JSE civil engineering and construction group Stefanutti & Bressan (“S&B”), which debuted on the JSE main board in August 2007, has seen solid growth for the six months to August 2007. Capitalising on ongoing infrastructure
expansion the group achieved interim revenue of R1,1 billion, up 26% on this time last year, and earnings growth of 69% to R57,3 million setting S&B on track to meet its full year forecasts.

Operating profit grew 45% to R77,8 million, while increased headline earnings of R55 million translated into 42,3 cents a share compared with 30,9 cents in the comparative interim period.

CEO Willie Meyburgh attributes the growth to robust market conditions which fuelled organic growth for the group and to the performance of new acquisition ECMP. “Strong demand in the construction and materials sector in terms of
infrastructure expansion as well as in the industrial and mining industries has boosted operating margins by 14,5% to7,1%.” He says the abundance of projects in the market currently, which is expected to continue, means that S&B is positioned to select projects for profitability.

Meyburgh is confident the margin growth is sustainable. He adds that although S&B’s year started slowly, early indications of the period ahead to year-end show a ramp-up in project activity that bodes well for bottom-line growth and the group’s ability to achieve its full year forecasts set out in the prospectus. “A number of projects were awarded later than expected
and work execution on certain projects was delayed by external factors. However, the contracts are now on track and further, demand to complete them at an accelerated pace augurs well for growth.”

ECMP, a civil engineering company specialising in the management of mine residue disposal facilities and open pit mining and the design, construction and operation of tailings, was acquired in April 2007 and according to Meyburgh “has been well bedded down in the group”.

He says S&B’s Concrete Structures division is firmly positioned to exploit flourishing market conditions. “The division has recently secured R600 million worth of contracts, with more in the imminent pipeline including select projects in neighbouring countries.” He adds that a number of planned infrastructure projects including new roads and upgrades such as the Gauteng Freeway improvement project, will help boost growth in the Concrete Structures and Roads & Earthworks divisions. “With buoyant conditions in the resources sector globally, growth in the Mining division is expected to continue.”

The Piling and Building divisions performed well, with Piling securing projects continuing well into the next period. Meyburgh says two residential apartment contracts which, as predicted, negatively impacted margins in the Building
division, and are already completed or nearing completion.

Post the period S&B announced that it will acquire majority interests in electrical construction specialists Skelton & Plummer for up to R68,2 million, and in Civil & Coastal Construction – marine construction experts – for R20 million. S&B is entitled to take full ownership of both companies over the next three to five years. The acquisitions remain conditional on regulatory approvals, amongst other conditions.

Meyburgh says the earnings-enhancing acquisitions “will realise the group’s pre-listing objective of expanding its service offering by diversifying further into complementary, high-growth niche construction sectors”. Part of the R350 million new capital raised pre-listing will fund the acquisitions.

S&B’s strongest markets traditionally, petrochemical and industrial, are experiencing good growth boosted by positive market conditions. Meyburgh says: “We are also capitalising on the continued expansion in the platinum mining industry.”

Looking ahead he expects demand to be further driven by Eskom’s commitment to increasing power capacity. “The government is committed to “bringing electricity to all” by 2012 which means the Department of Minerals and Energy together with Eskom will have to work at an accelerated pace to fulfil this commitment, necessitating expansion at an unprecedented rate.”

He concludes: “We remain confident that promising growth prospects for the infrastructure and road construction sectors and a healthy order book on hand of R3 billion, should enable the group to comfortably reach its forecasts for the full year to February 2008.”

The share closed Friday at R26,49 having risen steadily since its debut at over R15 a share, up on the pre-listing placement price of R12.
Ends.

Issued by: Envisage Communications, Nicole Katz
(011) 325 5944/083 287 2771
On behalf of: Stefanutti & Bressan Limited
Gino Stefanutti, Chairman
(011) 571 4300
AND
Willie Meyburgh, CEO
(011) 571 4300
SHARE CODE: SFB
Issue date: 12 November 2007