STEINHOFF INTERNATIONAL HOLDINGS N.V. - Censure imposed by the JSE on Steinhoff International Holdings N.V.

Censure imposed by the JSE on Steinhoff International Holdings N.V.

GEN – General – Steinhoff International Holdings N.V.
Censure imposed by the JSE on Steinhoff International Holdings N.V. (“Company” or “Steinhoff”)


The JSE hereby informs stakeholders of the following findings in respect of the Company:


Financial statements

1. Steinhoff published its audited annual financial statements for the year ended 30 September 2017
    (“2017 AFS”) on 7 May 2019 which contained restatements to previously published results to correct
    accounting irregularities, questionable transactions and prior period errors (“restatements”) in
    accordance with International Financial Reporting Standards (“IFRS”).


2. The restatements extended over a number of years. As a result, the Company restated its 2016
    consolidated financial statements and its statement of financial position as at 1 July 2015.


3. As disclosed by Steinhoff in the 2017 AFS, the financial impact of the restatement of the 2015 and prior
    financial years were material in that:


       i.    the opening balance of equity for the period ended 30 September 2016 was adjusted
             downward about 62% from €13,428 billion to €5,134 billion;
       ii.   total assets inclusive of cash and cash equivalents, decreased by about 35% from circa
             €23 billion to €14.9 billion; and
      iii.   Steinhoff’s cash and cash equivalents decreased by about 81% from €2.7 billion to €517
             million.


4. The financial impact of the restatement of the 2016 financial year was material in that:


       i.    total equity decreased by about 62% from circa €15.9 billion to €6 billion;
       ii.   total assets inclusive of cash and cash equivalents, decreased by about 35% from circa
             €32 billion to €21 billion;
      iii.   Steinhoff’s cash and cash equivalents decreased by about 76% from €2.8 billion to €687
             million;
      iv.    profit of €1.4 billion decreased to a loss of €237 million, a change of approximately 116%;
       v.    total comprehensive income of €446 million decreased to a comprehensive loss of €1 043
             billion, a decrease of about 334%;
      vi.    the 2016 headline earnings per share of 37.7 cents decreased to a headline loss per share of
             6.7 cents representing a downward adjustment of about 118%; and
     vii.    the 2016 earnings per share of 37.8 cents decreased to a loss per share of 7.6 cents
             representing a downward adjustment of 120%.


5. The Company’s previously published financial information for the 2016, 2015 and prior financial periods
    did not comply with IFRS and was incorrect, false and misleading in material aspects and this incorrect
    information was disseminated to shareholders, the JSE and the investing public. In these circumstances
    the JSE found that Steinhoff’s financial statements failed to comply with section 8.62(b) of the JSE
    Listings Requirements for the period ended 30 June 2015 and prior financial periods; and General
    Principle (v) for the fifteen months ended 30 September 2016.


Disposal of assets to the Genesis Group

6. On 7 December 2015, Steinhoff International Holdings Limited (“Steinhoff Limited”) moved its primary
    listing to the Frankfurt Stock Exchange under the new name Steinhoff International Holdings N.V. with
    a secondary listing on the JSE.


7. Prior to the listing of Steinhoff International Holdings N.V. on the Frankfurt Stock Exchange and d uring a
    period when Steinhoff Limited had its singular and primary listing on the JSE, the JSE has established
    that Steinhoff Limited disposed of the following European businesses to the Genesis Group:


       i.    sale of Steinhoff Global Investments GmbH (“SGI”) on 18 November 2015 for a sale
             consideration of €2.5 billion (“SGI Transaction”); and
       ii.   sale of the Kika-Leiner retail business operational rights to use certain Steinhoff brand names
             in territories where Steinhoff was not yet operating (“Operational Rights”) in September 2015
             for a sale consideration of €1.2 billion (“Operational Rights Transaction”).


    Hereafter collectively referred to as the “Disposals”.
8. In accordance with the provisions of section 9 the Listings Requirements, categorisation of the SGI
    Transaction (12.16%) and the Operational Rights Transaction (6.19%), individually and on an
    aggregated basis, amounted to category 2 transactions based on Steinhoff’s market capitalisation at
    the time of the Disposals. In the case of a category 2 transaction, an issuer is required to publish an
    announcement on SENS containing details of such transaction immediately after the terms have been
    agreed. Steinhoff at the time failed to announce or disclose the Disposals when the terms were agreed
    to or when the transactions were concluded/implemented or at any relevant time thereafter.


9. In addition, the Disposals were not disclosed in Steinhoff’s financial results for the fifteen months
    ended 30 September 2016 in accordance with the requirements of IFRS at the time of publication.


10. In these circumstances, the JSE found that Steinhoff at the relevant time failed to comply with section
    9.15 of the Listings Requirements for its failure to publish SENS announcements when the terms of the
    Disposals were agreed; and General Principle (iii) of the Listings Requirements for its failure to ensure
    that full, equal and timeous public disclosure was made to the market regarding activities of the
    Company that were price sensitive at the relevant time; and General Principle (v) dealing with the
    accuracy of the Company’s 2016 financial statements which requires issuers to ensure that all parties
    involved in the dissemination of information into the market place observe the highest standards of
    care in doing so.


JSE’s decision to censure Steinhoff

11. The accuracy and reliability of financial information published by companies are of critical importance
    in ensuring a fair, efficient and transparent market. The provisions of the Listings Requirements, which
    impose various important obligations on listed companies in respect of the disclosure of financial
    information, contributes to the integrity of the market and promotes investor confidence. The
    Company and its directors are therefore obliged at all relevant times to ensure that all financial
    information and reports that are published are, in all material aspects, accurate and correct. In addition
    hereto, the investing public relies on a company’s published financial information to make important
    investment decisions.
12. Issuers have a duty to comply with the Listings Requirements at all times which is aimed at ensuring
    that investors and potential investors receive relevant and important information timeously to allow
    investors to make informed decisions; and is simultaneously aimed at investor protection and investor
    confidence. SENS announcements must be published timeously and within the required timeframes of
    the Listings Requirements to ensure that investors and potential investors are made aware of pertinent
    changes that are being proposed by an issuer.


13. For these reasons and with reference to the JSE’s findings of breach, the JSE has decided to impose the
    following penalties on Steinhoff:


    For the breach of section 8.62(b) in respect of the Company’s financial statements for 30 June 2015 and
    prior financial periods and General Principle (v) for the fifteen months ended 30 September 2016:
      i.    A public censure and the maximum permissible fine of R7 500 000 (seven million five hundred
            thousand rand) as the previously published financial information did not comply with IFRS and
            was, in the view of the JSE, incorrect, false and misleading in material aspects;
    For the breach of section 9.15 and General Principle (iii) and (v) in respect of the Disposals:
      ii.   A public censure and a fine of R5 000 000 (five million rand) for failure to disclose the SGI
            Transaction on SENS at the time and in the financial results for the fifteen months ended
            30 September 2016 when published; and
     iii.   A public censure and a fine of R1 000 000 (one million rand) for failure to disclose at the time
            the Operational Rights Transaction on SENS and in the financial results for the fifteen months
            ended 30 September 2016 when published.


14. The JSE has considered all the relevant facts and information currently at its disposal in deciding on an
    appropriate censure and financial penalty as a result of Steinhoff’s transgressions of the Listings
    Requirements at the time which include: Steinhoff’s internal review that uncovered the accounting
    irregularities; its full co-operation and assistance in the JSE’s investigation; the ongoing restructure of
    the Steinhoff Group; the administrative penalty imposed on the Company by the FSCA; the remedial
    actions undertaken by the Board post December 2017 and the interests of current shareholders, the
    JSE and the investing public in general. In these circumstances, the JSE is of the view that the fine is
    appropriate if regard is had to the nature of the transgressions, the circumstances that resulted in the
    transgressions by Steinhoff and the interests of Steinhoff’s shareholders, the JSE and the investing
    public.


15. The fine imposed against Steinhoff will be appropriated in settlement of any future costs incurred by
    the JSE which may arise through the enforcement of the provisions of the Listings Requirements as
    contemplated in section 11(4) of the Financial Markets Act, 19 of 2012 read with section 1.25 of the
    Listings Requirements.


16. It is important to note the provisions of section 11(5) of the Financial Markets Act, which stipulates that
    the Listings Requirements are binding on companies and their directors. The JSE is therefore duty
    bound to properly investigate all potential breaches of the Listings Requirements by companies and
    their directors and to take the necessary and appropriate action if the Company and/or its directors
    failed to comply with the provisions of the Listings Requirements.


Other parties regulated by the JSE

17. This concludes the JSE’s process in respect of the Company as a juristic person. The investigation into
    the conduct of individuals that presided at the Company during the periods in question and who are
    bound by the Listings Requirements is ongoing.




20 October 2020

Date: 20-10-2020 10:00:00
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