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SHF SHFF
SHF
SHF - Steinhoff International Holdings Limited - Interim Results For
The Six Months Ended 31 December 2006 and dividend declaration
STEINHOFF INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration no. 1998/003951/06)
Ordinary share code: "SHF"
ISIN: ZAE000016176
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2006
INTEGRATED BUSINESS MODEL DELIVERS GROWTH AND RELATED SUPPLY CHAIN
EFFICIENCIES
STEINHOFF HIGHLIGHTS
- Cash flow from operations increase 174%
- Growth in headline earnings attributable to ordinary shareholders 33%
- Headline earnings per ordinary share increased by 32%
- Homestyle, and Unitrans becoming wholly owned subsidiaries
CONDENSED CONSOLIDATED INCOME STATEMENT
Restated
Six months six months Year
ended ended ended
31 Dec 31 Dec 30 June
2006 2005 % 2006
Unaudited Unaudited change Audited
Note R`000 R`000 R`000
Revenue 19 169 156 17 101 061 12 32 238
322
Operating 1 988 165 1 525 484 30 3 384 086
profit before
depreciation
and capital
items
Depreciation (367 776) (332 517) (637 541)
Operating 1 620 389 1 192 967 36 2 746 545
profit before
capital items
Capital items 1 (6 719) (10 875) (88 356)
Earnings before 1 613 670 1 182 092 37 2 658 189
interest,
associated
earnings and
taxation
Net finance (235 786) (126 644) (291 425)
charges
Dividend income 10 815 7 560 17 382
Earnings before 1 388 699 1 063 008 31 2 384 146
associated
earnings and
taxation
Share of 47 923 20 407 61 083
profits of
associates
Profit before 1 436 622 1 083 415 33 2 445 229
tax
Taxation (226 287) (164 881) (427 712)
Profit for the 1 210 335 918 534 32 2 017 517
period
Attributable
to:
Equity holders 1 176 072 880 217 34 1 953 376
of the parent
Minority 34 263 38 317 64 141
interest
Profit for the 1 210 335 918 534 32 2 017 517
period
ADDITIONAL INFORMATION
Number of shares in 1 139 826 1 134 394 1 141 442
issue (`000)
Weighted average 1 141 224 1 132 260 1 1 133 345
number of shares in
issue (`000)
Earnings 2 1 130 446 845 083 34 1 880 694
attributable to
ordinary
shareholders (R`000)
Headline earnings 3, 4 1 135 834 856 144 33 1 959 352
attributable to
ordinary
shareholders (R`000)
Basic earnings per 99 75 32 166
ordinary share
(cents)
Headline earnings 100 76 32 173
per ordinary share
(cents)
Diluted earnings per 97 73 33 164
ordinary share
(cents)
Diluted headline 98 74 32 171
earnings per
ordinary share
(cents)
Average currency
translation rate
(rand:euro) 9,2834 7,8714 18 7,8196
Note 1: Capital items
Closure costs (922) (18 302) (54 095)
Profit on disposal of 482 1 907
business
Goodwill adjustment (3 973)
(Loss)/profit on (1 824) 6 945 (8 475)
disposal of property,
plant and equipment
Impairments (27 693)
(6 719) (10 875) (88 356)
Note 2: Earnings attributable
to ordinary
shareholders
Earnings attributable 1 176 072 880 217 1 953 376
to equity holders
Dividend entitlement on (45 626) (35 134) (72 682)
non-redeemable
cumulative preference
shares (including STC)
1 130 446 845 083 1 880 694
Note 3: Headline earnings
calculation
Earnings attributable 1 176 072 880 217 1 953 376
to equity holders
Adjustment for:
Capital items 6 719 10 875 88 357
Taxation effects on (5 614)
capital items
Share of minorities on (4 084)
capital items
(Profit)/loss on income (1 331) 186
disposal of property,
plant and equipment
included in share of
associate
Headline earnings for 1 181 460 891 278 2 032 035
the period
Note 4: Headline earnings
attributable to
ordinary shareholders
Headline earnings 1 181 460 891 278 2 032 035
attributable to equity
holders
Dividend entitlement on (45 626) (35 134) (72 682)
non-redeemable
cumulative preference
shares (including STC)
1 135 834 856 144 1 959 353
CONDENSED CONSOLIDATED BALANCE SHEET
Restated 30 June
31 Dec 31 Dec 30 June
2006 2005 2006
Unaudited Unaudited Audited
R`000 R`000 R`000
Assets
Non-current assets
Property, plant and
equipment, biological
and intangible assets 14 674 415 8 880 604 13 358 558
Investments and loans 3 740 726 2 239 489 3 315 157
Deferred tax assets 549 599 435 320 529 741
18 964 740 11 555 413 17 203 456
Current assets
Accounts receivable, short-
term loans and
other current assets 7 058 992 6 889 231 6 261 127
Inventories 3 518 107 2 858 473 3 290 566
Cash and cash equivalents 3 543 649 4 009 989 4 842 330
14 120 748 13 757 693 14 394 023
Total assets 33 085 488 25 313 106 31 597 479
Equity and liabilities
Capital and reserves
Ordinary share capital and 11 607 455 8 348 186 10 872 655
reserves
Preference share capital 1 041 552 926 061 1 022 122
12 649 007 9 274 247 11 894 777
Minority interest 820 625 812 049 814 998
Total equity 13 469 632 10 086 296 12 709 775
Non-current liabilities
Deferred tax liabilities 1 340 911 914 120 1 284 184
Long-term liabilities and 8 475 823 7 122 486 8 672 889
provisions
Long-term licence fee 64 518 120 655 88 655
liability
9 881 252 8 157 261 10 045 728
Current liabilities
Net interest-bearing 3 604 324 1 142 347 2 241 465
liabilities
Accounts payable and 6 130 280 5 927 202 6 600 511
provisions
9 734 604 7 069 549 8 841 976
Total equity and liabilities 33 085 488 25 313 106 31 597 479
Net asset value per share 1 018 736 953
(cents)
Gearing ratio (net) 46% 44% 30%
Closing exchange rate - 9,2226 7,4670 9,1600
rand:euro
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Restated Restated
Six months six months year
ended ended ended
31 Dec 31 Dec 30 June
2006 2005 2006
Unaudited Unaudited Audited
R`000 R`000 R`000
Operating profit before 1 960 740 1 497 535 3 350 469
working capital changes
Net changes in working (1 274 257) (1 247 393) (45 015)
capital
Cash generated from 686 483 250 142 3 305 454
operations
Net finance costs (235 789) (126 885) (291 425)
Dividends paid (40 706) (624) (44 764)
Dividends received 22 124 7 560 26 785
Taxation (199 198) (119 338) (339 600)
Net cash inflow from 232 914 10 855 2 656 449
operating activities
Net cash outflow from (2 099 607) (1 925 121) (5 977 659)
investing activities
Net cash inflow from 2 297 004 3 034 762 3 008 259
financing activities
Net increase/(decrease)
in cash and
cash equivalents 430 311 1 120 496 (312 951)
Effects of exchange rate
changes on
cash and cash equivalents (9 746) (35 195) 352 913
Cash and cash equivalents 4 997 855 4 917 297 4 957 892
- beginning of period
Cash and cash equivalents 5 418 420 6 002 598 4 997 855
- end of period
Cash and cash equivalents
can be reconciled
to the balance sheet as
follows:
Cash and cash equivalents 5 418 420 6 002 598 4 997 855
above
Overdrafts included in 1 874 771 1 992 609 155 525
financing activities
Cash and cash equivalents 3 543 649 4 009 989 4 842 330
per balance sheet
CONDENSED STATEMENT OF RECOGNISED INCOME AND EXPENSE
Restated
Six months six months Year
ended ended ended
31 Dec 31 Dec 30 June
2006 2005 2006
Unaudited Unaudited Audited
R`000 R`000 R`000
Actuarial gains recognised in 42 155
equity
Exchange differences on
consolidation of foreign
subsidiaries 128 010 (375 691) 658 922
Cash flow hedges recognised (14 830) 37 927
in equity
Net income/(loss) recognised 113 180 (375 691) 739 004
directly in equity
Profit for the period 1 210 335 918 534 2 017 517
Total recognised income and
expense
for the period 1 323 515 542 843 2 756 521
Attributable to:
Equity holders of the parent 1 289 252 505 877 2 682 665
Minority interest 34 263 36 966 73 856
1 323 515 542 843 2 756 521
CONDENSED SEGMENTAL ANALYSIS IN RAND `000
Segment
six months ended 31 December Revenue % result* %
2006
Manufacturing 5 838 976 30 903 796 55
Wholesale, distribution and 13 330 180 70 728 922 45
retail
Total 19 169 156 100 1 632 718 100
Segment
six months ended 31 December Revenue % result* %
2005
Manufacturing 5 467 154 32 672 146 57
Wholesale, distribution and 11 633 907 68 503 097 43
retail
Total 17 101 061 100 1 175 243 100
CONDENSED GEOGRAPHICAL ANALYSIS IN RAND `000
Segment
six months ended 31 December Revenue % result* %
2006
Southern Africa 10 785 875 56 665 630 41
European Community 6 990 706 36 869 612 53
Pacific Rim 1 392 575 8 97 476 6
Total 19 169 156 100 1 632 718 100
Segment
six months ended 31 December Revenue % result* %
2005
Southern Africa 9 410 632 55 503 196 43
European Community 6 380 636 37 555 531 47
Pacific Rim 1 309 793 8 116 516 10
Total 17 101 061 100 1 175 243 100
CONDENSED SEGMENTAL ANALYSIS IN EURO `000
Segment
six months ended 31 December 2006 Revenue % result* %
Manufacturing 628 970 30 97 356 55
Wholesale, distribution and retail 1 435 916 70 78 519 45
Total 2 064 886 100 175 875 100
Segment
six months ended 31 December 2005 Revenue % result* %
Manufacturing 694 382 32 85 392 57
Wholesale, distribution and retail 1 478 175 68 63 913 43
Total 2 172 557 100 149 305 100
CONDENSED GEOGRAPHICAL ANALYSIS IN EURO `000
Segment
six months ended 31 December 2006 Revenue % result* %
Southern Africa 1 161 845 56 71 701 41
European Community 753 033 36 93 674 53
Pacific Rim 150 007 8 10 500 6
Total 2 064 885 100 175 875 100
Segment
six months ended 31 December 2005 Revenue % result* %
Southern Africa 1 195 547 55 63 927 43
European Community 810 610 37 70 576 47
Pacific Rim 166 399 8 14 802 10
Total 2 172 556 100 149 305 100
*Earnings before interest, taxation and capital items including share of
associated companies` income and excluding minority interests.
Selected explanatory notes
BASIS OF PREPARATION
This condensed interim financial information for the half year ended 31
December 2006 has been prepared in accordance with IAS 34 - Interim Financial
Reporting and the listing requirements of the JSE Limited (JSE). This
condensed interim financial information should be read with the annual
financial statements for the year ended 30 June 2006.
ACCOUNTING POLICY
The accounting policies adopted in the preparation of this condensed interim
financial information are consistent with those of the annual financial
statements for the year ended 30 June 2006.
EVENTS SUBSEQUENT TO PERIOD END
Subsequent to the balance sheet date:
With effect 19 February 2007 Steinhoff Europe has acquired the minority
shareholdings in Homestyle Group plc (Homestyle) on the implementation of the
scheme of arrangement approved by shareholders and the Court. The details of
this transaction are available on the press releases section of
www.homestylegroup.com. Also see commentary issued with these results.
The Group finalised the detailed terms and conditions of the disposal of its
South African furniture manufacturing interests to an associate company,
Amalgamated Appliance Holdings Limited (AMAP), subject to conditions
precedent. The details of the proposed transaction will be communicated to
AMAP shareholders by circular. Details of the transaction are available in
the press release dated 5 March 2007.
The Group has reached agreement, subject to conditions precedent, in terms of
which Unitrans Limited (Unitrans) will dispose of the Unitrans business as a
going concern to Steinhoff resulting in the acquisition of the remaining
interest of the minority shareholders in Unitrans. More detail on this
transaction is available from the announcement dated 21 February 2007 on SENS
and on www.unitrans.co.za.
Steinhoff Africa Holdings (Pty) Limited has entered into agreements to
acquire the shares in and claims against certain operating companies of Geros
Beteiligungsverwaltung GmbH (Geros), subject to conditions precedent. More
details on this transaction are available on SENS and on
www.steinhoffinternational.com.
RESTATEMENT OF COMPARATIVE FIGURES
The Group reported under International Financial Reporting Standards (IFRS)
for the first time for the year ended 30 June 2006. Following the issue of
the interim results for the six months ended 31 December 2005 ongoing reviews
of accounting policies and accounting impacts arising from the adoption of
IFRS resulted in further adjustments to the initial IFRS transition entries,
interim results and financial position of the Group reported at 31 December
2005.
In order to report the comparative results and the financial position for the
six months ended
31 December 2005 on a consistent basis the following adjustments to
previously reported interim results were effected:
RECONCILIATION OF EQUITY (R`000)
Equity previously reported 10 484 879
Retrospective application of previous South African
Statements of
Generally Accepted Accounting Practice (SA GAAP) (325 155)
accounting policy changes and restatements
Transactions giving rise to adjustments to revenue (2 081)
and cost of sales
Derecognition of minorities on consolidation of Black
Economic
Empowerment (BEE) entities (323 074)
Adjustments upon the adoption of IFRS (73 428)
Property, plant and equipment (15 975)
Business combinations (52 435)
Designation of previously recognised financial (6 508)
instruments
Share-based payment transactions 1 490
Equity after adjustments 10 086 296
Reconciliation of profit for the period
Profit for the period attributable to equity holders 875 071
of the parent previously reported
Retrospective application of previous SA GAAP
accounting policy changes and restatements:
Derecognition of minorities on consolidation of BEE 5 146
entities
Profit for the period attributable to equity holders of the parent as
restated 880 217
The following restatements had no effect on profit and equity:
- Revenue for the six months ended 31 December 2005 has been reduced by
R133,5 million to
conform with the requirements of SAICA Circular 9/2006 - Transactions giving
rise to adjustments to Revenue/Purchases.
- Adjustments to provisional accounting for business combinations has
resulted in an increase in provisions of R44 million, deferred tax assets of
R12,8 million and goodwill of R31,2 million which have been retrospectively
adjusted to the 31 December 2005 and 30 June 2006 balance sheets presented in
accordance with IFRS 3 - Business combinations.
- Capital distribution to shareholders amounting to R367,1 million that was
included in cash flows from operating activities in the 30 June 2006 cash
flow statement, has now been reclassified to cash flows from financing
activities.
COMMENTARY
REVIEW OF RESULTS
The Group achieved very satisfactory results for the six months under review.
Notwithstanding continued challenging conditions experienced in most of the
markets where it operates, these results underscore the integration strategy
of extended supply chain participation throughout a geographically spread
business base. The Group`s manufacturing and sourcing operations continued to
benefit from its major retail distribution base in the United Kingdom and
Australasia, as well as the spread of products from low-end mass market to
top-end branded products.
During the period under review, the retail markets in Continental Europe have
shown real top-line growth for the first time in many years. This is
evidenced by the general acceptance by the Group`s customers of price
increases, without sacrificing orders, precipitated by cost pressures in
respect of rising raw material input and logistics costs.
The results were also favourably impacted by the good performances of the
Group`s investing arrangements with its retail alliance partners in the
European Union, as well as earnings arising from its Treasury activities.
Notwithstanding the improved trading conditions in the German region, some of
the Group`s competitors are still experiencing severe financial distress or
have been liquidated. The consolidation trend continues and retailers are
becoming increasingly selective to source only from reliable, financially
strong suppliers with the appropriate supply chain capabilities, substance
and after sale support. Judging from activity levels in terms of order book
visibility, the increase in the value-added tax rate in Germany, effective
January this year, did not have a material impact on the performance of the
Group. The studio concepts positioned within our retail customers` stores in
the Benelux region (Henders & Hazel) and the German region (Esprit) are
showing continued growth and studio roll-outs are continuing apace.
In the United Kingdom, Homestyle experienced tough trading conditions in a
market that still remains overtraded. Management changes have been
implemented and a strategy of re-positioning Harveys from a mainly
upholstered furniture retailer to a furniture specialist store, also offering
cabinet and case goods has been embarked on. The Beds division of Homestyle
achieved satisfactory results despite the loss of a number of concessions.
However, the manufacturing and sourcing businesses in other regions
substantially gained through increased intra-group supply into Homestyle,
which, together with Steinhoff UK`s manufacturing division (which had good
results), stand to benefit further from Homestyle becoming a wholly owned
subsidiary of Steinhoff (refer Corporate activity).
Steinhoff Asia Pacific achieved a satisfactory result, mainly due to the
successful roll-out of the redesigned Freedom concept stores and
BayLeatherRepublic chain which continue to perform well. The BaySwiss chain
was repositioned and rebranded as Freedom Cuisine. The rebranded Snooze
concept (formerly Capt `n Snooze) continued its sound performance. However,
these rebranding initiatives required substantial management time, effort and
costs, the real benefits of which are yet to be realised.
The Steinhoff International Sourcing division performed exceptionally well
and nearly tripled its contribution, compared to the corresponding period
last year. This division now provides sourcing services to all Steinhoff`s
worldwide operations at service levels and on terms that are substantially
beneficial to the Group.
The Southern African operations performed well. The furniture manufacturing
interests of Steinhoff Africa, especially the Bedding division, achieved good
results while the Raw Materials division benefited from the restructuring of
the previous financial year. The Timber interests under PG Bison experienced
a tougher trading environment, principally due to particle board capacity
constraints, accompanied by the weaker rand which inhibited the Group`s
ability to supplement shortages through imports. Raw material price
increases, notably timber and resin, adversely impacted on margins.
Unitrans increased its headline earnings by 24% and is benefiting from new
business initiatives and positive economic conditions.
The average exchange rate used for converting euro income and expenditure to
rand was R9,2834 : 1 euro compared to R7,8714 : 1 euro in respect of the
corresponding six months of the previous financial year.
PERFORMANCE
Revenues increased by 12% from R17 101 million to R19 169 million.
The Group generated 44% (2005: 45%) of its revenues in currencies other than
South African rand, principally euro, pound sterling and Australian dollar.
The actual foreign revenue achieved, declined by 8% from euro 977 million to
euro 903 million, as a result of increased intra-group activities in line
with the integration strategy.
Headline earnings attributable to ordinary shareholders grew by 33% from R856
million during the six months ended 31 December 2005 to R1 136 million.
Headline earnings per ordinary share increased by 32% to 100 cents (2005: 76
cents) with basic earnings per ordinary share increasing 32% to 99 cents
(2005: 75 cents).
The weighted average number of ordinary shares in issue increased by 1%
during the period to 1 141,2 million (2005: 1 132,3 million).
Ordinary shareholders` funds at 31 December 2006 amounted to R11 607 million
(30 June 2006: R10 873) million. The annualised return on average ordinary
shareholders` funds was stable at 20,2%. The net asset value per ordinary
share increased to 1 018 cents from
953 cents per share as at 30 June 2006. This increase is stated after the
payment, in November 2006, of a 37,5 cents cash distribution per share from
share premium account (R430 million). Effective 19 February 2007, Steinhoff
acquired the entire issued shares of Homestyle for a consideration of GBP 3
million in cash and the issue of 73,7 million Steinhoff shares at 2 250 cents
per share. This transaction, together with the minority transaction in
respect of Unitrans announced on 21 February 2007, will, upon implementation,
result in the addition of approximately R3 314 million to the Group`s
permanent capital base.
Cash flow from operations was R686 million (2005: R250 million). Cash
generation is calculated after taking account of a net increase in working
capital of R1 274 million. This is consistent with the end of calendar year
trading cycle and is in line with the previous period`s comparative amount of
R1 247 million, notwithstanding the increased activity levels.
Average operating margin improved to 8,5% (2005 : 7,0%). The Group continues
to benefit from enhanced efficiencies throughout the supply chain, capacity
utilisation as a result of improved economies of scale and the favourable
terms of supply of finished products for resale.
Net finance charges for the period increased to R236 million (2005: R127
million) in accordance with the expanded operations. A significant portion of
this increase is attributable to the conversion of the Group`s euro finance
charges to South African rand at a higher rand: euro translation rate.
Finance charges included the higher net finance charges of Homestyle,
Steinhoff Asia Pacific and to a lesser degree, Unitrans.
At 31 December 2006, Steinhoff had net interest-bearing debt of R5 863
million (31 Dec 2005: R4 042 million) resulting in a debt : equity ratio of
46% (31 December 2005: 44%), still well within the Group`s self-imposed
covenants.
The Group`s taxation charge increased to R226 million (2005: R165 million),
translating to an average tax rate of 15,8% (2005: 15,5%) which is in line
with management`s expectations.
The higher absolute tax charge was attributable to the higher levels of
taxable income in certain jurisdictions as well as the conversion of the
Group`s foreign taxes to South African rand at a higher rand:euro translation
rate.
The wholesale, distribution and retail business segment which comprised 70%
(2005: 68%) of Steinhoff`s group revenues, enhances the flexibility and
product offering and facilitates participation through additional added value
segments of the supply chain. It remains a strategic objective to further
grow the retail activities of the Group in order to gain more critical mass,
enhance its independence and increase its footprint and representation into
new markets.
CORPORATE ACTIVITY
In addition to the Geros transaction announced 15 December 2006, the Group
concluded, or is in the process of concluding the following corporate
transactions:
Homestyle Group plc
Shareholders are advised that the scheme of arrangement (the scheme)
implemented in the United Kingdom concerning the acquisition by Steinhoff
Europe AG of all the remaining shares in Homestyle not already owned by it,
had become effective on Monday, 19 February 2007.
The scheme provided for a cash alternative of GBP 1 per Homestyle share or an
election to receive instead, 74,9 new Steinhoff shares for every 100
Homestyle share held (the share alternative). Of the 101 409 623 Homestyle
shares subject to the scheme, holders of 98 408 684 Homestyle shares (ie
97,04%) elected the share alternative. Steinhoff accordingly issued 73 707
918 new Steinhoff shares (at 2 250 cents per share) which were granted a
listing on the JSE Limited.
Prior to the implementation of the scheme, Homestyle was a public company,
listed on the London Stock Exchange. The remaining 39% shareholding was
acquired from the general public as investors in a publicly quoted company.
Steinhoff gained control of Homestyle in June 2005 following a refinancing
that was undertaken under circumstances of severe financial difficulties
experienced by Homestyle. Subsequently, continuous remedial actions were
taken to ensure Homestyle`s longer-term sustainable recovery. Notwithstanding
persistent challenging trading conditions in the UK retail market,
substantial benefits are being derived from intra-group trading opportunities
with the balance of the Steinhoff group. The directors of Steinhoff
considered it to be in the best interests of the Group, to constitute
Homestyle as a wholly-owned subsidiary in order to optimally utilise all
opportunities and benefits that Homestyle presents to Steinhoff`s
manufacturing and sourcing interests globally.
AMALGAMATED APPLIANCE HOLDINGS LIMITED
It was announced on 5 March 2007 (the Amap announcement) that agreement had
been reached in terms of which Steinhoff Africa`s furniture interests would
be sold to Amap. This transaction will, when implemented, result in Steinhoff
holding a 29% minority interest and a consortium comprising BEE and
management holding a collective interest of approximately 21% in the enlarged
Amap. The purchase consideration will, effctively, be payable in a
combination of cash and new Amap shares, from which shares the BEE and
management participation will be procured. The Amap announcement may be
viewed/obtained from www.amapholdings.co.za.
UNITRANS LIMITED
It was announced on 21 February 2007 (the Unitrans announcement) that an
offer was submitted to, and accepted for recommendation to Unitrans
shareholders by, the directors of Unitrans, which, if implemented, will
result in Unitrans` entire business operations becoming wholly-owned by
Steinhoff. The purchase consideration in respect of the minority interests in
Unitrans amounts to a share exchange of two new Steinhoff shares for each
Unitrans share held. This acquisition is subject to, inter alia, Unitrans
minority shareholders` approval at a general meeting to be held on or about
12 April 2007 (or such later date as shareholders of Unitrans may be advised)
and the approval of the Listings Division of the JSE Limited and the
Securities Regulation Panel on Take-overs and Mergers. A circular to Unitrans
shareholders in regard to this transaction is expected to be issued on or
about 21 March 2007. The Unitrans announcement may be viewed/obtained from
www.unitrans.co.za.
OUTLOOK
The Group`s integration strategy remains effective. A number of exciting
opportunities are being investigated to further expand the Group`s footprint
and independence in the European Union and Southern Africa.
The renewed consumer confidence and buoyant retail market in Continental
Europe augurs well for the future. These factors, accompanied by
consolidation trends prevalent in the German region, secure the Group`s
position as the leading supplier to major retailers and buying groups. Price
increases as a result of raw materials, logistics and other input costs
rising, are becoming the norm, without sacrificing orders, thereby protecting
the Group`s margins.
The strength of the Polish zloty, accompanied by the adverse impact on labour
costs arising from the migration of Polish workers to other European Union
countries, continues to affect the competitiveness of the Polish factories.
The Group therefore remains committed to alternative employment strategies in
Poland, coupled with expanding its operations in the Ukraine and outsourcing
labour intensive processes (eg cutting and sewing) to countries like India.
The Eastern European and Mass Discount division continues to grow market
share with Mail Order and Mass Discount players. Arrangements whereby raw
material price increases can be passed on to Mail Order and Discount
customers, will protect margins, whilst maintaining and growing volumes.
The process of integrating Homestyle`s retail activities with the Group`s
manufacturing and logistics operations in the United Kingdom continues.
Substantial savings and synergies are anticipated now that Homestyle is
wholly-owned and delisted. Harveys` repositioning and the likely addition of
more stores to the Beds division represent exciting prospects for the
operations in the United Kingdom.
The rebranding iniatives undertaken in the Pacific Rim region are showing
promising results. The rollout of new stores under the redesigned Freedom
concept, BayLeatherRepublic, Freedom Cuisine and Snooze is continuing.
Steinhoff International Sourcing is expected to grow into an even more
substantive part of the worldwide operations` sourcing base.
In Africa, the raw material division is continuing to benefit from its
restructure last year, and its expansion as a result of new acquisitions. The
market for PG Bison`s products remains strong and demand still outstrips
supply of the major product categories. PG Bison is continuously
investigating opportunities for securing its long-term raw material supply.
The North Eastern Cape Forest project is progressing well and the anticipated
commissioning date remains early 2008. Once this expansion is running at full
capacity (anticipated in June 2008) it is expected that the current capacity
constraints will be resolved.
The Group anticipates good prospects from its associated company investments,
Kap International Holdings Limited and AMAP, particularly the enlarged AMAP
once the implementation of the acquisition of Steinhoff Africa`s furniture
interests is complete. Management expects to achieve growth in headline
earnings from continuing operations for the remainder of the current
financial year.
DIRECTORATE
The company wishes to notify shareholders of the resignation of Norbert
Walter Steinhoff, a
non-executive director who resigned at date hereof. The board wishes to thank
Norbert for his contribution, initially as an executive director, assisting
with the merger and listing of the Group, and later on as a non-executive
director.
Ms Angela Krueger-Steinhoff has been appointed as an alternate to Mr Bruno
Steinhoff.
Shareholders are advised that the composition of the board will be reviewed
after the implementaton of the corporate activities that the Group is
currently involved with. The nomminations committee will make recommendations
in this regard to the board in due course.
Further announcements in this regard will follow in due course.
Distribution to ordinary shareholders
It is the Group`s policy to only declare a cash distributions once a year
after the announcement of its annual results.
On behalf of the board of directors
BE Steinhoff MJ Jooste
Executive chairman Chief executive officer
7 March 2007
STEINHOFF INVESTMENT HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1954/001893/06)
(JSE code: SHFF)
(ISIN: ZAE000068367)
(Steinhoff Investments)
Preference shareholders are referred to the above results of Steinhoff for a
full appreciation of the relevant consolidated results and financial position
of Steinhoff Investments.
Declaration of dividend number 3 to preference shareholders
The board of Steinhoff Investments has resolved to declare a dividend of
441,98 cents per preference share in respect of the period from 1 July 2006
up to and including 31 December 2006 (the dividend period), payable on
Monday, 24 April 2007, to those preference shareholders recorded in the books
of the company at the close of business on Friday, 21 April 2007. This
dividend has been determined on the basis of 75% of the prime bank overdraft
lending rate of ABSA Bank Limited prevailing over the dividend period,
applied to the nominal value plus premium (of R100,00 per preference share,
in the aggregate).
The dividend is payable in the currency of South Africa.
Last date to trade cum dividend Friday, 13 April 2007
Shares trade ex dividend Monday, 16 April 2007
Record date Friday, 20 April 2007
Payment date Monday, 23 April 2007
No dematerialisation or rematerialisation of preference shares may take place
between Monday, 16 April 2007 and Friday, 20 April 2007, both dates
inclusive.
On Monday, 23 April 2007, the preference dividend will be electronically
transferred to the bank accounts of preference shareholders. In all other
instances of certificated holders, if any, cheques dated 23 April 2007 will
be posted on or about that date. Preference shareholders who have
dematerialised their shares will have their accounts credited on Monday, 23
April 2007.
PROPOSED TAXATION AMENDMENTS
In the budget speech delivered by the Honourable Minister of Finance
(Minister) on 21 February 2007 read with a press statement issued by the
office of the Commissioner of the South African Revenue Service it was
announced that STC will in future be replaced by a dividend tax. The reforms
are to take effect in two main phases. These statements indicated that the
first phase takes effect from 1 October 2007 in terms of which STC will be
renamed as a dividend tax, the tax base will be broadened to cover all
distributions by companies and not just those from profits, since the
determination of what constitutes profits available for distribution can be a
complex and uncertain area of South African law. According to the press
statement provision will be made for the tax free return of capital but any
avoidance provisions will have to address inflated or transitory capital
contributions; the tax rate will be reduced to 10% and a more targeted
exemption for amalgamation transactions will be introduced, depending on
analysis of the transactions concerned. The second phase will be implemented
from 2008, depending on the renegotiation of certain double tax treaties, and
entails the conversion from a company tax to a shareholders` tax. This
conversion is dependent on the renegotiation of several double tax treaties
and the exact legal position remains unclear. During phase 1 as per the
Minister`s speech there will be no additional taxation in the hands of the
preference shareholders but during phase 2 it may result in an additional
cost for the preference shareholders and an equivalent benefit for Steinhoff
Investments.
The preference shareholders are accordingly advised that until such time as
the legislation is promulgated, legal opinion obtained as well as shareholder
approval procured it is not possible to determine exactly what the impact
will be on the cumulative non-redeemable non-participating preference shares
issued by Steinhoff Investments.
A further announcement in this regard will be made once the detailed
legislation is published and has been duly considered.
On behalf of the board of directors
D Konar JHN van der Merwe
Non-executive director Executive director
7 March 2007
OTHER NOTES
1. Corporate governance
Steinhoff has embraced the recommendations of King II on Corporate Governance
and strives to provide reports to shareholders that are timely, accurate,
consistent and informative.
2. Social responsibility
Steinhoff continues to be recognised for its corporate social investment
activities. Management remains committed to the related initiatives and is
conscious of the needs in this regard. A number of social responsibility
projects are continuing. A good working relationship is maintained with the
relevant unions. Ongoing skills and equity activities continue to ensure
compliance with current legislation.
Plans continue with initiatives that contribute to broader skills development
and selecting appropriately qualified staff on an ongoing basis.
3. Related party transactions
The company entered into various related party transactions. These
transactions are no less favourable than those arranged with third parties.
4. Additional information
For more detail on the Group`s listed investments, shareholders are referred
to the results and/or corporate announcements and financial information of:
Unitrans Limited - 21 February 2007 www.unitrans.co.za
Amalgamated Appliance Holdings Limited -
5 March 2007 www.amapholdings.co.za
KAP International Holdings Limited -
6 March 2007 www.kapinternational.com
ADMINISTRATION
STEINHOFF INTERNATIONAL HOLDINGS LIMITED
Registration number: 1998/003951/06
(Incorporated in the Republic of South Africa)
JSE share code: SHF ISIN code: ZAE000016176
("Steinhoff" or "the company" or "the group")
Registered office
28 Sixth Street, Wynberg, Sandton, 2090, Republic of South Africa
Tel +27 (11) 445 3000 Fax +27 (11) 445 3099
Transfer secretaries
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street, Johannesburg, 2001
Company secretary: SJ Grobler
Auditors: Deloitte & Touche
Sponsor: PSG Capital Limited
Directors: BE Steinhoff* (chairman), MJ Jooste (chief executive officer), DE
Ackerman^, CE Daun^*, KJ Grove, D Konar^, JF Mouton^, FJ Nel, FA Sonn^, NW
Steinhoff^*, IM Topping#, DM van der Merwe, JHN van der Merwe.
Alternate directors: JNS du Plessis, HJK Ferreira, SJ Grobler
#British *German ^Non-executive
www.steinhoffinternational.com
To view results on mobile www.steinhoff.mobi
Date: 07/03/2007 16:11:04 Produced by the JSE SENS Department.
