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Steinhoff International Holdings Ltd - Unaudited results for the six months
ended 31 December 2002
Steinhoff International Holdings Ltd
Registration number: 1998/003951/06
Share code: SHF ISIN code: ZAE 000016176
Sustainable growth achieved in challenging international markets
* Revenue up 35%
* Headline earnings up 33% to R487 million
* Headline EPS up 21%
* Strong operating cash flow
* Sound balance sheet structure
Consolidated income statement
for the six months ended 31 December 2002
Unaudited *Unaudite
d
six six Audited
months months year
ended ended ended
31/12/02 31/12/01 % 30/06/02
Notes R'000 R'000 change R'000
Revenue 5 299 962 3 912 203 35 8 207 936
Operating
income before
depreciation 609 799 459 285 33 1 040 014
Depreciation (111 813) (70 060) (163 563)
Operating
income after
depreciation 497 986 389 225 28 876 451
Exceptional 1 (15 307) - (107 174)
items
Earnings
before
goodwill,
interest and 482 679 389 225 24 769 277
taxation
Goodwill (28 506) - (36 549)
amortised
Earnings
before
interest
and taxation 454 173 389 225 17 732 728
Net finance (19 492) (18 137) (79 299)
charges
Earnings 434 681 371 088 17 653 429
before
taxation
Taxation (31 484) (25 365) 24 (52 609)
Earnings 403 197 345 723 17 600 820
after
taxation
Share of
associated
companies'
retained 44 515 21 704 105 55 964
income
Attributable
to outside
shareholders (8 281) 856 1 809
Income
attributable
to
shareholders 439 431 368 283 19 658 593
Number of 951 800 864 845 10 906 616
shares in
issue ('000)
Weighted
average
number of
shares in 929 537 855 528 9 864 754
issue ('000)
Attributable 439 431 368 283 19 658 593
income
(R'000)
Headline 2 487 536 367 267 33 785 021
earnings
(R'000)
Earnings per 47 43 9 76
share (cents)
Headline
earnings per
share
before 52 45 98
restatement
(cents)
Changes in
accounting
policies
to comply
with new
accounting
standards
and circular - (2) (7)
7/2002
Headline
earnings
per share 52 43 21 91
(cents)
Dividend per - - 15
share (cents)
Note 1:
Exceptional
items (R'000)
Closure costs (15 307) - (83 171)
Impairment of - - (24 003)
assets
(15 307) - (107 174)
Note 2:
Headline
earnings
calculation
Income
attributable
to
shareholders 439 431 368 283 658 593
Adjustment
for:
-
(Profit)/Loss
on disposal
of fixed 4 292 (1 016) (17 295)
assets
- Exceptional 15 307 - 107 174
items
- Goodwill 28 506 - 36 549
written off
Headline
earnings for
the period 487 536 367 267 33 785 021
Changes in
accounting
policies to
comply with
new
accounting
standards
and circular (4 292) 17 630 62 195
7/2002
Headline
earnings
before 483 244 384 897 847 216
restatement
*The figures for the six months ended 31/12/2001 have been restated to comply
with Accounting Statement AC 135 as well as circular 7/2002.
Abridged consolidated cash flow statement
for the six months ended 31 December 2002
Unaudited Unaudited
six six Audited
months months year
ended ended ended
31/12/02 31/12/01 30/06/02
R'000 R'000 R'000
Operating profit 586 048 458 269 932 557
before working
capital changes
Net changes in (344 858) (159 832) 22 454
working capital
Cash generated from 241 190 298 437 955 011
operations
Net finance costs (19 492) (18 137) (79 299)
Dividends paid (16 562) (26 694) (26 694)
Dividends received 17 230 7 506 7 506
Taxation (22 091) (60 457) (59 457)
Net cash inflow 200 275 200 655 797 067
from operating
activities
Net cash outflow (515 501) (1 134 016) (1 380 076)
from investing
activities
Net cash inflow 421 403 32 153 308 145
from financing
activities
Net 106 177 (901 208) (274 864)
increase/(decrease)
in cash and cash
equivalents
Effects of exchange
rate changes on
cash
and cash (121 449) 142 732 (308 989)
equivalents
Cash and cash 405 052 988 905 988 905
equivalents -
beginning of period
Cash and cash 389 780 230 429 405 052
equivalents - end
of period
Abridged consolidated balance sheet
at 31 December 2002
Unaudited *Unaudited Audited
31/12/02 31/12/01 30/06/02
R'000 R'000 R'000
ASSETS
Non-current
assets
Property, 2 830 639 2 786 699 2 729 956
plant and
equipment and
intangible
assets
Investments 1 240 035 808 089 1 246 109
and loans
Deferred tax 23 515 - 5 727
asset
4 094 189 3 594 788 3 981 792
Current
assets
Accounts 2 824 401 2 480 458 2 563 859
receivable
Inventories 1 124 779 1 127 763 1 109 204
Cash and cash 389 780 230 429 405 052
equivalents
4 338 960 3 838 650 4 078 115
Total assets 8 433 149 7 433 438 8 059 907
EQUITY AND
LIABILITIES
Capital and
reserves
Ordinary 4 693 236 3 796 269 4 382 901
shareholders'
equity
Outside 26 592 9 182 28 073
shareholders'
interest
4 719 828 3 805 451 4 410 974
Non-current
liabilities
Deferred 12 576 4 531 7 223
taxation
Long-term 655 914 1 054 260 746 811
liabilities
Long-term 216 381 287 250 237 873
licence fee
liability
884 871 1 346 041 991 907
Current
liabilities
Net interest 936 560 444 800 622 083
bearing
Accounts 1 891 890 1 837 146 2 034 943
payable and
provisions
2 828 450 2 281 946 2 657 026
Total equity 8 433 149 7 433 438 8 059 907
and
liabilities
Net asset 493 439 483
value per
share (cents)
Gearing ratio 33 33 24
(net) (%)
*The figures for the six months ended 31/12/2001 have been restated to comply
with Accounting Statement AC 135.
Statement of changes in equity
for the six months ended 31 December 2002
Share
capital Non-
and distributable Distributable
premium reserves reserves Total
R'000 R'000 R'000 R'000
Balance at 2 155 425 577 445 1 650 031 4 382 901
beginning of
period
Earnings 439 431 439 431
attributable
to
shareholders
Decrease in
foreign
currency
translation (246 423) (246 423)
reserve
Dividends (16 562) (16 562)
paid
Issue of 133 889 133 889
shares
Share of
associate
companies'
retained
earnings
transferred
to
non- 18 542 (18 542)
distributable
reserves
Balance at 2 289 314 349 564 2 054 358 4 693 236
end of period
Note
The accounting policies and methods of compilation for the financial statements
for the six months ended 31 December 2002 are in all material respects
consistent with those applied in previous periods, except for the provision of
depreciation on owner-occupied buildings (AC 135) and post-retirement medical
aid benefits (AC 116), which were accounted for the first time in the year ended
30 June 2002, and are in accordance with South African Statements of Generally
Accepted Accounting Practice. The comparative results for the six months ended
31 December 2001 have been restated to recognise these changes, which has had
the effect of reducing headline earnings for that period by R16,6 million with a
prior year adjustment at 30 June 2001 of R114,7 million, which has been adjusted
to the opening balance of retained income.
Review of results
Performance
The Board takes pleasure in reporting that the Group's headline earnings for the
six months ended 31 December 2002 grew to R487 million (2001: R367 million) on
increased revenues of R5 300 million (2001: R3 912 million) in a challenging and
competitive global market.
The results demonstrate the sustainability of the Group's business model and
core strategies through expanded geographical spread and diversification.
Through outsourcing of non-core product ranges, the partial vertical integration
of the European supply chain, the strengthening of existing and the creation of
new business relationships and the manufacture and sourcing of product in low
cost regions and sales into developed economies, the performance of the Group
has been sustained. The Group's ability to generate real earnings growth in its
wide geographical areas of operation, without relying on a consistent
depreciation in its reporting currency is encouraging.
The average operating margin of the Group was maintained at 10% for the period
and is expected to continue at this level for the remainder of the current
financial year. Steinhoff Africa achieved an operating margin of 9,0% (2001:
9,0%) while the rest of the Group generated a margin of 11% in rand terms.
Net finance charges were contained, notwithstanding the growth reported for the
period as a result of continued sound working capital management and
comparatively lower interest rates in Europe.
The relatively low effective tax rate is due mainly to the favourable tax
dispensations in certain jurisdictions in central Europe, as well as the partial
utilisation of assessed losses brought forward through profitable trading. The
effective tax rate is not anticipated to change materially in the foreseeable
future.
The Board is also pleased with the contribution of the Group's associated
investments, P G Bison Holdings and Unitrans, which more than doubled for the
period under review.
The results of Relyon (UK) and Steinhoff Pacific (Australia) are now included
for the full six month period compared to only three months for the comparative
period.
Headline earnings per share increased by 21% to 52 cents (2001: 43 cents) on a
weighted average number of 929,537 million (2001: 855,528 million) shares in
issue.
Segmental analysis
The Group's main activities as an integrated global lifestyle supplier is
focused on manufacturing and wholesale & distribution.
six months ended 31 December 2002
Earnings
before
exceptional
items,
goodwill,
interest
and Net
R'000 Revenue % taxation* % assets %
Manufacturing 3 706 175 70 363 483 67 3 383 72
846
Wholesale & 1 593 787 30 179 018 33 1 309 28
distribution 382
Total 5 299 962 10 542 501 10 4 693 100
0 0 228
* Earnings before exceptional items, goodwill, interest and taxation includes
share of associate income of R44 515 000.
six months ended 31 December 2001
Earnings
before
exceptional
items,
goodwill,
interest
and Net
R'000 Revenue % taxation** % assets %
Manufacturing 2 871 616 73 252 396 61 2 699 661 71
Wholesale & 1 040 587 27 158 533 39 1 096 608 29
distribution
Total 3 912 203 100 410 929 100 3 796 269 100
**Earnings before exceptional items, goodwill, interest and taxation includes
share of associate income of R21 704 000.
Geographical analysis
The Group's operations are located in southern Africa, the European community,
eastern Europe and Australia.
six months ended 31 December 2002
Earnings
before
exceptional
items,
goodwill,
interest
and Net
R'000 Revenue % taxation % assets %
Southern 1 475 906 28 131 884 24 1 316 350 28
Africa
European 2 344 960 44 251 924 47 2 592 375 55
Community
Eastern 1 223 449 23 152 931 28 706 149 15
Europe
Australia and 255 647 5 5 762 1 78 354 2
New Zealand
Total 5 299 962 100 542 501 100 4 693 228 100
six months ended 31 December 2001
Earnings
before
exceptional
items,
goodwill,
interest
and Net
R'000 Revenue % taxation % assets %
Southern 1 275 842 33 110 364 27 1 259 815 33
Africa
European 1 690 828 43 207 151 51 1 785 926 47
Community
Eastern 820 080 21 88 174 21 678 983 18
Europe
Australia 125 453 3 5 240 1 71 545 2
and New
Zealand
Total 3 912 203 100 410 929 100 3 796 269 100
The average exchange rate used to translate foreign currency income and
expenditure into South African rand was R9,85: Euro1 (2001: R8,33: Euro1). R479
million (2001: R414 million) of Africa's revenue represents exports to the USA
and the European community, amounting to approximately 32% (2001: 32%) of its
activities. It is the intention of the Group to continue to increase these
exports into the future. The Group's revenue exposure to the local South African
furniture market amounted to 19% (2001: 20%).
FUNDING AND GEARING
The Group redeemed Euro30 million of short-term debt outstanding on 30 June 2002
from the proceeds of a six-year redeemable bond, having a fixed six-monthly
coupon rate of 3,625% per annum. In addition, Steinhoff Europe intends to access
a Euro syndicated term loan facility, which, if implemented and together with
the bond, should improve the Group's financial risk profile. Further, the
Group's European operations are gaining greater visibility in the international
markets.
The company strengthened its equity through the issue of 20,8 million shares to
shareholders electing to receive the capitalisation shares in lieu of the cash
dividend of 15 cents per share. The company also placed 20 million shares in the
off-shore market in December 2002. The proceeds are to be used to fund capital
expenditure and future business opportunities in the European division. This
placing is in line with the Group's stated objective of increasing its non-
resident shareholder base.
The company maintained its gearing ratio at 31 December 2002 at 33% (2001: 33%)
and had an annualised net debt : EBITDA ratio of 1,27 times (2001: 1,37 times).
CORPORATE ACTIVITY
The Group did not make any material acquisitions during the period under review,
but continues to integrate recent acquisitions and joint ventures.
RELATED PARTY TRANSACTIONS
During the period the company and its subsidiaries in the ordinary course of
business, entered into various sale and purchase transactions with associates
and joint ventures. These transactions were subject to terms that are no less
favourable than those arranged with third parties.
CORPORATE GOVERNANCE
The Group complies in all material respects with the Code of Corporate Practice
and Conduct published in the King Report on Corporate Governance.
TRIPLE BOTTOM LINE
The Group's commitment to support of HIV/AIDS interventions, sound labour
relations, skills training and development and creating an environment where all
of its more than 30 000 employees worldwide can develop to their fullest
potential, continues as planned.
Compliance with environmental regulations remains a priority.
Black Economic Empowerment of enterprises within our South African communities
is an integral part of the group's strategy.
DIVIDEND
It is the Group's stated policy to declare dividends once a year, after its
financial year-end at 30 June.
PROSPECTS
The Group's operations in Europe and Australia are expected to gain market share
through their competitive advantages, strategic alliances and recent expansions.
The drive towards higher margin branded products continues. Management is
examining areas that will enhance efficiencies in raw material supply from inter
group sources, centralised distribution and logistics.
Steinhoff Africa will continue to grow its exports from South Africa. We will
make further investments in raw material production facilities to ensure long-
term sources of supply, particularly in sawmilling and the privatisation of
state-owned timber resources.
Management is confident that, given the existing trading conditions, the Group
will achieve real growth in earnings for the year.
By order of the Board
SJ GROBLER, Company secretary
3 March 2003
Corporate information
Registration number: 1998/003951/06
Share code: SHF ISIN code: ZAE 000016176
Registered office
28 Sixth Street, Wynberg, Sandton, 2090
(PO Box 1955, Bramley, 2018)
Tel +27 (11) 445 3000, Fax +27 (11) 445 3099
Transfer secretaries
Computershare Investor Services Limited
(Registration number 1987/003382/06)
Ground Floor, 70 Marshall Street, Johannesburg, 2001
(PO Box 7184, Johannesburg, 2000)
Company secretary
SJ Grobler
28 Sixth Street, Wynberg, Sandton, 2090 (PO Box 1955, Bramley, 2018)
Sponsor
Gensec Bank Limited, 3A Summit Road, Dunkeld West, Johannesburg, 2196
(PO Box 411420, Craighall, 2024)
Directors: BE Steinhoff* (Chairman), MJ Jooste (Managing Director), DE
Ackerman+,
CE Daun+*, JNS du Plessis+, KJ Grov+, D Konar+, JF Mouton+, FJ Nel, FA Sonn+,
NW Steinhoff*, DM van der Merwe
*German +Non-executive
www.steinhoffinternational.com
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Po-Co
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Ego Form
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Depol
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Dieter Knoll Collection
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Hachmer
Date: 03/03/2003 04:04:00 PM Produced by the JSE SENS Department
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