit:

Increase/(decrease) of R0,20 22 762 36 822

Zambian Kwacha

Net profit for the year included in financials 929 1 565


Effect on profit:


Malawi Kwacha

Net profit for the year included in financials 3 081 –

Average rate used for conversion R0,05 –

Effect on profit:

Increase/(decrease) of R0,017 1 131 –

Qatari Rial

Net loss for the year included in financials (5 339) –


Effect on profit:

Increase/(decrease) of R0,15 395 –

Sierra Leone Leone

Net profit for the year included in financials 21 013 –


Effect on profit:


71




Group


Interest rate riskThe group is exposed to interest rate risk through its cash and cash equivalents and interest-bearing, and short- and long-term liabilities. Short-term interest rate exposure is monitored and managed by each subsidiary in the group. Borrowings issued at variable rates expose the group to cash flow interest rate risk. All borrowings are issued at variable interest rates.

2012R’000

2011R’000

Balances exposed to interest rate risk

Bank balances 890 826 1 078 159

Instalment sale agreements and finance leases 313 833 200 096

Long-term loans 44 652 49 218

Other short-term loans 1 325 –

1 250 636 1 327 473

Net interest 7 718 37 285

At 29 February 2012, if interest rates on borrowings had been 1% higher/lower with all other variables held constant, the post-tax profit for the year would have been influenced as a result of the higher/lower interest expenses on variable rate borrowings, as follows:

Group

2012R’000

2011R’000

Profit for the year as per statement of comprehensive income 264 241 333 011

Effect on profit

1% increase/(decrease) on interest rate 12 506 13 274

An average rate was determined by expressing the net interest paid/received for the year under review as a percentage of the above balances exposed to interest rate risk.

The average interest rates on which the above mentioned calculations were based are as follows:

Average interest rate (%) 0,62 2,81

72




Group

33. BUSINESS COMBINATIONS

2012

During 2012 the group did not enter into any business combinations.

2011

In line with strategy, the group acquired the remaining non-controlling interest in SS Construcoes (Moc) Lda. In addition, the group acquired certain business operations of RGF Power Projects CC (RGF) and a 100% shareholding in Apollo E&I Construction (Pty) Ltd (Apollo E&I).

These acquisitions were concluded to expand the group’s capacity.

The fair value of assets and liabilities approximates the carrying amounts of assets and liabilities before acquisition.

RGF Apollo E&I

Acquisition date 12 April 2010 1 June 2010

Voting equity (%) – 100

Fair valueR’000

Fair valueR’000

At acquisition

Non-current assets 3 688 10 407

Property, plant and equipment 3 238 10 407

Intangible assets 450 –

Current assets – 47 069

Contracts in progress – 15 887

Trade and other receivables – 29 783

Taxation – 1 334

Bank balances – 65

Non-current liabilities – 2 192

Other financial liabilities – 566

Deferred taxation – 1 626

Current liabilities – 46 655

Other financial liabilities – 13 213

Trade and other payables – 28 987

Provisions – 1 123

Bank balances – 3 332

Net asset value acquired 3 688 8 629

Cost of acquisition 5 875 19 691

Cash paid 5 875 19 691

Goodwill arising on acquisition 2 187 11 062

Revenue since acquisition – 127 892

Profit after taxation since acquisition – 5 074

Revenue for the year 1 March 2010 to 28 February 2011 – 165 068

Loss for the year 1 March 2010 to 28 February 2011 – (328)

Acquisition-related costs 115 442

The goodwill is attributable to the acquiring of existing relationships with customers as well as the expertise of the workforce.

It is impracticable to report any revenue, profit or loss for RGF as its operations were acquired and fully integrated into existing operations from the acquisition date.

All receivables will be recovered.

All acquisition-related costs were recognised in the statement of comprehensive income within operating expenses.

73




Group

34. SEGMENT INFORMATIONIFRS 8 requires operating segments to be identified on the basis of internal financial information about components of the group that are regularly reviewed by and provided to the Chief Executive Officer and the executive management team, collectively identified as the chief operating decision-maker (CODM), in order to allocate resources to the segments and assess their performance. Individual members of the executive management team are responsible for the operating segments of the business noted below.

The group has identified its operating segments based on its business by services provided and geographical areas served; and has aggregated them into the following reportable operating segments: Structures, Building, Roads & Earthworks, Mining Services and Other segments. Other segments include those operations that are primarily centralised in nature, ie it primarily applies to the group’s headquarters and are not allocated to any one particular segment. Below are the types of activities from which each operating segment derives revenue:

StructuresCivil engineering, structural concrete, geotechnical and marine capabilities, which includes general and specialised concrete construction for infrastructure, mining and industrial markets.

BuildingFull scope of building construction from commercial and industrial through to residential and leisure. This includes select residential developments for major mining and industrial clients as well as low-cost and affordable housing for the public sector.

Roads & EarthworksConstruction of roads, bulk earthworks, mining infrastructure and rehabilitation, fibre optics, terraces for new developments and municipal services.

Mining ServicesDesign, construction and operation of mine residue disposal facilities, open-pit contract mining and structural steel, mechanical, electrical, instrumentation and powerline transmission and distribution operations.

The accounting policies of the segments are the same as those applied in the group. Intersegment contract revenues are eliminated on consolidation.

The Mining Services operating segment includes the operating activities of the Mining Services and the Mechanical, Electrical & Power business units. There are no additional segments to report separately.

StructuresR’000

Building R’000

Roads & Earthworks

R’000

MiningServices

R’000

Othersegments

R’000Total

R’000

2012

Revenues from external customers 2 555 007 3 675 843 882 543 952 131 2 959 8 068 483

Contract revenue 2 530 908 3 640 922 868 173 950 715 – 7 990 718

Intersegment contract revenues 60 546 4 150 35 135 15 829 – 115 660

Net interest revenue/(expense)* 6 976 11 855 (4 690) (5 177) (5 397) 3 567

Reportable segment operating profit/(loss)* 180 780 120 901 74 177 (4 908) (11 937) 359 013

Reportable segment profit/(loss) 144 326 91 813 49 469 (2 378) (18 989) 264 241

Reportable segment assets 1 484 150 2 127 290 539 821 555 605 1 204 166 5 911 032

Reportable segment liabilities 1 127 089 1 817 571 347 531 358 109 147 036 3 797 336

Depreciation and amortisation 60 370 23 464 43 244 65 051 1 037 193 166

Impairment of segment assets 215 1 035 – 1 083 319 2 652

* The performance of operating segments is assessed by management based on net interest revenue, operating profit and expense amounts as disclosed in the segment information above.

74




Group

34. SEGMENT INFORMATION (continued)

StructuresR’000

Building R’000

Roads & Earthworks

R’000

MiningServices

R’000

Othersegments

R’000Total

R’000

2011

Revenues from external customers 2 101 041 3 330 631 861 328 699 143 6 064 6 998 207

Contract revenue 2 072 757 3 276 132 845 556 701 973 – 6 896 418

Intersegment contract revenues 127 024 – 156 179 72 133 32 112 387 448

Net interest revenue* 20 288 25 652 (4 870) (9 706) 4 759 36 123

Reportable segment operating profit* 176 754 116 035 109 147 42 524 (2 131) 442 329

Reportable segment profit/(loss) 146 341 94 472 70 967 22 811 (1 580) 333 011

Reportable segment assets 1 253 165 1 871 899 479 802 408 682 1 057 838 5 071 386

Reportable segment liabilities 1 096 184 1 431 350 334 151 249 408 106 722 3 217 815

Depreciation and amortisation 50 666 23 615 36 022 43 092 2 461 155 856

Impairment of segment assets – – – – – –

* The performance of operating segments is assessed by management based on net interest revenue, operating profit and expense amounts as disclosed in the segment information above.

Geographical areas

The group operates mainly in the geographical areas of South Africa, Africa and the Middle East.

2012 2011Local R’000

ForeignR’000

LocalR’000

ForeignR’000

Contract revenues from external customers 6 057 547 1 933 171 5 281 660 1 614 758 Non-current assets (excluding deferred tax) 2 073 805 144 229 1 975 818 127 858

Major customersAlthough revenues from one customer of the group represent approximately R920 million (2011: R943 million) of the group’s total revenues, of which the largest portion is included in Structures, the group is not reliant on any one major customer as its services span over a varied number of industries and countries.

75


Group

35. NON-ADJUSTING EVENTS AFTER REPORTING PERIOD

Cycad Pipelines acquisition

With effect from 1 March 2012, the group acquired 100% of Cycad Pipelines (Pty) Ltd, a specialised pipeline infrastructure construction company and its related operations (Cycad Pipelines), at a cost of R261 million. This acquisition is in line with the group’s growth strategy to broaden its service offering in the construction sector.

In terms of IFRS 3 Business Combinations the initial accounting for the acquisition has only been determined provisionally, as the purchase price allocation, including the final purchase consideration and the valuation of the identifiable intangible assets have not been completed.

The carrying value of assets and liabilities, as noted in the table below, is based on unaudited amounts and approximates the fair value of assets and liabilities before acquisition.

Cycad Pipelines

Acquisition date 1 March 2012Voting equity (%) 100

R’000

Non-current assets 118 140

Property, plant and equipment 86 097

Goodwill 32 011

Other financial assets 32

Current assets 81 393

Contracts in progress and inventories 13 130

Trade and other receivables 45 483

Bank balances 22 780

Non-current liabilities 18 303

Other financial liabilities 3 553

Deferred taxation 14 750

Current liabilities 44 376

Other financial liabilities 6 129

Trade and other payables 21 142

Provisions 2 068

Taxation 15 037

Net asset value acquired 136 854

Cost of acquisition 261 030

Cash paid 261 030

Goodwill arising on acquisition 124 176

The goodwill arising on acquisition is attributable to the ability to access the pipeline construction market in which the group did not have a presence, as well as acquiring a well-established and reputable company with a skilled and specialised workforce.

The carrying value of trade receivables amounting to R45 million, approximates their fair value, and the group is of the opinion that all receivables will be recovered.

Acquisition-related costs of R1,9 million were recognised in the statement of comprehensive income as an expense within operating expenses.

To the extent that Cycad Pipelines’ profit after tax for the financial year ending 28 February 2013 exceeds R50 million, the excess will become payable to the sellers, limited to a maximum amount of R30 million.

76


Shareholders’ analysis

Shareholder spreadNumber of


shares %

1 – 1 000 shares 1 314 39,82 632 093 0,341 001 – 10 000 shares 1 337 40,52 5 000 979 2,6610 001 – 100 000 shares 460 13,94 16 221 888 8,62100 001 – 1 000 000 shares 158 4,78 49 903 428 26,531 000 001 and over 31 0,94 116 322 358 61,85

Totals 3 300 100,00 188 080 746 100,00

Distribution of shareholdersNumber of


shares %

Banks 20 0,62 2 027 739 1,08Close corporations 48 1,45 195 035 0,10Endowment funds 15 0,45 556 059 0,30Individuals 2 574 78,00 46 480 697 24,70Insurance companies 32 0,97 13 784 578 7,33Investment companies 16 0,48 863 934 0,46Medical aid schemes 10 0,30 954 436 0,51Mutual funds 107 3,24 44 701 764 23,77Nominees and trusts 266 8,07 21 265 985 11,30Other corporations 28 0,85 246 300 0,13Own holdings 1 0,03 6 710 537 3,57Private companies 70 2,12 12 555 388 6,68Retirement funds 110 3,33 29 317 862 15,59Share trusts 3 0,09 8 420 432 4,48

Totals 3 300 100,00 188 080 746 100,00

Public/non-public shareholdersNumber of


shares %

Non-public shareholders 133 4,03 76 775 977 40,82Directors and associates of the company 19 0,58 44 300 681 23,55Directors of a subsidiary 110 3,33 17 344 327 9,22Own holdings 1 0,03 6 710 537 3,57Share trusts 3 0,09 8 420 432 4,48Public shareholders 3 167 95,97 111 304 769 59,18

Totals 3 300 100,00 188 080 746 100,00

Beneficial shareholders holding 3% or moreNumber of

shares %

Coronation Fund Managers 21 909 822 11,65B Stefanutti 17 505 512 9,31Sanlam Investment Managers 14 981 961 7,97Government Employees Pension Fund 11 108 260 5,91Moputso Investments (Pty) Ltd 14 224 311 7,55W Meyburgh 9 132 006 4,86Stefanutti & Bressan Share Incentive Trust 7 438 550 3,95Stefanutti Stocks Investment Holding Limited 6 710 537 3,57

Totals 103 010 959 54,77

77


Corporate information

Company information Stefanutti Stocks Holdings LimitedShare code: SSKISIN: ZAE000123766JSE Sector: ConstructionYear end: 28 February

Registration number 1996/003767/06

Country of incorporation South Africa

Registered office No 9 Palala Street, Protec Park, Cnr Zuurfontein Avenue and Oranjerivier Drive, Kempton Park, 1619

Postal address PO Box 12394, Aston Manor, 1630

Telephone number +27 11 571 4300

Facsimile +27 11 976 3487

Company Secretary WR Somerville20 Lurgan Road, Parkview, 2193 Telephone number: +27 11 482 4019

Auditors Mazars 2nd Floor, Mazars House, 5 St Davids Place, Parktown, 2193PO Box 6697, Johannesburg, 2000Telephone number: +27 11 547 4000

Attorneys Webber Wentzel10 Fricker Road, Illovo Boulevard, Johannesburg, 2196PO Box 61771, Marshalltown, 2107Telephone number: +27 11 530 5000

Transfer Secretaries Computershare Investor Services (Pty) LtdGround Floor, 70 Marshall Street, Johannesburg, 2001PO Box 61051, Marshalltown, 2107Telephone number: +27 11 370 5000

Sponsor Bridge Capital Advisors (Pty) Ltd 2nd Floor, 27 Fricker Road, Illovo Boulevard, Illovo, 2196PO Box 651010, Benmore, 2010Telephone number: +27 11 268 6231

Bankers Nedbank LimitedThe Standard Bank of South Africa LimitedInvestec Bank LimitedAbsa Bank LimitedFirst National Bank, a division of FirstRand Bank LimitedNedbank SwazilandStandard Chartered Bank BotswanaBanco Internacional de MozambiqueMiddle East Barclays BankEmirates BankNBDHSBCFirst Gulf Bank

Investor relations Keyter Rech Investor Solutions CCFountain Grove, 5 2nd Street, Hyde Park, 2195Telephone number: +27 11 447 5204

Website www.stefanuttistocks.com

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