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STEINHOFF INTERNATIONAL HOLDINGS LTD
AUDITED RESULTS FOR THE TEN MONTHS ENDED 30 JUNE 1999
CONSOLIDATED INCOME STATEMENT
PRO FORMA
UNAUDITED
TEN MONTHS AUDITED FORECAST
ENDED TEN MONTHS TEN MONTHS
30 JUNE ENDED ENDED
1998 30 JUNE 30 JUNE 1999
(NOTE 1) 1999 % (NOTE 2)
R'000 R'000 CHANGE R'000
1 857 184 REVENUE 2 757 91 48 2 329 590
OPERATING INCOME BEFORE
114 277 DEPRECIATION 265 685 132 229 899
33 612 DEPRECIATION 49 099 37 698
OPERATING INCOME
80 665 BEFORE FINANCE COSTS 216 586 169 192 201
NET FINANCE INCOME/
6 531 (COSTS) (26 565) 21 877
87 196 INCOME BEFORE TAXATION 190 021 118 214 078
(15 474) TAXATION (8 182) (53 196)
71 722 NET INCOME AFTER TAXATION 181 839 154 160 882
(7 174) ABNORMAL ITEMS - -
SHARE OF ASSOCIATED
COMPANIES'
3 370 RETAINED INCOME 2 195 1 408
ATTRIBUTABLE TO OUTSIDE
1 502 SHAREHOLDERS (1 421) (866)
INCOME ATTRIBUTABLE
69 420 TO SHAREHOLDERS 182 613 163 161 424
- DIVIDENDS 47 950 40 356
NUMBER OF SHARES
773 392 IN ISSUE ('000) 773 392 650 000
WEIGHTED AVERAGE
NUMBER OF SHARES
662 839 IN ISSUE ('000) 662 839 650 000
69 420 ATTRIBUTABLE INCOME (R'000) 182 613 163 161 424
76 594 HEADLINE EARNINGS (R'000) 182 613 138 161 424
10,5 EARNINGS PER SHARE (CENTS) 27,6 163 24,8
HEADLINE EARNINGS PER
11,6 SHARE (CENTS) 27,6 138 24,8
- DIVIDEND PER SHARE (CENTS) 6,2
NOTE 1: FIGURES EXTRACTED FROM THE ADJUSTED PROFIT HISTORY AS DISCLOSED IN THE
PROSPECTUS DATED 28 AUGUST 1998, PUBLISHED PRIOR TO GOING PUBLIC, FOR THE FOUR
MONTHS SEPTEMBER 1997 TO DECEMBER 1997, AND MANAGEMENT ACCOUNTS FOR THE SIX
MONTHS JANUARY 1998 TO JUNE 1998.
NOTE 2: FIGURES EXTRACTED FROM THE PROFIT FORECAST ON WHICH THE INDEPENDENT
REPORTING ACCOUNTANTS' REPORT WAS ISSUED AND DISCLOSED IN THE PROSPECTUS DATED
28 AUGUST 1998.
CONSOLIDATED BALANCE SHEET
AT 30 JUNE 1999
AUDITED UNAUDITED
30 JUNE 31 DECEMBER
1999 1998
R'000 R'000
CAPITAL EMPLOYED
ORDINARY SHAREHOLDERS' INTEREST 1 631 780 1 231 513
OUTSIDE SHAREHOLDERS' INTEREST 17 336 10 660
DEFERRED TAXATION 8 096 2 961
LONG-TERM LIABILITIES 117 253 111 344
1 774 465 1 356 478
EMPLOYMENT OF CAPITAL
FIXED ASSETS 1 297 228 900 301
INVESTMENTS AND LOANS 45 664 141 217
CURRENT ASSETS 1 546 469 900 660
TOTAL ASSETS 2 889 361 1 942 178
CURRENT LIABILITIES 1 114 896 585 700
- NET INTEREST BEARING 231 912 121 133
- OTHER 882 984 464 567
1 774 465 1 356 478
NUMBER OF SHARES IN ISSUE ('000) 773 392 653 000
TANGIBLE NET ASSET VALUE PER SHARE
(CENTS) 211 189
GEARING RATIO (NET) (%) 21 19
ABRIDGED GROUP CASH FLOW STATEMENT
FOR THE
TEN MONTHS
ENDED 30 JUNE
1999
R'000
OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 226 558
NET CHANGES IN WORKING CAPITAL (219 485)
CASH GENERATED FROM OPERATIONS 7 073
NET FINANCE COSTS (26 565)
TAXATION 542
CASH OUTFLOW FROM OPERATING ACTIVITIES (18 950)
CASH OUTFLOW FROM INVESTING ACTIVITIES (629 011)
CASH INFLOW FROM FINANCING ACTIVITIES 785 864
NET INCREASE IN CASH POSITION 137 903
COMMENTS
POST-LISTING STRUCTURING AND ACQUISITIONS
STEINHOFF INTERNATIONAL HOLDINGS LISTED ON 23 SEPTEMBER 1998 ON THE
JOHANNESBURG STOCK EXCHANGE. STEINHOFF COMPRISES A MAJOR INTERNATIONAL
FURNITURE GROUP WHICH TODAY RANKS AS ONE OF THE FIVE BIGGEST MANUFACTURERS IN
EUROPE AND BY FAR THE LARGEST MANUFACTURER IN AFRICA. THE GROUP IS VERTICALLY
INTEGRATED IN AFRICA, PRODUCING MOST OF ITS OWN RAW MATERIAL REQUIREMENTS.
TODAY, MORE THAN 70 FACTORIES ARE OWNED WORLDWIDE, BEING CONCENTRATED IN
POLAND, HUNGARY, EAST GERMANY AND SOUTH AFRICA. THE GROUP ALSO CONDUCTS
WHOLESALING AND DISTRIBUTION ACTIVITIES IN EUROPE, GREAT BRITAIN AND SOUTH
AFRICA, THROUGH MORE THAN 20 DISTRIBUTION FACILITIES.
SUBSEQUENT TO LISTING THE GROUP EXPANDED ITS INVESTMENTS IN SOUTH AFRICA BY
ACQUIRING THE PREVIOUSLY LISTED MEGACOR GROUP. THIS ENHANCES THE GROUP'S EXPORT
POTENTIAL TO EUROPE VIA ITS OWN NETWORK. A FURTHER ACQUISITION OF THREE
SAWMILLS ENHANCES MEGACOR'S ABILITY TO EXPORT AT INCREASED MARGINS, WITH PROPER
CONTROLS OVER RAW MATERIAL INPUT.
THE GROUP ACQUIRED THE OPERATING SUBSIDIARIES OF CORNICK GROUP LIMITED WITH
EFFECT FROM 1 APRIL 1999. THIS ACQUISITION ENABLES US TO FURTHER CONSOLIDATE
OUR SOUTH AFRICAN MANUFACTURING OPERATIONS THROUGH RATIONALISATION, RESULTING
IN POTENTIAL SUBSTANTIAL COST SAVINGS.
THE MANAGEMENT STRUCTURE IS FOCUSED INTO FOUR CLEARLY DEFINED DIVISIONS:
LOCAL FURNITURE, EXPORTS, RAW MATERIALS AND LOGISTICS. EACH OF THESE DIVISIONS
IS BEING MANAGED AS AN INDEPENDENT BUSINESS UNIT BY A DEDICATED MANAGEMENT TEAM
TO ACHIEVE MAXIMUM RETURNS.
STEINHOFF EUROPE HAS ASSUMED RESPONSIBILITY FOR THE MANAGEMENT OF THE FORMER
CORNICK GROUP'S INVESTMENT IN ADELAIDE, AUSTRALIA. THIS NEW MARKET PRESENTS
EXPORT OPPORTUNITIES FOR OUR FACILITIES IN CENTRAL EUROPE.
AS GRANT ANDREWS OFFICE FURNITURE DOES NOT FORM PART OF STEINHOFF'S CORE
BUSINESS, IT WAS DISPOSED OF WITH EFFECT FROM 1 APRIL 1999 TO THE MANAGEMENT
CONSORTIUM.
RESULTS
GROUP REVENUE GREW 48% COMPARED TO THE CORRESPONDING PERIOD. OPERATING INCOME
BEFORE FINANCE COSTS INCREASED BY 169% TO R216 586 MILLION (1998: R80 665
MILLION). OPERATING MARGIN IMPROVED TO 8%, IN LINE WITH THE GROUP'S FORECAST
GIVEN AT THE TIME OF GOING PUBLIC AND COMPARES FAVOURABLY TO LAST YEAR'S 4%.
THIS IS MOST SATISFYING CONSIDERING THE TOUGH TRADING CONDITIONS EXPERIENCED IN
EUROPE AND AFRICA DURING THE FIRST SIX MONTHS OF 1999.
FINANCE CHARGES INCREASED TO R26 565 MILLION DUE TO ADDITIONAL WORKING CAPITAL
REQUIREMENTS.
THE PROCEEDS OF THE RIGHTS ISSUE OF R286 MILLION WAS RECEIVED ON 29 JUNE 1999.
NET INCOME ATTRIBUTABLE TO SHAREHOLDERS INCREASED BY 163% TO R182 613 MILLION
(1998: R69 420 MILLION). THE LOWER THAN ANTICIPATED EFFECTIVE TAX CHARGE IS DUE
TO THE GROUP'S FAVOURABLE TAX DISPENSATIONS PREVAILING IN CENTRAL EUROPE. IT IS
ANTICIPATED THAT THE EFFECTIVE TAX RATE WILL NOT CHANGE MATERIALLY FROM THE
CURRENT LEVELS.
EARNINGS PER SHARE INCREASED BY 163%, WHILE HEADLINE EARNINGS PER SHARE
INCREASED BY 138%. HEADLINE EARNINGS PER SHARE EXCEEDED THE PROFIT FORECAST
MADE AT THE TIME OF GOING PUBLIC BY 11%, AND ANNUALISED HEADLINE EARNINGS PER
SHARE AMOUNTS TO 33 CENTS PER SHARE.
REVIEW OF OPERATIONS
THE TRANSFORMATION OF STEINHOFF INTERNATIONAL INTO A PUBLIC COMPANY HAS LARGELY
BEEN COMPLETED AND APPROPRIATE DISCIPLINES AND CONTROLS ARE BEING IMPLEMENTED,
WITHOUT INHIBITING OUR FLEXIBILITY TO RESPOND QUICKLY TO CHANGING MARKET
CONDITIONS.
THE RELATIVE CONTRIBUTION TO GROUP TURNOVER AND EARNINGS OF STEINHOFF EUROPE
AND STEINHOFF AFRICA IS AS FOLLOWS:
R'000 R'000 R'000
EUROPE AFRICA TOTAL
REVENUE 1 855 414 902 076 2 757 490
PERCENTAGE 67 33 100
ATTRIBUTABLE EARNINGS 117 406 65 207 182 613
PERCENTAGE 64 36 100
AN AVERAGE EXCHANGE RATE OF R3,41:1DM WAS USED TO TRANSLATE FOREIGN CURRENCY
AMOUNTS INTO LOCAL CURRENCY.
R305 MILLION OF AFRICA'S TURNOVER WAS EXPORTED TO EUROPE AND THE USA WHICH
AMOUNTS TO APPROXIMATELY 35% OF ITS ACTIVITIES. THE OPPORTUNITY TO
SUBSTANTIALLY INCREASE THESE EXPORTS EXISTS IN THE YEARS AHEAD.
YEAR 2000 COMPLIANCE
THE BOARD DOES NOT FORESEE ANY SIGNIFICANT IMPACT ON THE GROUP'S INTERNAL
PERFORMANCE WITH THE ADVENT OF THE YEAR 2000 AS IT IS CONFIDENT THAT ALL
SYSTEMS WORLDWIDE SHOULD BE YEAR 2000 COMPLIANT BY NOVEMBER 1999. ADDITIONAL
COSTS IN THIS REGARD ARE NOT EXPECTED TO BE MATERIAL.
CAPITALISATION SHARE AWARD AND DIVIDEND DECLARATION
THE BOARD HAS RESOLVED TO AWARD CAPITALISATION SHARES TO SHAREHOLDERS
REGISTERED AT THE CLOSE OF BUSINESS ON FRIDAY, 1 OCTOBER 1999 ("THE SHARE
AWARD"). SHAREHOLDERS WILL BE ENTITLED TO DECLINE THE SHARE AWARD OR ANY PART
THEREOF AND INSTEAD ELECT TO RECEIVE THE COMPANY'S MAIDEN DIVIDEND OF 6,2 CENTS
PER SHARE IN CASH.
THE TERMS OF THE SHARE AWARD WILL BE ANNOUNCED ON MONDAY, 27 SEPTEMBER 1999 AND
DOCUMENTATION RELATING THERETO WILL BE POSTED ON FRIDAY, 8 OCTOBER 1999.
ELECTIONS IN RESPECT OF THE CASH DIVIDEND WILL OPEN ON FRIDAY, 8 OCTOBER 1999
AND CLOSE ON FRIDAY, 29 OCTOBER 1999.
PROSPECTS
THE GROUP IS WELL POSITIONED TO INCREASE ITS MARKET SHARE IN A HIGHLY
FRAGMENTED EUROPEAN FURNITURE MARKET AND TO CAPITALISE ON THE RATIONALISATION
OF THE LOCAL FURNITURE MARKET. OUR ENTRY INTO THE UK FURNITURE MARKET, THROUGH
A STRATEGIC ALLIANCE WITH A LOCAL PARTNER, WILL FURTHER ENHANCE REVENUE GROWTH.
WE ARE ALSO CURRENTLY NEGOTIATING THE TAKEOVER OF A MEDIUM SIZED EUROPEAN NICHE
FURNITURE MANUFACTURER, WHICH WILL COMPLEMENT THE CURRENT STEINHOFF RANGE.
DESPITE THE CHALLENGING TRADING CONDITIONS, MANAGEMENT IS CONFIDENT THAT THE
GROUP WILL ACHIEVE ABOVE AVERAGE EARNINGS GROWTH IN THE COMING YEAR.
BY ORDER OF THE BOARD
F J NEL
SECRETARY
31 AUGUST 1999
REGISTERED OFFICE
22 DACRES AVENUE, EPPING 2, CAPE TOWN, 7460
TEL (021) 535 0867 FAX (021) 544 553
TRANSFER SECRETARIES
MERCANTILE REGISTRARS LIMITED, FIRST NATIONAL HOUSE
11 DIAGONAL STREET, JOHANNESBURG, 2001
DIRECTORS
BRUNO STEINHOFF*# (EXECUTIVE CHAIRMAN), NORBERT STEINHOFF*#, MARKUS JOOSTE*,
FRIKKIE NEL*, CLAAS DAUN#, LEN KONAR, DIRK ACKERMAN
*EXECUTIVE DIRECTOR #GERMAN CITIZEN
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