Wrap Text
Steinhoff International Holdings - Audited results for the year ended 30
June 2002
Steinhoff International Holdings Ltd
(Registration number 1998/003951/06)
Share code: SHF
ISIN: ZAE 000016176
* Revenue up 42%
* Headline earnings per share up 50%
* Hard currency revenues reached 81%
* Net asset value up 38%
* Return on equity at 22%
Audited results for the year ended 30 June 2002
Consistent growth off an expanded geographical base
Abridged consolidated income statement
for the year ended 30 June 2002
Audited year ended
30/06/02 30/06/01* %
Note R`000 R`000 increase
Revenue 8 207 936 5 773 532 42
Operating income 1 040 014 676 647 54
before depreciation
Depreciation (163 563) (132 150)
Operating income 876 451 544 497 61
after depreciation
Exceptional items 1 (107 174) 134 898
Earnings before 769 277 679 395 13
goodwill, interest
and taxation
Goodwill amortised (36 549) (37 531)
Earnings before 732 728 641 864 14
interest and
taxation
Net finance charges (79 299) (46 648)
Earnings before 653 429 595 216 10
taxation
Taxation (52 609) (27 130)
Earnings after 600 820 568 086 6
taxation
Share of associate 55 964 38 111
income
Attributable to 1 809 1 819
outside
shareholders
Income attributable 658 593 608 016 8
to shareholders
Number of shares in 906 616 829 323 9
issue (`000)
Weighted average 864 754 822 129 5
number of shares in
issue (`000)
Attributable income 658 593 608 016 8
(R`000)
Headline earnings 2 802 316 510 649 57
(R`000)
Earnings per share 76 74 3
(cents)
Headline earnings 98 67
per share before
restatement (cents)
Changes in
accounting policies
to comply with new
accounting (5) (5)
standards
Headline earnings 93 62 50
per share (cents)
Proposed dividend 15 12 25
per share (cents)
Note 1: Exceptional
items (R`000)
- Capital gain on 179 282
sale of trade marks
- Closure costs (83 171) (44 384)
- Impairment of (24 003)
assets
(107 174) 134 898
Note 2: Headline
earnings
calculation
Income attributable 658 593 608 016
to shareholders
Adjustment for:
- Exceptional items 107 174 (134 898)
- Goodwill written 36 549 37 531
off
Headline earnings 802 316 510 649
for the year
Changes in
accounting policies
to comply with new
accounting 44 900 36 167
standards
Headline earnings 847 216 546 816 55
before restatement
* Note
The prior year figures have been restated to comply with Accounting
Statements AC 135 and AC 116
Abridged consolidated balance sheet
at 30 June 2002
Audited Audited
30/06/02 30/06/01*
ASSETS
Non-current assets
Property, plant and equipment and 2 729 956 1 580 749
intangible assets
Investments and loans 1 246 109 546 190
Deferred tax asset 5 727 9 541
3 981 792 2 136 480
Current assets
Accounts receivable 2 563 859 1 695 383
Inventories 1 109 204 768 409
Cash and cash equivalents 405 052 988 905
Net cash balances 317 967 786 764
Near cash financial instruments 87 085 202 141
4 078 115 3 452 697
Total assets 8 059 907 5 589 177
EQUITY AND LIABILITIES
Capital and reserves 4 382 901 2 895 806
Outside shareholders` interest 28 073 10 037
4 410 974 2 905 843
Non-current liabilities
Deferred taxation 7 223 4 529
Long term liabilities 746 811 426 723
Long term licence fee liability 237 873 287 250
991 907 718 502
Current Liabilities
Net interest bearing 622 083 631 186
Accounts payable and provisions 2 034 943 1 333 646
2 657 026 1 964 832
Total equity and liabilities 8 059 907 5 589 177
Net asset value per share (cents) 483 349
Gearing ratio (net) 24% 9%
* Note
The prior year figures have been restated to comply with Accounting
Statements AC 135 and AC 116
Abridged group cash flow statement
for the year ended 30 June 2002
Audited year ended
30/06/02 30/06/01*
R`000 R`000
Operating profit before working 932 557 824 830
capital changes
Net changes in working capital 22 454 (90 907)
Cash generated from operations 955 011 733 923
Net finance costs (79 299) (46 648)
Dividends paid (26 694) (17 365)
Dividends received 7 506 5 610
Taxation (59 457) (43 192)
Net cash inflow from operating 797 067 632 328
activities
Net cash outflow from investing (1 380 076) (347 395)
activities
Net cash inflow from financing 308 145 277 012
activities
Net increase in cash and cash (274 864) 561 945
equivalents
Effects of exchange rate changes
on cash and
cash equivalents (308 989) (27 681)
Cash and cash equivalents - 988 905 454 641
beginning of period
Cash and cash equivalents - end 405 052 988 905
of period
* Note
The prior year figures have been restated to comply with Accounting
Statements AC 135 and AC 116
Statement of changes in equity
for the year ended 30 June 2002
Non-
Share distributable Distributable
capital
and reserves reserves Total
premium
R`000 R`000 R`000 R`000
Balance at 30 1 583 778 39 884 579 901 2 203 563
June 2000 as
previously
stated
Change in (2 813) (78 532) (81 345)
accounting
policy
Balance at 30 1 583 778 37 071 501 369 2 122 218
June 2000
restated
Earnings 608 016 608 016
attributable
to
shareholders
As previously 644 183 644 183
stated
Change in (36 167) (36 167)
accounting
policy
Share of
associate
companies`
retained
earnings
transferred 32 501 (32 501) -
to non-
distributable
reserves
Foreign 70 346 70 346
currency
translation
reserve
As previously 70 828 70 828
stated
Change in (482) (482)
accounting
policy
Dividends (2 883) (2 883)
paid
Issue of 98 109 98 109
shares
Balance at 30 1 681 887 139 918 1 074 001 2 895 806
June 2001
restated
Current year 55 964 (55 964) -
associate
income
Earnings 658 593 658 593
attributable
to
shareholders
Increase in 381 658 381 658
foreign
currency
translation
reserve
Dividends (26 694) (26 694)
paid
Issue of 473 538 473 538
shares
Transfer to (95) 95 -
distributable
reserves
Balance at 2 155 425 577 445 1 650 031 4 382 901
end of period
Notes
1. The accounting policies and methods of computation for the financial
statements for the year ended 30 June 2002 are in all material respects
consistent with those applied in prior years, except for the provision
of depreciation on buildings and post-retirement medical aid benefits,
which were done for the first time this year, and are in accordance with
South African Statements of Generally Accepted Accounting Practice.
2. The results have been audited by Deloitte & Touche. Their unqualified
audit opinion is available for inspection at the company`s registered
office.
Comments
Review of results
The board is pleased to report growth in headline earnings for the year
ended 30 June 2002 of 57% to R802 million (2001: R511 million) on
increased revenues of 42%.
Notwithstanding the demanding trading conditions, both in South Africa
and Europe, the Group achieved real growth in revenue whilst increasing
its operating margin to 11,4% (2001: 10,1%). The results for the year
confirm the Group`s ability to maintain and grow market share in
contracting and declining markets. This is a result of its cost
advantages in Eastern Europe and the increased export realisations from
South Africa.
The Group, for the first time, provided for depreciation on all
buildings in accordance with South African Accounting Standard AC135 as
well as for post-retirement medical aid benefits in terms of AC116. This
had the effect of reducing headline earnings for the year to 30 June
2002 by R44,9 million (2001: R36,2 million) with a prior year adjustment
of R78,6 million, which is shown as an adjustment to the opening balance
of retained income.
Net finance charges increased to R79,3 million (2001: R46,6 million)
mainly as a result of the Group`s offshore borrowings and the impact of
the weakening Rand. Interest cover amounts to 11,1 times (2001: 11,7
times) and the net interest-bearing debt: equity ratio is at 24% (2001:
9%) well within the Group`s self-imposed borrowing covenants. The
increase in the level of financial gearing was mainly attributable to
the acquisitions in Australia (Freedom Manufacturing), the UK (Relyon)
and the Group`s increased investment in Unitrans.
Taxation increased to R52,6 million (2001: R27 million) and the
continuing relatively low effective tax charge is due mainly to the
Group`s favourable tax dispensations in Central Europe, which are
expected to continue in the foreseeable future.
Shareholders` funds increased to R4 383 million (2001: R2 896 million)
and return on average shareholders` funds was 22% during the year. The
net asset value per share increased from 349 cps to 483 cps, an increase
of 38,4%.
The Group generated 81% (2001: 73%) of its total revenues in hard
currencies during the year.
Headline earnings per share increased by 50% to 93 cents (2001: 62
cents) while basic earnings per share increased by 3% (due mainly to the
non-recurring exceptional gain in 2001) to 76 cents (2001: 74 cents).
The weighted average number of shares increased by 5% during the year.
The Group`s cash flow continues to be strong and cash generated from
operations amounted to R955 million (2001: R734 million). The cash
generative capacity and low gearing ratios of the Group place it in an
ideal position to exploit further growth opportunities, both organically
and by acquisition.
Segmental analysis
The Group`s main activity as an integrated global lifestyle supplier is
focused on manufacturing and wholesale and distribution.
Year ended 30 June 2002
Earnings
before
exceptional
items,
goodwill,
interest and
R`000 Revenue % taxation % Net assets %
Manufacturing 6 154 814 75 653 961 70 3 287 171 75
Wholesale and 2 053 122 25 280 263 30 1 095 730 25
distribution
Total 8 207 936 100 934 224** 10 4 382 901 100
** Earnings before exceptional items, goodwill, interest and taxation
include share of income from associated companies and outside
shareholders` income of R57,773 million.
Year ended 30 June 2001
Earnings
before
exceptional
items,
goodwill,
interest
and
R`000 Revenue % taxation % Net assets %
Manufacturing 4 087 206 71 442 059 76 2 317 202 80
Wholesale and 1 686 326 29 142 367 24 578 604 20
distribution
Total 5 773 532 100 584 426** 100 2 895 806 100
** Earnings before exceptional items, goodwill, interest and taxation
include share of income from associated companies and outside
shareholders` income of R39,930 million.
Geographical analysis
The Group`s operations are located in southern Africa, the European
Community, eastern Europe and Australia.
Year ended 30 June 2002
Earnings
before
exceptional
items,
goodwill,
interest
and
R`000 Revenue % taxation % Net assets %
Southern 2 502 161 30 226 230 24 1 225 837 28
Africa***
European 3 589 038 44 430 686 46 2 417 465 55
Community
Eastern 1 820 556 22 267 273 29 657 435 15
Europe
Australia 296 181 4 10 035 1 82 164 2
Total 8 207 936 100 934 224 100 4 382 901 100
*** Southern Africa comprises the Republic of South Africa, Botswana,
Swaziland, Namibia and Lesotho. The Group has no exposure to Zimbabwe.
Year ended 30 June 2001
Earnings
before
exceptional
items,
goodwill,
interest and
R`000 Revenue % taxation % Net assets %
Southern 2 254 691 39 176 242 30 1 276 584 44
Africa***
European 2 029 069 35 265 663 45 1 345 894 46
Community
Eastern 1 439 036 25 139 388 24 262 286 9
Europe
Australia 50 736 1 3 133 1 11 042 1
Total 5 773 532 100 584 426 100 2 895 806 100
An average exchange rate of R9,00: 1 Euro (2001: R6,75: 1 Euro) was used
to translate foreign currency income and expenditure into South African
Rand. R936 million (2001: R706 million) of Africa`s revenue represents
exports to the USA and the European Community, representing
approximately 37% (2001: 31%) of its activities. It is the intention of
the Group to increase these exports into the future. The Group`s
exposure to the local South African furniture market amounts to 18%
(2001: 24%) of total revenue.
Corporate governance
The Group is committed to the principles of sound corporate governance
and is substantially compliant with the requirements of the King Report
on Corporate Governance for South Africa 2002 ("King II"). A phasing-in
approach towards full compliance with the recommendations of King II has
been adopted and an appropriate balance between performance and
corporate constraints is being pursued.
Corporate activity
In order to rationalise and achieve economies of sale, a number of
business divisions both locally and internationally, were closed during
the financial year, resulting in exceptional closure costs of R83,171
million.
The Group has entered into and concluded a number of investment
transactions during the financial year:
- Relyon Group Plc, a bedding manufacturer in the UK and the Netherlands
and a foam converting facility in the UK which supplies the furniture,
automotive and aviation industries, was acquired effective 1 October
2001;
- the Group acquired Marshall Furniture, based in Adelaide, the largest
case-goods manufacturer in Australia;
- Steinhoff Pacific was formed as a joint venture with the retail group,
Freedom Group Limited, which is listed on the Australian Stock Exchange.
Steinhoff owns 74,9% and Freedom 25,1% of this entity. Steinhoff Pacific
now has manufacturing facilities in Sydney, Brisbane, Adelaide, Victor
Harbour and Auckland;
- two new brands, Egoform and Dieter Knoll were acquired which are
targeted at the top end of the European market. They were launched this
January and confirm the Group`s commitment to developing brands in its
respective markets;
- the joint venture with La-Z-Boy Inc of America was finalised during
the year under review and authorised exclusive dealers for this well
known brand are currently being appointed in various parts of Europe;
- Steinhoff acquired a 34,99% interest in PG Bison Holdings
(Proprietary) Limited which is the leading particle board manufacturer
in South Africa;
- the Group increased its holding in Unitrans Limited to 26% (2001:
14,4%); and
- additional investments were made during the year in new saw milling
capacity which will promote further exports from South Africa.
The Group is constantly examining new business opportunities. The
corporate services team examines all opportunities and their likely fit
and possible future contribution to the Group`s activities to complement
organic growth. This demonstrates the Group`s commitment to ensuring
that its operations are appropriately structured to achieve optimal
growth in the years to come, in the various markets that it serves.
Social responsibility and manpower
The Group is committed to good labour relations and creating an
environment where all of its more than 30 000 employees worldwide can
develop to their fullest potential. Notwithstanding certain discontinued
operations, the number of the Group`s employees have increased
worldwide. The Group is committed to a programme of skills transfer,
ranging from leadership development at various educational levels, to
successful training and deployment of individuals worldwide.
Black economic empowerment of small and medium sized enterprises, within
our South African communities, forms part of the Group`s strategy.
In addition to traditional medical schemes, the Steinhoff Health Care
Plan was introduced with a special focus on HIV/Aids management and
involves, inter alia, access to medical assistance dedicated to the
Steinhoff employees.
Compliance with environmental regulations is one of the Group`s
priorities. This manifests itself, both in terms of the sourcing of raw
materials, eg timber that complies with Forestry Stewardship Council
Standards, and the infrastructure and processes within our manufacturing
operations.
Prospects
The continued growth and development of the business will be achieved
through improved capacity utilisation, enhanced working capital
management and expansion of the Group`s core competencies and products.
Because of its integrated nature, the Group is also well positioned to
optimise intergroup sourcing of raw materials and components. These
opportunities, together with co-ordinated sourcing and enhanced customer
service levels, are all expected to have a positive impact on margins
into the future.
Continued growth in exports from South Africa is expected to further
enhance earnings.
The consolidation in the local furniture retail sector is nearing
completion and this, together with a fundamental change in retailing
focus to core products and business mix between cash and credit, are
expected to benefit the Group.
In Germany and eastern Europe the Group is committed to grow its market
share by delivering quality products at competitive prices, supported by
quality support and service excellence. The stated move towards higher
price branded products is also anticipated to impact favourably on
margins.
The Group`s integration of the UK and Australian acquisitions have
progressed well and these operations are well placed to deliver above
average earnings growth.
The Company is delighted with the performance of its associates,
Unitrans and PG Bison, and expects continued material contributions from
these investments in years to come.
Management is confident that the Group will continue to generate real
earnings growth in the year ahead.
Declaration of Capitalisation share award with dividend election option
The board has resolved to award capitalisation shares to shareholders
recorded in the register at the close of business on Friday, 1 November
2002 ("the share award"). Shareholders will be entitled to accept or
decline the share award or any part thereof and instead elect to receive
a cash dividend of 15 cents (2001: 12 cents) per share.
The last day to trade the Company`s shares on the JSE Securities
Exchange South Africa to ensure that a purchaser appears as a
shareholder on the record date (1 November 2002) will be Friday, 25
October 2002. Shares will commence trading ex dividend from the
commencement of trading on Monday, 28 October 2002.
Share certificates may not be dematerialised or rematerialised from
Monday, 28 October 2002 to Friday, 1 November 2002, both days inclusive.
The terms of the share award will be announced on Friday, 11 October
2002, and documentation relating thereto will be posted by Friday, 18
October 2002. Elections in respect of the cash dividend will close on
Friday, 1 November 2002.
Communication
The Group strives to communicate openly, and with clarity, on how we are
performing and our results are consistent, and adequately explained,
without divulging information that would jeopardise our competitive
advantage.
The Annual Report will be mailed to shareholders in due course. The
annual general meeting is scheduled to take place on Friday, 29 November
2002, at 13:00 at the registered office of the Company.
By order of the board
S J Grobler
Company secretary
9 September 2002
Administration
Registration number
1998/003951/06
Share code: SHF
ISIN: ZAE 000016176
Registered office
28 6th Street, Wynberg, Sandton, 2090
Republic of South Africa
Tel +27 (11) 445 3000
Fax +27 (11) 445 3099
Sponsor
Gensec Bank Limited
3A Summit Road
Dunkeld West
Transfer secretaries
Computershare Investor Services Limited
18th Floor, 11 Diagonal Street
Johannesburg
2001
Directors
B E Steinhoff* (Chairman), M J Jooste (Managing Director), D E
Ackerman+, C E Daun+*, K J Grov+, D Konar+, F J Nel, N W Steinhoff*, D
M van der Merwe
*German +Non-executive
Auditors
Deloitte & Touche
Company secretary
S J Grobler
website: www.steinhoffinternational.com
Date: 09/09/2002 07:27:00 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
Sharenet Sites 
