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Steinhoff - Audited Results For The Year Ended 30 June 2006 and

Release Date: 11/09/2006 16:49
Code(s): SHF SHFF
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Steinhoff - Audited Results For The Year Ended 30 June 2006 and distribution declaration STEINHOFF INTERNATIONAL HOLDINGS LIMITED (Incorporated in the Republic of South Africa) (Registration Number: 1998/003951/06) ("Steinhoff") Share Code: SHF ISN Code: ZAE000016176 AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2006 COMPLEMENTARY GEOGRAPHICAL STRATEGY RELATING TO VERTICAL INTEGRATION UNDERPIN FUTURE PROSPECTS HIGHLIGHTS - Group revenues increased 70% in rand and 72% in euro - Headline earnings per ordinary share increased 25% in rand and 27% in euro - R3,3 billion cash generated from operations - Free cash flow per share is 237 cents (2005: 95 cents) - Distribution to shareholders increased 25% to 37,5 cents per share - Substantial retail investments and continued alliances underpin growth CONDENSED CONSOLIDATED INCOME STATEMENT for the year ended 30 June 2006 Audited Audited Restated* Year ended Year ended 30 June 30 June %
2006 2005 change Note R"000 R"000 REVENUE 32 238 322 18 958 014 70 Operating income before depreciation 3 384 086 2 365 229 43 Depreciation (637 541) (423 767) Operating income after depreciation 2 746 545 1 941 462 41 Capital items 1 (88 356) (10 441) Earnings before interest, income from investments, associated earnings and taxation 2 658 189 1 931 021 38 Net finance costs (291 425) (193 448) Dividend income 17 382 3 130 Earnings before share of associates and taxation 2 384 146 1 740 703 37 Share of profit of associated companies 61 083 58 014 Profit before taxation 2 445 229 1 798 717 36 Taxation (427 712) (213 332) Profit for the year 2 017 517 1 585 385 27 Attributable to Equity holders of the parent 1 953 376 1 544 998 26 Minority interest 64 141 40 387 Profit for the year 2 017 517 1 585 385 27 Explanatory notes: Number of shares in issue ("000) 1 141 442 1 130 584 1 Weighted average number of shares in issue ("000) 1 133 345 1 128 054 Attributable income (R"000) 2 1 880 694 1 544 998 22 Headline earnings (R"000) 4 1 959 352 1 557 109 26 Basic earnings per share (cents) 166 137 21 Headine earnings per share (cents) 173 138 25 Diluted earnings per share (cents) 164 134 22 Diluted headline earnings per share (cents) 171 135 27 Distribution per ordinary share 37,5 30 25 Average currency translation (rand : euro) 7,8196 7,9091 Note 1: Capital items (R"000) Loss on disposal of businesses (1 434) Closure costs (54 095) (9 270) Profit on disposal of businesses and investments 1 907 (Loss)/profit on disposal of property, plant and equipment (8 475) 37 503 Negative goodwill released 1 434 Impairments (27 693) (38 674) (88 356) (10 441)
Note 2: Earnings attributable to ordinary shareholders (R"000) Earnings attributable to equity holders 1 953 376 1 544 998 Dividend entitlement on non-redeemable cumulative preference shares (including STC) (72 682) 1 880 694 1 544 998 Note 3: Headline earnings calculation (R"000) Earnings attributable to equity holders 1 953 376 1 544 998 Adjustment for: - Capital items 88 356 10 441 - Taxation effects on capital items (5 615) - Share of minorities on capital items (4 083) -Loss on disposal of property, plant and equipment included in share of associate income 1 527 - Impairment/amortisation of goodwill included in share of associate income 143 Headline earnings for the year 2 032 034 1 557 109 Note 4: Headline earnings attributable to ordinary shareholders (R"000) Headline earnings attributable to equity holders 2 032 034 1 557 109 Dividend entitlement on non-redeemable cumulative preference shares (including STC) (72 682) 1 959 352 1 557 109 *Prior year figures have been restated to reflect the effects of the transition to IFRS, the consolidation of special-purpose entities, the adoption of SAICA circular 9/2006 and the reassessment of provisionally determined fair values of prior year business combinations. CONDENSED CONSOLIDATED CASH FLOW STATEMENT for the year ended 30 June 2006 Audited Audited Restated* Year ended Year ended
30 June 30 June 2006 2005 R"000 R"000 Operating profit before working capital changes 3 350 469 2 439 225 Net changes in working capital (45 015) (990 526) Cash generated from operations 3 305 454 1 448 699 Net interest paid (291 425) (193 448) Dividends and capital distribution paid (411 833) (333 076) Dividends received 26 785 23 087 Taxation paid (339 601) (201 083) Net cash inflow from operating activities 2 289 380 744 179 Net cash outflow from investing activities (5 977 659) (2 479 035) Net cash inflow from financing activities 3 375 328 3 036 809 Net (decrease)/increase in cash and cash equivalents (312 951) 1 301 953 Effects of exchange rate changes on cash and cash equivalents 352 913 (502) Cash and cash equivalents at beginning of year 4 957 893 3 656 442 Cash and cash equivalents at end of year 4 997 855 4 957 893 Cash and cash equivalents can be reconciled to the balance sheet as follows: - Cash and cash equivalents above 4 997 855 4 957 893 - Overdrafts included in financing activities (155 525) (731 948) Cash and cash equivalents per balance sheet 4 842 330 4 225 945 *Prior year figures have been restated to reflect the effects of the transition to IFRS, the consolidation of special-purpose entities, the adoption of SAICA circular 9/2006 and the reassessment of provisionally determined fair values of prior year business combinations. CONDENSED CONSOLIDATED BALANCE SHEET at 30 June 2006 Audited Audited Restated* Year ended Year ended
30 June 30 June 2006 2005 R"000 R"000 ASSETS Non-current assets Property, plant and equipment, biological assets and intangible assets 13 358 558 8 908 511 Investments and loans 3 315 157 1 417 883 Deferred tax assets 529 741 466 047 17 203 456 10 792 441 Current assets Accounts receivable, short-term loans and other current assets 6 261 127 5 859 569 Inventories 3 290 566 2 937 671 Cash and cash equivalents 4 842 330 4 225 945 14 394 023 13 023 185
Total assets 31 597 479 23 815 626 EQUITY AND LIABILITIES Capital and reserves Ordinary share capital and reserves 10 872 655 8 187 472 Preference share capital 1 022 122 643 879 11 894 777 8 831 351 Minority interest 814 998 882 750 Total equity 12 709 775 9 714 101 Non-current liabilities Deferred tax liabilities 1 284 184 927 188 Long-term liabilities and provisions 8 672 889 6 034 046 Long-term licence fee liability 88 655 143 894 10 045 728 7 105 128 Current liabilities Net interest bearing liabilities 2 241 465 763 445 Accounts payable and provisions 6 600 511 6 232 952 8 841 976 6 996 397 Total equity and liabilities 31 597 479 23 815 626 Net asset value per ordinary share (cents) 953 724 Gearing ratio (net) 30% 21% Closing exchange rate - rand : euro 9,1600 8,0965 *Prior year figures have been restated to reflect the effects of the transition to IFRS, the consolidation of special-purpose entities, the adoption of SAICA circular 9/2006 and the reassessment of provisionally determined fair values of prior year business combinations. SEGMENTAL ANALYSIS year ended 30 June 2006 Wholesale, retail and
Manufacturing distribution Total R"000 R"000 R"000 Revenue 9 499 580 22 738 742 32 238 322 Income before interest, taxation and capital items, including share of associate companies" income, and excluding minority interests 1 457 952 1 281 452 2 739 404 Gross assets 17 496 521 14 364 242 31 860 763 Gross liabilities (11 243 244) (8 722 742) (19 965 986) Net assets 6 253 277 5 641 500 11 894 777 Wholesale,
retail and Manufacturing distribution Total year ended 30 June 2005 R"000 R"000 R"000 Revenue 9 249 865 9 708 149 18 958 014 Income before interest, taxation and capital items including share of associate companies" income, and excluding minority interests ("segment results") 1 181 290 779 470 1 960 760 Gross assets 12 174 984 12 397 758 24 572 742 Gross liabilities (6 549 399) (9 191 992) (15 741 391) Net assets 5 625 585 3 205 766 8 831 351 GEOGRAPHICAL ANALYSIS year ended 30 June 2006 Southern European Pacific
Africa Community Rim Total R"000 R"000 R"000 R"000 Revenue 17 928 399 12 049 652 2 260 271 32 238 322 Income before interest, taxation, and capital items, including share of associate companies" income, and excluding minority interests 995 329 1 566 359 177 716 2 739 404 Gross assets 11 494 300 17 623 061 2 743 402 31 860 763 Gross liabilities (8 477 363) (10 254 487) (1 234 136) (19 965 986) Net assets 3 016 937 7 368 574 1 509 266 11 894 777 Southern European Pacific year ended Africa Community Rim Total 30 June 2005 R"000 R"000 R"000 R"000 Revenue 9 958 051 6 616 334 2 383 629 18 958 014 Income before interest, taxation, and capital items including share of associate companies" income, and excluding minority interests 615 028 1 104 987 240 745 1 960 760 Gross assets 8 902 924 14 330 633 1 339 185 24 572 742 Gross liabilities (6 868 993) (8 300 970) (571 428) (15 741 391) Net assets 2 033 931 6 029 663 767 757 8 831 351 SEGMENTAL ANALYSIS IN EURO "000 year ended 30 June 2006 Revenue Revenue
30 June 30 June % 2006 2005 change Manufacturing 1 214 842 1 169 522 4 Wholesale, retail and distribution 2 907 916 1 227 466 137 Total 4 122 758 2 396 988 72 Segment Segment results results
30 June 30 June % 2006 2005 change Manufacturing 186 448 149 358 25 Wholesale, retail and distribution 163 877 98 554 66 Total 350 325 247 912 41 GEOGRAPHICAL ANALYSIS IN EURO "000 year ended 30 June 2006 Revenue Revenue 30 June 30 June % 2006 2005 change Southern Africa 2 292 751 1 259 063 82 European Community 1 540 955 836 547 84 Pacific Rim 289 052 301 378 (4) Total 4 122 758 2 396 988 72 Segment Segment
results results 30 June 30 June % 2006 2005 change Southern Africa 127 286 77 762 64 European Community 200 312 139 711 43 Pacific Rim 22 727 30 439 (25) Total 350 325 247 912 41 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2006 Ordinary Total share Non-distri- Distri- ordinary capital butable butable shareholders"
and premium reserves reserves R"000 R"000 R"000 R"000 Balance at 30 June 2004 as restated* 3 161 878 158 131 3 151 060 6 471 069 Profit for the year 1 544 998 1 544 998 Restatement of available-for-sale financial assets to fair value 482 482 Investment reserves released to income (3 638) (3 638) Exchange differences on consolidation of foreign subsidiaries 345 638 345 638 Share-based payment reserve 48 916 48 916 Dividends paid (248 970) (248 970) Issue of share capital 28 977 28 977 Share of associate companies transferred to retained earnings (133 356) 133 356 Net increase on acquisition and disposal of subsidiaries Balance at 30 June 2005 as restated* 3 190 855 416 173 4 580 444 8 187 472 Profit for the year 1 953 376 1 953 376 Capital distribution (340 225) (340 225) Preference dividend (43 234) (43 234) Issue of share capital 162 695 162 695 Foreign currency translation reserve movement 665 706 665 706 Investment reserves released to income (1 447) (1 447) Cash flow hedges 37 927 37 927 Actuarial gains 25 656 25 656 Share-based payment reserve 39 765 39 765 Convertible bond issue - equity portion 220 712 220 712 Transfer to contingency reserve 1 827 (2 394) (567) Minority transactions (35 181) (35 181) Balance at 30 June 2006 3 013 325 1 371 138 6 488 192 10 872 655 *Prior year figures have been restated to reflect the effects of the transition to IFRS, the consolidation of special-purpose entities, the adoption of SAICA circular 9/2006 and the reassessment of provisionally determined fair values of prior year business combinations. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2006 Preference share Total capital Minority shareholders"
and premium interest equity R"000 R"000 R"000 Balance at 30 June 2004 as restated* 35 241 6 506 310 Profit for the year 40 387 1 585 385 Restatement of available-for-sale financial assets to fair value 482 Investment reserves released to income (3 638) Exchange differences on consolidation of foreign subsidiaries 835 346 473 Share-based payment reserve 48 916 Dividends paid (248 970) Issue of share capital 643 879 672 856 Share of associate companies transferred to retained earnings Net increase on acquisition and disposal of subsidiaries 806 287 806 287 Balance at 30 June 2005 as restated* 643 879 882 750 9 714 101 Profit for the year 64 141 2 017 517 Capital distribution (27 833) (368 058) Preference dividend (43 234) Issue of share capital 378 243 540 938 Foreign currency translation reserve movement (6 784) 658 922 Investment reserves released to income (1 447) Cash flow hedges 37 927 Actuarial gains 16 499 42 155 Share-based payment reserve 39 765 Convertible bond issue - equity portion 220 712 Transfer to contingency reserve 567 Minority transactions (114 342) (149 523) Balance at 30 June 2006 1 022 122 814 998 12 709 775 *Prior year figures have been restated to reflect the effects of the transition to IFRS, the consolidation of special-purpose entities, the adoption of SAICA circular 9/2006 and the reassessment of provisionally determined fair values of prior year business combinations. NOTES 1. CHANGES IN ACCOUNTING POLICIES The group is reporting under International Financial Reporting Standards (IFRS) for the first time for the year ended 30 June 2006, and accordingly, comparatives have been restated where required. The transition to IFRS has been accounted for in accordance with IFRS 1 (First-time Adoption of International Financial Reporting Standards) with 1 July 2004 as the date of transition. The group also adopted SAICA circular 9/2006 retrospectively. The changes in accounting policies as a consequence of the transition to IFRS are described below. 2. SIGNIFICANT CHANGES TO THE GROUP"S ACCOUNTING POLICIES FOLLOWING ADOPTION OF IFRS AND IFRS 1 - FIRST-TIME ADOPTION ELECTION OF EXEMPTIONS 2.1 Business combinations The group has elected, in terms of IFRS 1, to apply the requirements of IFRS 3 to all business combinations with effective dates on or after 1 April 2004. The classification and accounting treatment of business combinations with effective dates prior to 1 April 2004 have not been reconsidered, and previously reported goodwill has been included on the basis of its deemed cost. 2.2 Property, plant and equipment IAS 16 - Property, Plant and Equipment ("IAS 16") differs in certain respects from the previous South African Generally Accepted Accounting Practice ("SA GAAP") equivalent, AC 123 - Property, plant and equipment ("AC 123"), applied by the group until 30 June 2005. IAS 16 requires an entity to measure the residual value of an item of property, plant and equipment as the amount the entity estimates it would receive currently for the asset as if the asset was already of the age and in the condition it is expected to be at the end of its useful life. The group has previously, under SA GAAP, accounted for residual values based on the approach adopted in terms of the requirements of AC 123. Where components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. Residual values and useful lives of all assets are reassessed annually. In addition, depreciation of an item of property, plant and equipment commences when it is available for use and ceases at the earlier of the date it is classified as held for sale or the date that it is derecognised. The group has assessed the useful lives and residual values of all individual components of property, plant and equipment and adjusted the carrying value of those assets at the date of transition accordingly. The adjustments to the residual values and useful lives of certain items of property, plant and equipment and the corresponding change in their carrying values at 1 July 2004 has also impacted depreciation charges subsequent to 1 July 2004. The group has elected, in terms of IFRS 1, to measure certain items of property, plant and equipment at the transition date to IFRS at their respective fair values, and used those fair values as the deemed cost at that date. The group adjusted the carrying values of the individual items of property, plant and equipment for those specified items to which the exemption was applied. Changes in estimated decommissioning and restoration liabilities that occurred before the transition date to IFRS have also been adjusted at the transition date on a net basis, in accordance with the provisions of IFRIC 1 and the applicable exemptions under IFRS 1. 2.3 Share-based payment transactions The fair value of share options under employee share incentive schemes and other equity instruments granted to group employees is recognised as an employee expense, with a corresponding increase in equity. The fair value is measured at grant date and expensed over the period during which the employee becomes unconditionally entitled to the equity instruments. The fair value of the instruments granted is measured using generally accepted valuation techniques, taking into account the terms and conditions upon which the instruments are granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest, except where forfeiture is only due to performance conditions not being met. This accounting policy has been applied to all equity instruments granted after 7 November 2002 that had not yet vested at 1 January 2005. The fair value of share-based payments was not recognised under the group"s previous accounting policies. 2.4 Black economic empowerment transactions Share-based payments The group is applying the scope of IFRS 2 - Share-based Payments, to include the group"s Black economic ownership initiatives in accordance with international interpretations in this regard. Where goods or services are received from Black economic empowerment partners as consideration for equity instruments of the group, these transactions are accounted for in terms of IFRS 2. This accounting policy is applicable to equity instruments that had not yet vested by 1 January 2005, and thus had no application in the current period. 2.5 Foreign operations The group has elected, in terms of IFRS 1, that cumulative foreign currency translation reserves in existence at the transition date, 1 July 2004, arising from the previous application of SA GAAP, have been recognised in retained income in determining the opening IFRS balance sheet at that date. 2.6 Designation of previously recognised financial instruments The group has also elected, in terms of IFRS 1, to designate certain financial liabilities previously recognised at amortised cost to fair value through profit and loss. The rationale for the designation was to eliminate an accounting mismatch arising from measuring related assets and liabilities and recognising gains and losses on different bases. 2.7 Common control transactions - premia and discounts arising on subsequent purchases from or sales to minority interests in subsidiaries Following the presentation of minority interests in equity, any increases and decreases in ownership interests in subsidiaries without a change in control, are recognised as equity transactions in the consolidated financial statements. Accordingly, any premia or discounts on subsequent purchases of equity instruments from or sales of equity instruments to minority interests are recognised directly in the equity of the parent shareholder. Previously, premia on subsequent purchases of equity instruments from minorities were recognised as goodwill and premia or discounts on subsequent disposal of equity instruments to minorities were taken to income as a capital item in the income statement. 2.8 Earnings per share - cumulative preference shares In order to calculate earnings per share, the after-tax amount of preference dividends for cumulative preference shares accrued for that period, whether or not declared, is deducted from profit attributable to equity holders in determining earnings per share. The amount of preference dividends for the period used to calculate earnings per share does not include the amount of any preference dividends for cumulative preference shares paid or declared during the current period, in respect of previous periods. 2.9 Capital items Capital items are defined as items of income and expenditure relating to the acquisition, disposal or impairment of investments, businesses, property, plant and equipment and intangible assets, closure of businesses, as well as the impairment of goodwill. 3. RECONCILIATION BETWEEN IFRS, PREVIOUS SOUTH AFRICAN GENERALLY ACCEPTED ACCOUNTING PRACTICE AND OTHER RESTATEMENTS 3.1 SIC 12 - Transaction recognition criteria In circumstances where equity in a subsidiary or associate company is disposed and serves as security for the funding of the proceeds receivable, the accounting recognition of the disposal of such shares in the group financial statements is deferred until the funding subject to the security of the equity sold has been fully repaid. In previous years, such transactions were recognised upon entering into the respective sale agreements. The comparative results and financial position have been restated accordingly. 3.2 SAICA circular 9/2006 - Transactions giving rise to adjustments to Revenue/Purchases Previously, the group had accounted for certain rebates received and settlement discounts granted as income and expense in the income statement. In terms of Circular 9/2006 issued by the South African Institute of Chartered Accountants, these rebates received and settlement discounts granted need to be set off against turnover and cost of sales and, where applicable, estimated at the date the related asset is recognised and capitalised to cost of the asset. As a result, the revenue and cost of sales in the comparative financial statements have been restated to reflect the net turnover or cost of sale and, where applicable, the income recognised has been reversed against the cost of the asset and the depreciation charged for the prior year decreased. The following reconciliations provide a quantification of the effect, after taxation, of the transition to IFRS: Reconciliation of equity 1 July 2004 30 June 2005 R"000 R"000 Equity previously recognised under SA GAAP 6 489 847 10 193 882 Retrospective application of previous SA GAAP accounting policy changes and restatements (366 373) Black Economic Empowerment minorities in subsidiary eliminated pending derecognition criteria (31 983) Impairment losses adjusted for (16 408) Cash discounts, rebates and extended payment terms (2 081) Derecognition of minorities on consolidation of BEE entity (315 901) Adjustment upon adoption of IFRS 16 463 (113 408) Business combinations adjusted retrospective to 1 April 2004 - IFRS 3/IFRS 1 66 617 (97 925) Property, plant and equipment - IAS 16/IFRS 1 (54 516) (28 768) Share-based payments - IFRS 2/IFRS 1 4 362 13 641 Re-designation of financial instruments to fair value through income statement - IAS 39/IFRS 1 (356) Equity reported under IFRS 6 506 310 9 714 101 Reconciliation of profit for the period ended 30 June 2005 30 June 2005 R"000 Profit for the period attributable to equity holders of the parent previously reported under SA GAAP 1 591 555 Retrospective application of previous SA GAAP accounting policy changes and restatements (26 203) Impairment losses adjusted for (16 408) Cash discounts, rebates and extended payment terms (2 081) Derecognition of minorities on consolidation of BEE equity (7 714) Adjustment upon adoption of IFRS (20 354) Business combinations adjusted retrospective to 1 April 2004 - IFRS 3/IFRS 1 1 404 Property, plant and equipment - IAS 16/IFRS 1 11 817 Share based payments - IFRS 2/IFRS 1 (33 164) Re-designation of financial instruments to fair value through income statement - IAS 39/IFRS 1 (411) Profit for the period attributable to equity holders of the parent previously reported under IFRS 1 544 998 The prior year restatements reduced basic earnings per share as previously reported from 141 cents to 137 cents per share. 4. Financial statements This set of summarised consolidated financial statements are presented in compliance with IAS 34 - Interim Financial Reporting. The consolidated financial statements for the year have been audited by Deloitte & Touche and their accompanying unmodified audit report as well as their unmodified audit report on this set of summarised financial information is available for inspection at the company"s registered office. Full details of the group"s business combinations for the year, additions and disposals of property, plant and equipment as well as commitments and contingencies are included in the group"s consolidated financial statements. COMMENTARY REVIEW OF RESULTS The group"s strategic positioning of its operations globally has yet again delivered the desired result. The business model of geographically spread operations and accompanying strategies of supply chain participation through vertical integration is the platform from which sustainable growth is being delivered. The group"s manufacturing and sourcing operations benefited from its investment in an expanded retail base. Despite challenging market conditions outside South Africa, the extension of the group"s retail distribution base is poised to deliver sustainable benefits in the future. Trading conditions in Continental Europe remain competitive, notwithstanding moderate signs of recovery. The consolidation trend in these markets continues and the group is well-positioned to exploit these through market coverage in terms of variety of product and price points, as well as sourcing networks. The investments in developing and acquiring brands have benefited both the group and its strategic retail partners via exclusivity agreements. The Polish and Hungarian operations performed well. The Benelux region, through its accelerated rollout of the Henders & Hazel concept, has shown a satisfying improvement in profitability towards the latter part of the financial year. It is anticipated that this concept will enable the Benelux operations to continue to grow under this new business model, which should contribute to improved performance in the years ahead. In addition to growth in existing markets, the group continues to pursue and secure new markets. In the year under review the group secured new sustainable supply agreements in Scandinavia, France and the Far East as a result of its geographic reach and position as a preferred supplier to leading retailers in those markets. In the United Kingdom ("UK"), the group should continue to benefit from its investment in Homestyle. Despite difficult trading conditions but following decisive restructuring actions, Homestyle is now well positioned to grow. Its operating profitability already improved in the last six months of the financial year. The commercial relationship with Steinhoff, as a significant supplier to Homestyle, has exceeded initial expectations and benefited the group through incremental business gained from this retail distribution base. Steinhoff"s UK manufacturing businesses delivered a strong performance and are well positioned for significant growth. Consumer confidence and spending patterns in the Pacific Rim region were subdued, with the furniture retail market in Australia and New Zealand remaining static during the year under review. Focused re-branding initiatives, the development and store rollouts of the new brand, BayLeatherRepublic, and store format conversions, are showing signs of improved performance. The International Sourcing division in China continued to perform well, and is rapidly becoming a key contributor to the continued success of the divisions it serves within the group. South Africa"s household goods sector continued to experience strong demand and Steinhoff Africa"s Furniture division performed particularly well due to its positioning to take advantage of increased consumer spending and a wider consumer base. The increases in fuel prices and the continued high consumer spending and its accompanying inflationary impact has resulted in interest rate hikes. This may cause a slowdown in the buoyant market conditions which prevailed in respect of household goods. In order to address these effects, actions have been implemented in all of the southern African operations to remain competitive, whilst maintaining profitable growth. PG Bison, once again delivered record results. All Steinhoff"s Timber interests have now been rebranded under the successful PG Bison brand. This resulted in an expanded integrated value chain, stretching from the plantations to value-added products supplied directly to the end consumer. The Raw Material division experienced tough trading conditions as a result of import competition. The Textile division was repositioned during the year to improve future contribution. The consistently sound operating performance delivered by Unitrans, vindicates the group"s investment therein. The average exchange rate used for converting euro income and expenditure to ZAR was R7,8196 : 1 euro compared to R7,9091 : 1 euro in respect of the previous financial year. Performance The group"s revenues increased by 70% from R18 958 million to R32 238 million. A substantial portion of this increase was attributable to the first-time consolidation of the full-year results of Unitrans (2005: 6 months) and Homestyle, that became subsidiaries with effect from January 2005 and July 2005, respectively. The group generated 46% (2005: 52%) of its revenues in currencies other than South African rand, principally euro, pound sterling and Australian dollar. The impact of the inclusion of Homestyle as a subsidiary on the proportionate contribution of foreign currency-denominated revenue, was reduced by the full- year inclusion of Unitrans. However, if Unitrans" motor retail business is excluded, the foreign currency-denominated revenue of the group comprises 67% (2005: 67%). The actual foreign revenue achieved in currencies other than South African rand, denominated in euro, increased by 61% from euro 1 138 million to euro 1 830 million. Headline earnings attributable to ordinary shareholders increased by 26% from R1 557 million in the year ended 30 June 2005 to R1 959 million. Headline earnings per ordinary share increased by 25% to 173 cents (2005: 138 cents) with basic earnings per ordinary share improving 21% to 166 cents (2005: 137 cents). The weighted average number of ordinary shares in issue was 1 133,3 million (2005: 1 128,1 million). Ordinary shareholders" funds at 30 June 2006 amounted to R10 873 million (30 June 2005: R8 187 million). The return on average ordinary shareholders" funds was stable at 21%. The net asset value per ordinary share grew to 953 cents from 724 cents per share as at 30 June 2005. This increase is stated after accounting for the equity portion of R221 million of the convertible bond referred to under Corporate Activity. The group"s cash flow from operations was R3 305 million (2005: R1 449 million). Cash generation is calculated after taking account of the net increase in working capital of R45 million (2005: R991 million). Net cash flow from operating activities (as adjusted for dividends and capital distributions paid) is 237 cents per share (2005: 95 cents per share) and exceeded headline earnings per share at 173 cents, confirming the group"s quality of earnings. Positive cash generation was achieved through good working capital management, containing inventory and debtor levels, notwithstanding the substantial increase in activity levels. The group"s operating margin decreased, as expected, to 11,3% (2005: 12,5%) excluding, for comparative purposes, the lower margins of the motor retail business of Unitrans. The decreased margin is attributable to the inclusion of Homestyle and the retail operations in the Pacific Rim, which, collectively, as a result of continued tough trading conditions in the UK and Australasia, made a lower proportionate contribution to group operating profits. The continued improvement and growth in the retail trading results is anticipated to impact favourably on margins. The group continues to benefit from improved efficiencies throughout the supply chain and the group"s favourable terms of supply of finished products for resale. Margins should also improve once the current process of integrating and rationalising activities in the Pacific Rim, notably in respect of the logistics function, have been completed. Net finance expense for the year rose to R291 million (2005: R193 million) in line with the expanded group operations and the funding costs incurred on the acquisition of Homestyle, and the bank facilities assumed with the acquisition of Steinhoff Asia Pacific in January 2006. At 30 June 2006, Steinhoff had net interest-bearing debt of R3 566 million (30 June 2005: R1 894 million) resulting in a debt: equity ratio of 30% (30 June 2005: 21%), well within the group"s targeted debt : equity range. The group"s permanent capital base was strengthened by the net proceeds of R378 million from the issue of perpetual preference shares. The group"s taxation charge increased to R428 million (2005: R213 million). The resultant higher average tax rate was attributable mainly to Unitrans" higher tax rate and Homestyle"s tax losses. Given the prospects of Homestyle and likely further favourable tax incentives in respect of exports from Eastern Europe, management remains satisfied with a favourable sustainable average tax rate of 15% anticipated for the 2007 financial year. The wholesale, distribution and retail segment of the business now comprises 71% (2005: 51%) of Steinhoff"s group revenues and it is anticipated that this segment will be further expanded to facilitate increased participation through additional added value segments of the supply chain. Corporate activity In addition to the corporate transactions detailed in Steinhoff"s interim results announcement (8 March 2006), and those concluded by Unitrans and reported on in its own results announcement (23 August 2006), the group concluded the following corporate transactions during the year under review: - with effect from January 2006 Steinhoff, through one of its European subsidiaries, acquired the remaining issued ordinary share capital held by the management in the retail operations conducted through Steinhoff Asia Pacific (Pty) Limited (formerly Bravoscar Nominees (Pty) Limited) in Australia and New Zealand. The purchase consideration was settled by the assumption of debt in Steinhoff Asia Pacific and the issue of Steinhoff shares, which are subject to certain "lock-in" arrangements with the management concerned; - on 30 June 2006 Steinhoff issued a seven-year rand-denominated convertible bond ("the Bond") to raise R1,5 billion (before expenses). The Bond bears interest six-monthly at a fixed rate of 5,7% p.a. and is convertible into 54,74 million Steinhoff ordinary shares at an issue price of 2 740 cents per share (representing a conversion premium of 32,5% to the prevailing underlying share price at the date of pricing). The Bond was issued exclusively to international investors and is listed on the Singapore Stock Exchange. The net proceeds from the Bond are earmarked for investment in the North-Eastern Cape Forestry project ("NECF") which is currently being developed by PG Bison at an estimated cost of R1,5 billion; - during the year Steinhoff continued to participate in the funding the expansions in the European Community of Poco International, it"s strategic retail partner in that region; and - Steinhoff Investment Holdings Limited issued a further tranche of variable rate, cumulative, non-redeemable, non-participating preference shares. Outlook The restructuring of Homestyle continues. It will provide a sound base from which its turnaround in the latter half of the year under review is expected to continue to deliver substantial growth in operating profits. As a result, the balance of the group"s operations in the UK, Eastern Europe and Pacific Rim also stand to further benefit from their trading relationships with Homestyle. In the German region, the group continues to grow through its existing brand and product strategy, and relationships with major retailers, mail order companies and buying groups. The new Esprit product range has been successful with 120 studios already opened, and further rollout planned. The group continues to investigate opportunities for brand expansion, through own brand development and acquisitions. The German economy is showing moderate signs of recovery and increased consumer confidence. The level of order books in respect of the group"s main product categories and new ranges is growing. The successful Henders & Hazel store-in-store concept of our Benelux operations is being extended to other European destinations. Steinhoff International Sourcing in China will increasingly contribute to the success of the divisions it serves, in particular the UK region, Australasia, the German region and South Africa. The sourcing base is being expanded to increase the group"s supplier base. Initiatives are well advanced to improve the logistics and distribution function to provide a more efficient service to the group. In respect of Australia, project "Renew" (the repositioning of the existing Freedom brand) and new store openings under the BayLeatherRepublic brand, all bode well for improved performance in the current financial year and thereafter. The South African retail sector is expected to become more competitive as a result of the macro-economic factors impacting on consumer confidence and disposable income. The combination of the timber interests and their rebranding under PG Bison is expected to deliver sustained growth in the years to come. PG Bison"s NECF particleboard project is well under way and is expected to be commissioned in January 2008, which will add capacity of 1 000 m3 of particle board per day. This will further strengthen and improve PG Bison"s competitive position in respect of import replacement and the anticipated continued high level of demand in the structural industry. The acquisition by Unitrans of Concorde Logistics and TechXpress provides a base for Unitrans" international expansion, and these acquisitions will assist in exploiting synergies within the larger Steinhoff group. It is anticipated that Unitrans will deliver a satisfactory performance in the current financial year. Management expects to achieve growth in headline earnings from continuing operations for the current financial year. On behalf of the board of directors BE Steinhoff MJ Jooste Executive chairman Chief executive officer 11 September 2006 Distribution from share premium account Notice is hereby given that, in accordance with the authority granted to the directors of the company in terms of Article 56A of the company"s articles of association and the resolution passed at the annual general meeting of the company held on 25 November 2005, a cash distribution from share premium (in lieu of a dividend) of 37,5 cents per share (2005: 30 cents per share) has been declared and is payable to shareholders recorded in the books of the company at the close of business on Friday, 10 November 2006 ("the capital distribution"). The salient dates of this distribution are: 2006 Last date to trade cum capital distribution Friday, 3 November Shares trade ex capital distribution Monday, 6 November Record date Friday, 10 November Payment date Monday, 13 November On Monday, 13 November 2006, the capital distribution will be electronically transferred to the bank accounts of certificated shareholders who utilise this facility. In all other instances of certificated holders, cheques dated 13 November 2006 will be posted on or about that date. Shareholders who have dematerialised their shares will have their accounts credited on 13 November 2006. In terms of the Companies Act, the directors confirm that, after the payment of the capital distribution, the company will be able to pay its debts as they become due in the ordinary course of business and its consolidated assets, fairly valued, will exceed its consolidated liabilities. Annual report The annual report will be mailed to shareholders in due course. The annual general meeting is scheduled to take place on Monday, 4 December 2006, at the registered office of the company, at 08:00. By order of the board SJ Grobler Company secretary 11 September 2006 For more detail on the group"s listed investments, shareholders are referred to the following results announcements and financial information: - Unitrans Limited - 23 August 2006 www.unitrans.co.za - Homestyle Group plc - 31 August 2006 www.homestylegroup.com - Amalgamated Appliance Holdings Limited - 22 August 2006 www.amap.co.za - KAP International Holdings Limited - 11 September 2006 www.kapinternational.com STEINHOFF INVESTMENT HOLDINGS LIMITED (Incorporated in the Republic of South Africa) (Registration number: 1954/001893/06) (JSE code: SHFF) (ISIN: ZAE000068367) ("Steinhoff Investments") Steinhoff Investments is a wholly owned subsidiary of Steinhoff International Holdings Limited (Steinhoff) except for the variable rate, cumulative, non- redeemable, non-participating preference shares with a par value of 0,1 cent each in the capital of Steinhoff Investments, issued at a premium of R99,99 per share (the preference shares). Steinhoff Investments holds the entire issued share capital in the group"s two principal subsidiaries, Steinhoff Mbel Holdings Alpha GmbH and Steinhoff Africa Holdings (Proprietary) Limited. Preference shareholders are referred to the above results of Steinhoff for a full appreciation of the consolidated results and financial position of Steinhoff Investments. Declaration of dividend number 2 to preference shareholders The board of Steinhoff Investments has resolved to declare a dividend of 392 cents per preference share in respect of the period from 1 January 2006 up to and including 30 June 2006 (the dividend period), payable on Monday, 23 October 2006, to those preference shareholders recorded in the books of the company at the close of business on Friday, 20 October 2006. 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 October 2006 Shares trade ex dividend Monday, 16 October 2006 Record date Friday, 20 October 2006 Payment date Monday, 23 October 2006 No dematerialisation or rematerialisation of preference shares may take place between Monday, 16 October 2006 and Friday, 20 October 2006, both dates inclusive. On Monday, 23 October 2006, 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 October 2006 will be posted on or about that date. Preference shareholders who have dematerialised their shares will have their accounts credited on Monday, 23 October 2006. On behalf of the board of directors D Konar JHN van der Merwe Non-executive director Executive director 11 September 2006 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. DIRECTORATE During the year under review the composition of our board has had certain changes and the board has resolved that the board"s committees (save for Exco) effective from date of this announcement, will only comprise non-executive directors. Changes which occurred during the period under review related to the resignation from the group of RH Walker and the appointment of IM Topping, managing director of Steinhoff"s UK operations, to the board. In addition JNS du Plessis was reclassified from non-executive to executive and now acts as alternate director, and the board was further strengthened with the appointment of HJK Ferreira and SJ Grobler as alternate directors. 3. 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 in terms of initiatives embarked upon that contribute to broader skills development and sourcing appropriately qualified staff on an ongoing basis. 4. RELATED-PARTY TRANSACTIONS The company entered into various related-party transactions. These transactions are no less favourable than those arranged with third parties. 5. SUBSEQUENT EVENTS No significant events have occurred in the period between the reporting date and the date of this report. 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 Grov, 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: 11/09/2006 04:49:52 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department

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