| Tue 6 Mar 2012, 14:00 | | SHF - Steinhoff International Holdings Limited - Unaudited interim results |
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SHF SHFF
SHF
SHF - Steinhoff International Holdings Limited - Unaudited interim results
for the six months ended 31 December 2011
Steinhoff International Holdings Limited
Registration number: 1998/003951/06
(Incorporated in the Republic of South Africa)
("Steinhoff" or "the company" or "the group")
JSE share code: SHF
ISIN code: ZAE000016176
Unaudited interim results for the six months ended 31 December 2011
- Headline earnings attributable to ordinary shareholders R2 761m (1H11: R1
630m) Increased by 69%
- Headline earnings per share 166.5 cps (1H11: 112.8 cps) Increased by 48%
- Operating profit R3 699m (1H11: R2 323m) Increased by 59%
- Cash generated from operations R3 136m (1H11: R1 901m) Increased by 65%
Condensed consolidated income statement
Notes Six Six % Year
months months change ended
ended ended 30 June
31 Dec 31 Dec 2011
2011 2010* Audited
Unaudited Unaudited Rm
Rm Rm
Revenue 37 645 16 857 123 43 040
Operating profit before 4 475 2 772 61 6 497
depreciation and capital
items
Depreciation (776) (449) (1 073)
Operating profit before 3 699 2 323 59 5 424
capital items
Capital items 1 (5) 4 (64)
Earnings before interest, 3 694 2 327 59 5 360
dividend income, associate
earnings and taxation
Net finance charges (585) (441) (1 175)
Dividend income 3 - 13
Share of profit of 236 24 55
associate companies
Profit before taxation 3 348 1 910 75 4 253
Taxation (315) (209) (435)
Profit for the period from 3 033 1 701 78 3 818
continuing operations
Profit for the period from - 103 1 526
discontinued operations
Profit for the period 3 033 1 804 68 5 344
Attributable to:
Owners of the parent 2 907 1 668 74 5 136
Non-controlling interests 126 136 208
Profit for the period 3 033 1 804 68 5 344
From continuing operations:
Headline earnings per 166.5 106.1 57 239.9
ordinary share (cents)
Fully diluted headline 150.5 102.2 47 225.8
earnings per ordinary share
(cents)
Basic earnings per ordinary 166.3 106.4 56 237.0
share (cents)
Fully diluted earnings per 150.3 102.4 47 223.4
ordinary share (cents)
From continuing and
discontinued operations:
Headline earnings per 166.5 112.8 48 257.7
ordinary share (cents)
Fully diluted headline 150.5 108.1 39 240.5
earnings per ordinary share
(cents)
Basic earnings per ordinary 166.3 112.6 48 341.3
share (cents)
Fully diluted earnings per 150.3 108.0 39 309.6
ordinary share (cents)
Number of ordinary shares 1 723 1 470 17 1 641
in issue (m)
Weighted average number of 1 658 1 446 15 1 461
ordinary shares in issue
(m)
Earnings attributable to 2 2 757 1 628 69 4 986
ordinary shareholders (Rm)
Headline earnings 3 2 761 1 630 69 3 766
attributable to ordinary
shareholders (Rm)
Average currency 10.5137 9.4495 11 9.5644
translation rate
(rand:euro)
The capitalisation share award on 5 December 2011 led to the restatement of
comparative per share numbers, none of which resulted in a deviation of more
than 1.6 cents.
* The prior period figures have been re-presented to reflect discontinued
operations.
Additional information
Six Six Year
months months ended
ended ended 30 June
31 Dec 31 Dec 2011
2011 2010* Audited
Unaudited Unaudited Rm
Rm Rm
Note 1: Capital items
From continuing operations:
Loss on disposal of property, plant and (1) (2) (62)
equipment
Loss on disposal of investment property (4) - -
Profit on disposal of investments and - 4 99
associate companies
Reversal of impairments/(impairments) - 2 (101)
(5) 4 (64)
From discontinued operations:
Impairments - - (12)
Loss on scrapping of vehicle rental fleet - (3) (10)
Loss on disposal of investments and - (2) (27)
associate companies
Loss on disposal of property, plant and - - (6)
equipment
Profit on disposal of discontinued - - 1 285
operations
(5) (1) 1 166
Note 2: Earnings attributable to ordinary
shareholders
Earnings attributable to owners 2 907 1 668 5 136
Dividend entitlement on non-redeemable (150) (40) (150)
cumulative preference shares
2 757 1 628 4 986
Note 3: Headline earnings attributable to
ordinary shareholders
Earnings attributable to owners of the 2 907 1 668 5 136
parent
Adjusted for:
Capital items (note 1) 5 1 (1 166)
Taxation effects of capital items (1) 1 (54)
Dividend entitlement on non-redeemable
cumulative preference shares (150) (40) (150)
2 761 1 630 3 766
* The prior period figures have been re-presented to reflect discontinued
operations.
Condensed consolidated statement of cash flows
Six Six Year
months months ended
ended ended 30 June
31 Dec 31 Dec 2011
2011 2010 Audited
Unaudited Unaudited Rm
Rm Rm
Cash generated before working capital 4 552 2 965 6 943
changes
Increase in inventories (1 082) (792) (827)
Increase in receivables (1 037) (58) (151)
Increase/(decrease) in payables 703 (214) 1 237
Changes in working capital (1 416) (1 064) 259
Cash generated from operations 3 136 1 901 7 202
Net finance costs (446) (271) (860)
Dividends paid (40) (73) (106)
Dividends received 88 - 13
Taxation paid (326) (196) (573)
Net cash inflow from operating activities 2 412 1 361 5 676
Net cash outflow from investing activities (3 415) (1 928) (15 100)
Net cash inflow from financing activities 570 964 10 307
Net (decrease)/increase in cash and cash (433) 397 883
equivalents
Effects of exchange rate changes on cash 329 (257) 317
and cash equivalents
Cash and cash equivalents at beginning of 6 321 5 121 5 121
period
Cash and cash equivalents at end of period 6 217 5 261 6 321
Condensed consolidated statement of financial position
31 Dec 31 Dec 30 June
2011 2010 2011
Unaudited Unaudited Audited
Rm Rm Rm
Assets
Non-current assets
Intangible assets and goodwill 38 675 16 939 35 930
Property, plant and equipment, investment 32 240 15 014 29 696
properties and biological assets
Investments in associate companies 4 765 924 4 274
Investments and loans 5 835 3 957 4 429
Deferred taxation assets 432 633 420
Other long-term assets 94 65 -
82 041 37 532 74 749
Current assets
Inventories 10 248 5 095 8 813
Accounts receivable, short-term loans and 13 306 10 083 11 036
other current assets
Cash and cash equivalents 6 217 5 261 6 321
29 771 20 439 26 170
Total assets 111 812 57 971 100 919
Equity and liabilities
Capital and reserves
Ordinary share capital and reserves 38 749 23 963 33 749
Preference share capital 4 056 1 092 4 056
42 805 25 055 37 805
Non-controlling interests 3 331 2 662 3 025
Total equity 46 136 27 717 40 830
Non-current liabilities
Interest-bearing long-term liabilities 27 360 15 958 26 112
Deferred taxation liabilities 6 899 2 634 6 420
Other long-term liabilities and provisions 2 969 528 2 916
37 228 19 120 35 448
Current liabilities
Accounts payable, provisions and other 21 686 8 677 20 254
current liabilities
Interest-bearing short-term liabilities 4 684 1 704 1 978
Bank overdrafts and short-term facilities 2 078 753 2 409
28 448 11 134 24 641
Total equity and liabilities 111 812 57 971 100 919
Net asset value per ordinary share (cents) 2 249 1 631 2 056
Net gearing ratio (%) 45 30 46
Closing exchange rate (rand:euro) 10.5023 8.8843 9.8654
Condensed consolidated statement of comprehensive income
Six Six Year
months months ended
ended ended 30 June
31 Dec 31 Dec 2011
2011 2010 Audited
Unaudited Unaudited Rm
Rm Rm
Profit for the period 3 033 1 804 5 344
Other comprehensive income/(loss)
Actuarial (loss)/gain on defined benefit (32) (1) 47
plans
Exchange differences on translation of 1 566 (1 508) 1 392
foreign subsidiaries
Net value gain/(loss) on cash flow hedges 162 (9) (32)
and other fair value reserves
Deferred taxation (36) 2 3
Other comprehensive income/(loss) for the 1 660 (1 516) 1 410
period, net of taxation
Total comprehensive income for the period 4 693 288 6 754
Total comprehensive income attributable
to:
Owners of the parent 4 378 294 6 406
Non-controlling interests 315 (6) 348
Total comprehensive income for the period 4 693 288 6 754
Condensed consolidated statement of changes in equity
Six Six Year
months months ended
ended ended 30 June
31 Dec 31 Dec 2011
2011 2010 Audited
Unaudited Unaudited Rm
Rm Rm
Balance at beginning of the period 40 830 27 061 27 061
Changes in ordinary share capital and
share premium
Capital distribution (1 311) (1 178) (1 178)
Net shares issued 1 948 996 3 938
Net utilisation of treasury shares - 352 167
(Loss)/profit on treasury share - (22) 153
transactions net of capital gains taxation
Treasury shares eliminated on disposal of - - 471
subsidiaries
Changes in preference share capital and
share premium
Net shares issued - - 2 964
Proceeds on disposal of treasury shares - 50 50
Changes in reserves
Total comprehensive income for the period 4 378 294 6 406
attributable to owners of the parent
Equity portion of convertible bonds issued - 185 570
net of deferred taxation
Preference dividends (37) (41) (89)
Share-based payments 16 59 58
Premium on acquisition of non-controlling - - (74)
interests
Other reserve movements 6 (5) 4
Changes in non-controlling interests
Total comprehensive income/(loss) for the 315 (6) 348
period attributable to non-controlling
interests
Dividends and capital distributions paid (2) (25) (24)
Other transactions with non-controlling (7) (3) 5
interests
Balance at end of the period 46 136 27 717 40 830
Comprising:
Ordinary share capital and share premium 9 111 5 071 8 474
Preference share capital and share premium 4 056 1 092 4 056
Distributable reserves 27 146 20 843 24 271
Actuarial gains reserve 16 4 45
Cash flow hedging and other fair value 94 (15) (29)
reserves
Convertible and redeemable bonds reserve 923 538 923
Foreign currency translation reserve 936 (3 060) (441)
Share-based payment reserve 608 593 592
Other reserves (85) (11) (86)
Non-controlling interests 3 331 2 662 3 025
46 136 27 717 40 830
Segmental analysis
Six Six % Year
months months change ended
ended ended 30 June
31 Dec 31 Dec 2011
2011 2010* Audited
Unaudited Unaudited Rm
Rm Rm
Revenue
Retail activities - household 28 094 8 599 227 25 822
goods
Manufacturing and sourcing of 13 049 10 960 19 21 017
household goods and related raw
materials
Logistics services 4 075 3 398 20 7 050
Corporate services
- Brand management 196 167 17 341
- Investment participation 256 173 48 433
- Central treasury, properties and 150 143 5 449
other activities
45 820 23 440 95 55 112
Intersegment revenue eliminations (8 175) (6 583) (12 072)
37 645 16 857 123 43 040
Operating profit before capital
items
Retail activities - household 1 860 625 198 1 554
goods
Manufacturing and sourcing of 1 172 1 079 9 2 466
household goods and related raw
materials
Logistics services 489 422 16 835
Corporate services
- Brand management 196 167 17 341
- Investment participation 256 173 48 433
- Central treasury, properties and 135 196 (31) 507
other activities
4 108 2 662 54 6 136
Intersegment profit eliminations (409) (339) (712)
3 699 2 323 59 5 424
31 Dec % 31 Dec % 30 June %
2011 2010 2011
Unaudited Unaudited Audited
Rm Rm Rm
Total assets
Retail activities
- Household goods and 63 338 65 19 221 39 57 100 65
building supplies
- Automotive - - 2 928 6 - -
Manufacturing and sourcing 16 203 17 12 333 25 14 631 17
of household goods and
related raw materials
Logistics services 7 976 8 7 522 15 7 560 8
Corporate services
- Brand management 4 663 5 3 834 8 4 447 5
- Investment participation 3 205 3 2 566 5 2 867 3
- Central treasury, 1 713 2 1 114 2 1 669 2
properties and other
activities
97 098 100 49 518 100 88 274 100
Reconciliation of total assets per statement of financial position to total
assets per segmental analysis
31 Dec 31 Dec 30 June
2011 2010 2011
Unaudited Unaudited Audited
Rm Rm Rm
Total assets per statement of financial 111 812 57 971 100 919
position
Less: Cash and cash equivalents (6 217) (5 261) (6 321)
Less: Investments in associate companies (4 765) (924) (4 274)
Less: Investment in preference shares (329) (257) (313)
Less: Investment in PSG Group Limited (971) - -
Less: Interest-bearing short-term loans (2 302) (1 767) (1 495)
receivable
Less: Interest-bearing long-term loans (130) (244) (242)
receivable
Total assets per segmental analysis 97 098 49 518 88 274
Geographical information
Six % Six % Year %
months months ended
ended ended 30 June
31 Dec 31 Dec 2011
2011 2010* Audited
Unaudited Unaudited Rm
Rm Rm
Revenue
Continental Europe 28 342 75 7 803 46 25 825 60
Pacific Rim 1 412 4 1 241 7 2 481 6
Southern Africa 5 132 14 4 616 28 8 926 21
United Kingdom 2 759 7 3 197 19 5 808 13
37 645 100 16 857 100 43 040 100
31 Dec % 31 Dec % 30 June %
2011 2010 2011
Unaudited Unaudited Audited
Rm Rm Rm
Non-current assets
Continental Europe 59 227 72 19 460 52 54 256 73
Pacific Rim 1 658 2 1 412 4 1 476 2
Southern Africa 15 136 19 11 296 30 13 624 18
United Kingdom 6 020 7 5 364 14 5 393 7
82 041 100 37 532 100 74 749 100
* The prior period figures have been re-presented to reflect discontinued
operations.
Notice
The preparation of these condensed interim financial statements has been
supervised by Frikkie (FJ) Nel CA(SA), finance director of Steinhoff.
Review of results
Our strategic position has been strengthened through the successful
integration of the Conforama acquisition in Europe and the repositioning of
our African business through the investments in JD Group and KAP.
Total assets per segment
65% Retail - household goods
17% Manufacturing and sourcing
8% Logistics services
10% Corporate services
Revenue per geographical region
75% Continental Europe
14% Southern Africa
7% United Kingdon
4% Pacific Rim
Revenue per segment
61% Retail - household goods
29% Manufacturing and sourcing
9% Logistics services
1% Corporate services
Operational review: Steinhoff Europe
The group reported a strong financial performance in a challenging market.
This performance was supported by our resilient value proposition in our
retail formats, good cost control across the group, and our ongoing focused
investments in brands, product, infrastructure and properties.
Retail activities: Household goods
Continental Europe
In sharp contrast to the macro-economic woes of Europe, our retail operations
on the continent generated strong growth in revenue and profit. Conforama is
reported on for the full period under review. The comparative period does not
reflect any contribution from Conforama as the acquisition only became
effective in March 2011.
In line with the strategy to focus on margin improvement, Conforama reported
good results compared to that of the previous year. A solid performance in
France was complemented by growth in Switzerland and Iberia and a
satisfactory performance elsewhere. Revenue was aided by tactical marketing,
increased internet trading and product campaigns that drove increased in-
store traffic. The increased traffic was successfully converted into sales of
more profitable product ranges that, coupled with good cost control, improved
margins. We continued to invest in the Conforama business by opening new
stores, buying franchisee businesses and properties from which we trade.
These investments bode well for the continued success of Conforama.
The resilient economies in central continental Europe supported our ERM
retail businesses in the German-speaking territories. Growth was further
supported by the compelling in-store value proposition and new store
openings. Profitability increased year-on-year as a result of the retail
properties acquired by the group in the previous financial year. During the
period under review, ERM opened seven new stores, all of which are trading
ahead of initial expectations.
United Kingdom
Our focus in providing an appropriate value offering to our key target market
proved to be the main contributor to the improved performance in the UK. The
UK retail division outperformed the market, increased market share and
profitability, despite fewer trading outlets across all brands and a subdued
market. The new furniture retail management team is now well entrenched and
the brand rationalisation at the bed retail division is largely complete,
which has laid the foundation for a continued good performance.
Pacific Rim
Australian retailers that differentiate on low prices grew market share at
the expense of the middle to upper-end market segments in line with the trend
experienced in Europe. Our existing positioning at the higher end of the
market continued to affect our trading in Freedom Australia. The bed retail
division reported good growth. In New Zealand, the decision to lower prices
and focus on the discount segment has had the desired outcome, and this
division reported increased sales.
Eastern Europe
The group`s joint venture retail operations in eastern Europe have continued
to be affected by the tough consumer spending conditions prevailing in these
markets. The newly acquired Abra reported an improved performance in the
months since our acquisition.
Manufacturing and sourcing
United Kingdom
In line with the UK retail performance, the bedding, furniture and foam
conversion manufacturing plants benefited from increased sales through the
group-owned beds retail chains. While the foam conversion plant benefited
further from an increased external sales demand (automotive and industrial)
the furniture and mattress manufacturing plants remain more focused on
increasing sales to internal and existing customers.
Continental Europe
The group`s trading divisions and manufacturing plants throughout the
European Union and eastern Europe as well as our European logistics platform,
delivered good revenue growth. As reported previously, the Conforama
acquisition created some uncertainty with our manufactured products` external
customer base that put some pressure on sales in the six months directly
following the Conforama acquisition. It is therefore pleasing to report that
the independence of our manufacturing and trading divisions has been re-
established, the optimisation of our customer base completed and order books
are at high levels for most divisions.
In addition, the weakening of both the Polish zloty and the Hungarian forint
against the euro further assisted these divisions` competitiveness.
International sourcing
The International sourcing division remains one of the fastest growing
divisions in the group. This division delivered pleasing growth at consistent
quality and service levels to its internal customer base. This team has now
been expanded and strengthened with a new division that will be responsible
for co-ordinating the European supply base. The new structure successfully
draws on the combined skills of the existing Steinhoff International Sourcing
office and that of Conforama Sourcing. Improved margins have already been
achieved throughout the diverse product range. This division will concentrate
on bedding down and testing the new structure for the remainder of the year,
whereafter additional volume will be allowed onto the structure that will
drive additional benefits and margin.
Logistics services
Continental Europe, United Kingdom and Pacific Rim
Our drive to optimise and rationalise the logistic efforts of all our
divisions throughout Europe and the Pacific Rim is performing according to
plan. The group strategy and agreed plan on how to create and manage an
efficient and effective Asian and European supply chain operation continues
to make good progress. During the period under review, the decentralised
supply chain in all countries functioned well. Cost savings have been
realised, in particular on inbound shipping charges from across the globe.
Operational review: Steinhoff Africa
Steinhoff Africa made great strides in establishing the future strategic
positioning of this group through the various transactions announced during
the six months under review.
Industrial assets
Logistics services: Unitrans
The period under review concluded with satisfying activity levels and a very
busy December in virtually all divisions. Increased volumes and demand for
fuel in Gauteng, Botswana, Namibia and Swaziland contributed to a good
performance in the Fuel and Chemical division. The Agriculture and Mining
division reported strong volumes, ahead of expectation, across the majority
of our customer base. The Freight and Logistics division reported solid
revenues and margins, aided by its diverse customer base and industry
exposure. Unitrans Passenger reported growth from its contractual passenger
transport divisions which was partly offset by an anticipated decline in
demand from the tourist and commuter division.
Manufacturing: Timber and raw material division
Satisfactory results were reported by our timber operations, despite the
tough trading environment for particle board and medium density fibre board.
The current market conditions, including rand strength (that stimulates
imports and inhibits exports), are expected to continue in the foreseeable
future, and as such, this division will concentrate on balancing the existing
plant efficiencies with additional infrastructural improvements to better
compete in the current market. In the rest of the raw material division, the
foam division and the bedding component business reported a satisfactory
performance in a very tough and competitive market.
Industrial associate holding: KAP International Holdings Limited ("KAP")
(34%)
KAP increased HEPS by 22% on the back of strong demand in its industrial
businesses, particularly the PET Resin plant, Hosaf.
Retail associate holding: JD Group Limited ("JD Group") (32%)
JD Group became an associate of Steinhoff in June 2011 and as a result its
results were equity accounted for the entire period under review. The group
increased its holding in JD Group to 32%. JD Group performed well during the
period under review and R196.1m has been included in associate earnings in
respect of this investment.
Financial review
The results for the half-year ended 31 December 2011 included six months
trading contribution of Conforama. Conforama`s results were not included in
the comparative period as the business was acquired effective 1 March 2011.
In addition, the results exclude the performance of the Unitrans automotive
and Steinbuild businesses that now form part of JD Group.
Revenue
Group revenue for the period increased 123% to R37.6bn (1H11: R16.9bn). Group
turnover in our continuing African operations increased by 11% to R5 132m
(1H11: R4 616m), while turnover earned in currencies other than rand, as
measured in euro, increased by 139% to EUR3 092m (1H11: EUR1 295m), mainly
due to the first-time consolidation of Conforama in the six months under
review. The group`s reporting currency (rand) weakened against the euro by
11% during the period. A total of 86% of the group`s revenue was earned in
currencies other than South African rand. Growth was experienced throughout
the segments as evidenced by the segmental report and explained in more
detail within the operational commentary part of this report.
Operating profit before capital items
Operating profit increased by 59% to R3 699m (1H11: R2 323m). Retail
activities: household goods contributed R1 860m (1H11: R625m) reflecting the
contribution from the Conforama business but also the margin growth
experienced in the European retail businesses. Operating profit from
manufacturing and sourcing activities increased 9% to R1 172m (1H11: R1 079m)
and logistics services contributed R489m to operating profit, a 16% increase
compared to the previous period.
Net finance charges
Net finance charges increased by R144m to R585m, reflecting the increase in
absolute debt levels as a result of the Conforama acquisition. However, due
to increased trading levels as a result of the Conforama acquisition,
interest cover increased from 5.3 to 6.3 times.
Taxation
In line with the increased activity levels and the first-time consolidation
of Conforama, taxation increased by 51% to R315m (1H11: R209m). The group
maintains that a 15% average tax rate is a normalised tax rate given the
range of jurisdictions where we operate.
Earnings per share (EPS) and headline earnings per share (HEPS)
EPS increased by 56% to 166.3 cps (1H11: 106.4 cps) and increased by 48% as
measured against an EPS of 112.6 cps that included discontinued operations.
HEPS at 166.5 cps increased by 57% (1H11: 106.1 cps) and increased 48% as
measured against the HEPS that included discontinued operations. These
increases were achieved despite an increase of 15% in the weighted average
number of ordinary shares in issue to 1 658m (1H11: 1 446m). The additional
shares were largely due to the shares issued in part funding of the Conforama
acquisition.
The average translation rate increased to R10.5137:EUR1 from R9.4495:EUR1
(11% change) for the six months ended 31 December 2011.
Assets
The total assets of the group increased to R111.8bn (FY11: R100.9bn) which
reflects the increased scale of the group after the implementation of the
acquisition of Conforama, the investment in new stores, as well as the
investment in the associate, JD Group. The net asset value per share
increased 9% and amounted to 2 249 cps (FY11: 2 056 cps).
Debt
The group remains well capitalised with net debt at 31 December 2011 of
R20.9bn, translating to the debt:equity ratio reducing to 45% (FY11: 46%).
At 31 December 2011, the group had R6.2bn (FY11: R6.3bn) cash and cash
equivalents and with confirmed unutilised facilities, is comfortable that the
business is well capitalised for the medium term.
Working capital
In line with increased activity levels, and the peak trading period in Europe
during December and January, working capital consumed increased to R1 416m
(1H11: R1 064m). In addition, the group increased the furniture range
available from stock (versus from order) during the peak season to boost
sales and drive efficiencies through the supply chain. This tactical
marketing campaign was continued in January to mitigate the delivery risk
experienced in the previous year resulting from the Chinese new year slow-
down. The group remains confident that the integrated supply chain model will
be working capital neutral on a normalised basis.
The group insures the majority of its debtors, as well as all retailers where
we are exposed in terms of retail participation investments. As a result, the
group did not incur any significant bad debt during the period under review.
Cash flow
The group`s cash flow dynamics will change from its historic performance,
given the inclusion of the Conforama business. For the period under review,
the group exchanged the cash contribution from the southern African retail
businesses for the non-cash associate earnings of JD Group. Despite this,
cash generation remained strong, with cash generated from operations of R3
136m against an operating profit of R3 699m. Taking into account this
performance, and the busy trading period experienced in our European
businesses in December and January, the group remains confident that current
trading will continue to result in strong cash flows for the remainder of the
year.
Capital expenditure
The group is motivated by the success of its retail offering in Europe in a
fragmented but consolidating market. In the past six months, the group opened
seven stores in Germany, two stores in Spain, and acquired nine previously
franchisee stores that will now be trading as owned Conforama stores.
Conforama also opened two Confo Deco stores. These new stores comprise 145
351 m2 and account for the majority of the expansion capital invested in the
group during the period under review. Maintenance capital expenditure remains
in line with the higher depreciation charge, arising from the Conforama
acquisition.
Corporate activity
The group announced the following corporate actions during the period under
the review:
- On 18 October 2011, it was announced that Steinhoff concluded an agreement
with KAP in terms of which KAP would acquire all of Steinhoff`s Industrial
Assets, comprising its PG Bison, Unitrans and raw materials businesses ("the
KAP transaction"). The KAP transaction was approved by KAP shareholders on 18
January 2012 and the only condition precedent remaining is the approval of
the South African Competition Authorities. When implemented, KAP will be
reconstituted as Steinhoff`s separately listed operating subsidiary, owning
and operating a large industrial portfolio in southern Africa. Steinhoff`s
shareholding in KAP will increase to 88% of its enlarged issued share capital
following the implementation of KAP transaction, subject to the additional
transaction relating to JD Group (refer below).
- On 18 October 2011, it was announced that Steinhoff had procured call
options and undertakings from JD Group shareholders to make a number of
shares in JD Group available to Steinhoff, sufficient for Steinhoff to
acquire control of JD Group on the basis of an exchange of 16 KAP shares for
every JD Group share ("the JD share exchange"). The JD share exchange will be
implemented by way of a partial offer to all JD Group shareholders, other
than Steinhoff ("the partial offer"). Full details of the partial offer are
contained in the circular dated 11 February 2012 which also contains a notice
of general meeting to be held on 12 March 2012 for the purposes of approving
the partial offer. If the requisite approval is obtained from JD Group
shareholders at the aforesaid general meeting, the outstanding conditions
precedent to this transaction will be that the KAP transaction becomes
unconditional, as well as the approval of the South African Competition
Authorities to the change of control of JD Group arising from the
implementation of the partial offer. Steinhoff`s shareholding in JD Group
will increase from 32.4% to 50.1% and its shareholding in KAP will decrease
to 62%.
- On 15 December 2011, it was announced that Steinhoff entered into
agreements for the acquisition of a 20% shareholding in PSG Group Limited for
a combination of cash and the issue of Steinhoff shares. The issue of shares
by the company in terms of section 41 of the Companies Act was approved by a
majority of 82% of the total votes received from Steinhoff shareholders in
terms of a written resolution which closed on 27 January 2012.
Outlook
During the period under review, the group established the future strategic
intent and positioning of its constituent businesses comprising:
- Steinhoff Europe, an integrated mass market retailer of furniture and
household goods, predominately serving the discount segment.
- Steinhoff Africa, a diversified industrial company operating in the
logistics, integrated timber and industrial raw materials sectors, including
our associate investment in KAP, which on implementation of the KAP
transaction will become a listed subsidiary of Steinhoff.
- Associate company, JD Group, an emerging market retailer of furniture and
household goods, motor vehicles and DIY products, supported by a consumer
finance business. On implementation of the partial offer, JD Group will
become a listed subsidiary of Steinhoff.
- Associate investment in PSG Group, an investment holding company invested
in a variety of complementary assets at various stages of development and
maturity.
- A property portfolio comprising commercial, industrial and retail real
estate assets throughout the jurisdictions where we operate.
The directors are confident that the above repositioning establishes the base
that will provide focus from which the separate operating units will continue
to deliver sustainable earnings growth.
Len Konar Markus Jooste
Independent chairman Chief executive officer
6 March 2012
Selected explanatory notes
Statement of compliance
The consolidated interim financial information for the six months ended 31
December 2011 has been prepared in accordance with International Financial
Reporting Standards (IFRS), the AC 500 standards as issued by the Accounting
Practices Board and the interpretations adopted by the International
Accounting Standards Board (IASB). This set of condensed interim financial
statements are presented in compliance with IAS 34 - Interim Financial
Reporting and should be read in conjunction with the annual financial
statements for the year ended 30 June 2011.
Basis of preparation
The condensed interim financial statements are prepared in millions of South
African rand (Rm) on the historical-cost basis, except for certain assets and
liabilities which are carried at amortised cost, and derivative financial
instruments, available for sale financial assets and biological assets which
are stated at their fair value.
Accounting policies
The accounting policies adopted in the preparation of the condensed interim
financial information are consistent with those of the annual financial
statements for the year ended 30 June 2011. For a full list of standards and
interpretations which have been adopted, we refer you to our 30 June 2011
annual financial statements. During the period under review, the group
adopted all the IFRS and interpretations being effective and deemed
applicable to the group. None of these standards and interpretations had a
material impact on the results.
Other notes
1. Corporate governance
Steinhoff has embraced the recommendations of the King Report on Corporate
Governance and strives to provide reports to shareholders that are timely,
accurate, consistent and informative.
2. Social responsibility
The group remains committed to behaving in a socially responsible manner and
is conscious of its responsibilities in this regard.
3. Human resources
A constructive working relationship is maintained with our group employees
and the relevant unions. Ongoing skills and equity activities ensure
compliance with current legislation.
4. Related-party transactions
The company entered into various related-party transactions. These
transactions are no less favourable than those arranged with third parties.
5. Further events
No significant events have occurred in the period between the reporting date
and the date of this report.
For more detail on the group`s listed investments, shareholders are referred
to the results and/or corporate announcements and financial information of:
KAP International Holdings Limited - 6 March 2012 www.kapinternational.com,
JD Group Limited - 17 February 2012 www.jdgroup.co.za and PSG Group Limited
www.psggroup.co.za.
Administration
Registered office
28 Sixth Street,
Wynberg,
Sandton 2090,
Republic of South Africa
Tel: +27 (11) 445 3000
Fax: +27 (11) 445 3094
Directors
D Konar (chairman), MJ Jooste (chief executive officer), SF Booysen, DC
Brink, YZ Cuba, CE Daun*, HJK Ferreira, SJ Grobler, TLJ Guibert#, MT Lategan,
JF Mouton, FJ Nel, FA Sonn, BE Steinhoff*, PDJ van den Bosch+, DM van der
Merwe
Alternate directors
JNS du Plessis, KJ Grove, A Kruger-Steinhoff*, AB la Grange, M Nel
+Belgian #French *German non-executive
Company secretary
Steinhoff Africa Secretarial Services (Proprietary) Limited
Auditors
Deloitte & Touche
Sponsor
PSG Capital (Proprietary) Limited
Transfer secretaries
Computershare Investor Services (Proprietary) Limited
70 Marshall Street
Johannesburg 2001
Website
www.steinhoffinternational.com
To view results on mobile www.steinhoff.mobi
Steinhoff Investment Holdings Limited
Registration number: 1954/001893/06
(Incorporated in the Republic of South Africa)
("Steinhoff Investment")
JSE share code: SHFF
ISIN code: ZAE000068367
Proposed dividend to preference shareholders
Preference shareholders are referred to the above results of Steinhoff for a
full appreciation of the consolidated results and financial position of
Steinhoff Investment.
The board has recommended that a dividend of 374 cents per preference share
be declared on or before 3 April 2012, in respect of the period from 1 July
2011 to and including 31 December 2011 (the dividend period), payable on
Monday, 23 April 2012, to those preference shareholders recorded in the books
of the company at the close of business on Friday, 20 April 2012.
The dividend will be payable in the currency of South Africa. This dividend
will be subject to Dividends Tax.
Anticipated dates:
2012
Last date to trade cum dividend Friday, 13 April
Shares trade ex dividend Monday, 16 April
Record date Friday, 20 April
Payment date Monday, 23 April
Share certificates may not be dematerialised or rematerialised between
Monday, 16 April 2012 and Friday, 20 April 2012, both days inclusive.
Dividends taxation
We refer to previous communications regarding the introduction of Dividends
Tax.
Dividends Tax will come into operation with effect from 1 April 2012 and will
apply to all declarations of dividends to shareholders on or after that date.
The existing terms and conditions of the preference shares do not provide for
any adjustment to the dividend rate, in respect of the introduction or of
changes to Dividends Tax. However, the board has decided to adjust the
preference share dividend rate from 75% to 82.5% of the prime bank overdraft
lending rate of Absa Bank Limited prevailing over the relevant dividend
period, effective in respect of all dividends declared after date of this
notice.
On behalf of the board of directors.
Len Konar Piet Ferreira
Independent director Executive director
6 March 2012
Date: 06/03/2012 14:00:01 Produced by the JSE SENS Department.
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