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SHF - Steinhoff International Holdings Limited - Unaudited interim results

Release Date: 06/03/2012 14:00
Code(s): SHF SHFF
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SHF - Steinhoff International Holdings Limited - Unaudited interim results for the six months ended 31 December 2011 Steinhoff International Holdings Limited Registration number: 1998/003951/06 (Incorporated in the Republic of South Africa) ("Steinhoff" or "the company" or "the group") JSE share code: SHF ISIN code: ZAE000016176 Unaudited interim results for the six months ended 31 December 2011 - Headline earnings attributable to ordinary shareholders R2 761m (1H11: R1 630m) Increased by 69% - Headline earnings per share 166.5 cps (1H11: 112.8 cps) Increased by 48% - Operating profit R3 699m (1H11: R2 323m) Increased by 59% - Cash generated from operations R3 136m (1H11: R1 901m) Increased by 65% Condensed consolidated income statement Notes Six Six % Year
months months change ended ended ended 30 June 31 Dec 31 Dec 2011 2011 2010* Audited
Unaudited Unaudited Rm Rm Rm Revenue 37 645 16 857 123 43 040 Operating profit before 4 475 2 772 61 6 497 depreciation and capital items Depreciation (776) (449) (1 073) Operating profit before 3 699 2 323 59 5 424 capital items Capital items 1 (5) 4 (64) Earnings before interest, 3 694 2 327 59 5 360 dividend income, associate earnings and taxation Net finance charges (585) (441) (1 175) Dividend income 3 - 13 Share of profit of 236 24 55 associate companies Profit before taxation 3 348 1 910 75 4 253 Taxation (315) (209) (435) Profit for the period from 3 033 1 701 78 3 818 continuing operations Profit for the period from - 103 1 526 discontinued operations Profit for the period 3 033 1 804 68 5 344 Attributable to: Owners of the parent 2 907 1 668 74 5 136 Non-controlling interests 126 136 208 Profit for the period 3 033 1 804 68 5 344 From continuing operations: Headline earnings per 166.5 106.1 57 239.9 ordinary share (cents) Fully diluted headline 150.5 102.2 47 225.8 earnings per ordinary share (cents) Basic earnings per ordinary 166.3 106.4 56 237.0 share (cents) Fully diluted earnings per 150.3 102.4 47 223.4 ordinary share (cents) From continuing and discontinued operations: Headline earnings per 166.5 112.8 48 257.7 ordinary share (cents) Fully diluted headline 150.5 108.1 39 240.5 earnings per ordinary share (cents) Basic earnings per ordinary 166.3 112.6 48 341.3 share (cents) Fully diluted earnings per 150.3 108.0 39 309.6 ordinary share (cents) Number of ordinary shares 1 723 1 470 17 1 641 in issue (m) Weighted average number of 1 658 1 446 15 1 461 ordinary shares in issue (m) Earnings attributable to 2 2 757 1 628 69 4 986 ordinary shareholders (Rm) Headline earnings 3 2 761 1 630 69 3 766 attributable to ordinary shareholders (Rm) Average currency 10.5137 9.4495 11 9.5644 translation rate (rand:euro) The capitalisation share award on 5 December 2011 led to the restatement of comparative per share numbers, none of which resulted in a deviation of more than 1.6 cents. * The prior period figures have been re-presented to reflect discontinued operations. Additional information Six Six Year months months ended ended ended 30 June 31 Dec 31 Dec 2011
2011 2010* Audited Unaudited Unaudited Rm Rm Rm Note 1: Capital items From continuing operations: Loss on disposal of property, plant and (1) (2) (62) equipment Loss on disposal of investment property (4) - - Profit on disposal of investments and - 4 99 associate companies Reversal of impairments/(impairments) - 2 (101) (5) 4 (64)
From discontinued operations: Impairments - - (12) Loss on scrapping of vehicle rental fleet - (3) (10) Loss on disposal of investments and - (2) (27) associate companies Loss on disposal of property, plant and - - (6) equipment Profit on disposal of discontinued - - 1 285 operations (5) (1) 1 166 Note 2: Earnings attributable to ordinary shareholders Earnings attributable to owners 2 907 1 668 5 136 Dividend entitlement on non-redeemable (150) (40) (150) cumulative preference shares 2 757 1 628 4 986 Note 3: Headline earnings attributable to ordinary shareholders Earnings attributable to owners of the 2 907 1 668 5 136 parent Adjusted for: Capital items (note 1) 5 1 (1 166) Taxation effects of capital items (1) 1 (54) Dividend entitlement on non-redeemable cumulative preference shares (150) (40) (150) 2 761 1 630 3 766
* The prior period figures have been re-presented to reflect discontinued operations. Condensed consolidated statement of cash flows Six Six Year
months months ended ended ended 30 June 31 Dec 31 Dec 2011 2011 2010 Audited
Unaudited Unaudited Rm Rm Rm Cash generated before working capital 4 552 2 965 6 943 changes Increase in inventories (1 082) (792) (827) Increase in receivables (1 037) (58) (151) Increase/(decrease) in payables 703 (214) 1 237 Changes in working capital (1 416) (1 064) 259 Cash generated from operations 3 136 1 901 7 202 Net finance costs (446) (271) (860) Dividends paid (40) (73) (106) Dividends received 88 - 13 Taxation paid (326) (196) (573) Net cash inflow from operating activities 2 412 1 361 5 676 Net cash outflow from investing activities (3 415) (1 928) (15 100) Net cash inflow from financing activities 570 964 10 307 Net (decrease)/increase in cash and cash (433) 397 883 equivalents Effects of exchange rate changes on cash 329 (257) 317 and cash equivalents Cash and cash equivalents at beginning of 6 321 5 121 5 121 period Cash and cash equivalents at end of period 6 217 5 261 6 321 Condensed consolidated statement of financial position 31 Dec 31 Dec 30 June 2011 2010 2011 Unaudited Unaudited Audited Rm Rm Rm
Assets Non-current assets Intangible assets and goodwill 38 675 16 939 35 930 Property, plant and equipment, investment 32 240 15 014 29 696 properties and biological assets Investments in associate companies 4 765 924 4 274 Investments and loans 5 835 3 957 4 429 Deferred taxation assets 432 633 420 Other long-term assets 94 65 - 82 041 37 532 74 749 Current assets Inventories 10 248 5 095 8 813 Accounts receivable, short-term loans and 13 306 10 083 11 036 other current assets Cash and cash equivalents 6 217 5 261 6 321 29 771 20 439 26 170 Total assets 111 812 57 971 100 919 Equity and liabilities Capital and reserves Ordinary share capital and reserves 38 749 23 963 33 749 Preference share capital 4 056 1 092 4 056 42 805 25 055 37 805
Non-controlling interests 3 331 2 662 3 025 Total equity 46 136 27 717 40 830 Non-current liabilities Interest-bearing long-term liabilities 27 360 15 958 26 112 Deferred taxation liabilities 6 899 2 634 6 420 Other long-term liabilities and provisions 2 969 528 2 916 37 228 19 120 35 448
Current liabilities Accounts payable, provisions and other 21 686 8 677 20 254 current liabilities Interest-bearing short-term liabilities 4 684 1 704 1 978 Bank overdrafts and short-term facilities 2 078 753 2 409 28 448 11 134 24 641 Total equity and liabilities 111 812 57 971 100 919 Net asset value per ordinary share (cents) 2 249 1 631 2 056 Net gearing ratio (%) 45 30 46 Closing exchange rate (rand:euro) 10.5023 8.8843 9.8654 Condensed consolidated statement of comprehensive income Six Six Year months months ended ended ended 30 June 31 Dec 31 Dec 2011
2011 2010 Audited Unaudited Unaudited Rm Rm Rm Profit for the period 3 033 1 804 5 344 Other comprehensive income/(loss) Actuarial (loss)/gain on defined benefit (32) (1) 47 plans Exchange differences on translation of 1 566 (1 508) 1 392 foreign subsidiaries Net value gain/(loss) on cash flow hedges 162 (9) (32) and other fair value reserves Deferred taxation (36) 2 3 Other comprehensive income/(loss) for the 1 660 (1 516) 1 410 period, net of taxation Total comprehensive income for the period 4 693 288 6 754 Total comprehensive income attributable to: Owners of the parent 4 378 294 6 406 Non-controlling interests 315 (6) 348 Total comprehensive income for the period 4 693 288 6 754 Condensed consolidated statement of changes in equity Six Six Year months months ended ended ended 30 June
31 Dec 31 Dec 2011 2011 2010 Audited Unaudited Unaudited Rm Rm Rm
Balance at beginning of the period 40 830 27 061 27 061 Changes in ordinary share capital and share premium Capital distribution (1 311) (1 178) (1 178) Net shares issued 1 948 996 3 938 Net utilisation of treasury shares - 352 167 (Loss)/profit on treasury share - (22) 153 transactions net of capital gains taxation Treasury shares eliminated on disposal of - - 471 subsidiaries Changes in preference share capital and share premium Net shares issued - - 2 964 Proceeds on disposal of treasury shares - 50 50 Changes in reserves Total comprehensive income for the period 4 378 294 6 406 attributable to owners of the parent Equity portion of convertible bonds issued - 185 570 net of deferred taxation Preference dividends (37) (41) (89) Share-based payments 16 59 58 Premium on acquisition of non-controlling - - (74) interests Other reserve movements 6 (5) 4 Changes in non-controlling interests Total comprehensive income/(loss) for the 315 (6) 348 period attributable to non-controlling interests Dividends and capital distributions paid (2) (25) (24) Other transactions with non-controlling (7) (3) 5 interests Balance at end of the period 46 136 27 717 40 830 Comprising: Ordinary share capital and share premium 9 111 5 071 8 474 Preference share capital and share premium 4 056 1 092 4 056 Distributable reserves 27 146 20 843 24 271 Actuarial gains reserve 16 4 45 Cash flow hedging and other fair value 94 (15) (29) reserves Convertible and redeemable bonds reserve 923 538 923 Foreign currency translation reserve 936 (3 060) (441) Share-based payment reserve 608 593 592 Other reserves (85) (11) (86) Non-controlling interests 3 331 2 662 3 025 46 136 27 717 40 830 Segmental analysis Six Six % Year months months change ended
ended ended 30 June 31 Dec 31 Dec 2011 2011 2010* Audited Unaudited Unaudited Rm
Rm Rm Revenue Retail activities - household 28 094 8 599 227 25 822 goods Manufacturing and sourcing of 13 049 10 960 19 21 017 household goods and related raw materials Logistics services 4 075 3 398 20 7 050 Corporate services - Brand management 196 167 17 341 - Investment participation 256 173 48 433 - Central treasury, properties and 150 143 5 449 other activities 45 820 23 440 95 55 112 Intersegment revenue eliminations (8 175) (6 583) (12 072) 37 645 16 857 123 43 040
Operating profit before capital items Retail activities - household 1 860 625 198 1 554 goods Manufacturing and sourcing of 1 172 1 079 9 2 466 household goods and related raw materials Logistics services 489 422 16 835 Corporate services - Brand management 196 167 17 341 - Investment participation 256 173 48 433 - Central treasury, properties and 135 196 (31) 507 other activities 4 108 2 662 54 6 136 Intersegment profit eliminations (409) (339) (712) 3 699 2 323 59 5 424
31 Dec % 31 Dec % 30 June % 2011 2010 2011 Unaudited Unaudited Audited Rm Rm Rm
Total assets Retail activities - Household goods and 63 338 65 19 221 39 57 100 65 building supplies - Automotive - - 2 928 6 - - Manufacturing and sourcing 16 203 17 12 333 25 14 631 17 of household goods and related raw materials Logistics services 7 976 8 7 522 15 7 560 8 Corporate services - Brand management 4 663 5 3 834 8 4 447 5 - Investment participation 3 205 3 2 566 5 2 867 3 - Central treasury, 1 713 2 1 114 2 1 669 2 properties and other activities 97 098 100 49 518 100 88 274 100
Reconciliation of total assets per statement of financial position to total assets per segmental analysis 31 Dec 31 Dec 30 June 2011 2010 2011
Unaudited Unaudited Audited Rm Rm Rm Total assets per statement of financial 111 812 57 971 100 919 position Less: Cash and cash equivalents (6 217) (5 261) (6 321) Less: Investments in associate companies (4 765) (924) (4 274) Less: Investment in preference shares (329) (257) (313) Less: Investment in PSG Group Limited (971) - - Less: Interest-bearing short-term loans (2 302) (1 767) (1 495) receivable Less: Interest-bearing long-term loans (130) (244) (242) receivable Total assets per segmental analysis 97 098 49 518 88 274 Geographical information Six % Six % Year % months months ended
ended ended 30 June 31 Dec 31 Dec 2011 2011 2010* Audited Unaudited Unaudited Rm
Rm Rm Revenue Continental Europe 28 342 75 7 803 46 25 825 60 Pacific Rim 1 412 4 1 241 7 2 481 6 Southern Africa 5 132 14 4 616 28 8 926 21 United Kingdom 2 759 7 3 197 19 5 808 13 37 645 100 16 857 100 43 040 100
31 Dec % 31 Dec % 30 June % 2011 2010 2011 Unaudited Unaudited Audited Rm Rm Rm
Non-current assets Continental Europe 59 227 72 19 460 52 54 256 73 Pacific Rim 1 658 2 1 412 4 1 476 2 Southern Africa 15 136 19 11 296 30 13 624 18 United Kingdom 6 020 7 5 364 14 5 393 7 82 041 100 37 532 100 74 749 100 * The prior period figures have been re-presented to reflect discontinued operations. Notice The preparation of these condensed interim financial statements has been supervised by Frikkie (FJ) Nel CA(SA), finance director of Steinhoff. Review of results Our strategic position has been strengthened through the successful integration of the Conforama acquisition in Europe and the repositioning of our African business through the investments in JD Group and KAP. Total assets per segment 65% Retail - household goods 17% Manufacturing and sourcing 8% Logistics services 10% Corporate services Revenue per geographical region 75% Continental Europe 14% Southern Africa 7% United Kingdon 4% Pacific Rim Revenue per segment 61% Retail - household goods 29% Manufacturing and sourcing 9% Logistics services 1% Corporate services Operational review: Steinhoff Europe The group reported a strong financial performance in a challenging market. This performance was supported by our resilient value proposition in our retail formats, good cost control across the group, and our ongoing focused investments in brands, product, infrastructure and properties. Retail activities: Household goods Continental Europe In sharp contrast to the macro-economic woes of Europe, our retail operations on the continent generated strong growth in revenue and profit. Conforama is reported on for the full period under review. The comparative period does not reflect any contribution from Conforama as the acquisition only became effective in March 2011. In line with the strategy to focus on margin improvement, Conforama reported good results compared to that of the previous year. A solid performance in France was complemented by growth in Switzerland and Iberia and a satisfactory performance elsewhere. Revenue was aided by tactical marketing, increased internet trading and product campaigns that drove increased in- store traffic. The increased traffic was successfully converted into sales of more profitable product ranges that, coupled with good cost control, improved margins. We continued to invest in the Conforama business by opening new stores, buying franchisee businesses and properties from which we trade. These investments bode well for the continued success of Conforama. The resilient economies in central continental Europe supported our ERM retail businesses in the German-speaking territories. Growth was further supported by the compelling in-store value proposition and new store openings. Profitability increased year-on-year as a result of the retail properties acquired by the group in the previous financial year. During the period under review, ERM opened seven new stores, all of which are trading ahead of initial expectations. United Kingdom Our focus in providing an appropriate value offering to our key target market proved to be the main contributor to the improved performance in the UK. The UK retail division outperformed the market, increased market share and profitability, despite fewer trading outlets across all brands and a subdued market. The new furniture retail management team is now well entrenched and the brand rationalisation at the bed retail division is largely complete, which has laid the foundation for a continued good performance. Pacific Rim Australian retailers that differentiate on low prices grew market share at the expense of the middle to upper-end market segments in line with the trend experienced in Europe. Our existing positioning at the higher end of the market continued to affect our trading in Freedom Australia. The bed retail division reported good growth. In New Zealand, the decision to lower prices and focus on the discount segment has had the desired outcome, and this division reported increased sales. Eastern Europe The group`s joint venture retail operations in eastern Europe have continued to be affected by the tough consumer spending conditions prevailing in these markets. The newly acquired Abra reported an improved performance in the months since our acquisition. Manufacturing and sourcing United Kingdom In line with the UK retail performance, the bedding, furniture and foam conversion manufacturing plants benefited from increased sales through the group-owned beds retail chains. While the foam conversion plant benefited further from an increased external sales demand (automotive and industrial) the furniture and mattress manufacturing plants remain more focused on increasing sales to internal and existing customers. Continental Europe The group`s trading divisions and manufacturing plants throughout the European Union and eastern Europe as well as our European logistics platform, delivered good revenue growth. As reported previously, the Conforama acquisition created some uncertainty with our manufactured products` external customer base that put some pressure on sales in the six months directly following the Conforama acquisition. It is therefore pleasing to report that the independence of our manufacturing and trading divisions has been re- established, the optimisation of our customer base completed and order books are at high levels for most divisions. In addition, the weakening of both the Polish zloty and the Hungarian forint against the euro further assisted these divisions` competitiveness. International sourcing The International sourcing division remains one of the fastest growing divisions in the group. This division delivered pleasing growth at consistent quality and service levels to its internal customer base. This team has now been expanded and strengthened with a new division that will be responsible for co-ordinating the European supply base. The new structure successfully draws on the combined skills of the existing Steinhoff International Sourcing office and that of Conforama Sourcing. Improved margins have already been achieved throughout the diverse product range. This division will concentrate on bedding down and testing the new structure for the remainder of the year, whereafter additional volume will be allowed onto the structure that will drive additional benefits and margin. Logistics services Continental Europe, United Kingdom and Pacific Rim Our drive to optimise and rationalise the logistic efforts of all our divisions throughout Europe and the Pacific Rim is performing according to plan. The group strategy and agreed plan on how to create and manage an efficient and effective Asian and European supply chain operation continues to make good progress. During the period under review, the decentralised supply chain in all countries functioned well. Cost savings have been realised, in particular on inbound shipping charges from across the globe. Operational review: Steinhoff Africa Steinhoff Africa made great strides in establishing the future strategic positioning of this group through the various transactions announced during the six months under review. Industrial assets Logistics services: Unitrans The period under review concluded with satisfying activity levels and a very busy December in virtually all divisions. Increased volumes and demand for fuel in Gauteng, Botswana, Namibia and Swaziland contributed to a good performance in the Fuel and Chemical division. The Agriculture and Mining division reported strong volumes, ahead of expectation, across the majority of our customer base. The Freight and Logistics division reported solid revenues and margins, aided by its diverse customer base and industry exposure. Unitrans Passenger reported growth from its contractual passenger transport divisions which was partly offset by an anticipated decline in demand from the tourist and commuter division. Manufacturing: Timber and raw material division Satisfactory results were reported by our timber operations, despite the tough trading environment for particle board and medium density fibre board. The current market conditions, including rand strength (that stimulates imports and inhibits exports), are expected to continue in the foreseeable future, and as such, this division will concentrate on balancing the existing plant efficiencies with additional infrastructural improvements to better compete in the current market. In the rest of the raw material division, the foam division and the bedding component business reported a satisfactory performance in a very tough and competitive market. Industrial associate holding: KAP International Holdings Limited ("KAP") (34%) KAP increased HEPS by 22% on the back of strong demand in its industrial businesses, particularly the PET Resin plant, Hosaf. Retail associate holding: JD Group Limited ("JD Group") (32%) JD Group became an associate of Steinhoff in June 2011 and as a result its results were equity accounted for the entire period under review. The group increased its holding in JD Group to 32%. JD Group performed well during the period under review and R196.1m has been included in associate earnings in respect of this investment. Financial review The results for the half-year ended 31 December 2011 included six months trading contribution of Conforama. Conforama`s results were not included in the comparative period as the business was acquired effective 1 March 2011. In addition, the results exclude the performance of the Unitrans automotive and Steinbuild businesses that now form part of JD Group. Revenue Group revenue for the period increased 123% to R37.6bn (1H11: R16.9bn). Group turnover in our continuing African operations increased by 11% to R5 132m (1H11: R4 616m), while turnover earned in currencies other than rand, as measured in euro, increased by 139% to EUR3 092m (1H11: EUR1 295m), mainly due to the first-time consolidation of Conforama in the six months under review. The group`s reporting currency (rand) weakened against the euro by 11% during the period. A total of 86% of the group`s revenue was earned in currencies other than South African rand. Growth was experienced throughout the segments as evidenced by the segmental report and explained in more detail within the operational commentary part of this report. Operating profit before capital items Operating profit increased by 59% to R3 699m (1H11: R2 323m). Retail activities: household goods contributed R1 860m (1H11: R625m) reflecting the contribution from the Conforama business but also the margin growth experienced in the European retail businesses. Operating profit from manufacturing and sourcing activities increased 9% to R1 172m (1H11: R1 079m) and logistics services contributed R489m to operating profit, a 16% increase compared to the previous period. Net finance charges Net finance charges increased by R144m to R585m, reflecting the increase in absolute debt levels as a result of the Conforama acquisition. However, due to increased trading levels as a result of the Conforama acquisition, interest cover increased from 5.3 to 6.3 times. Taxation In line with the increased activity levels and the first-time consolidation of Conforama, taxation increased by 51% to R315m (1H11: R209m). The group maintains that a 15% average tax rate is a normalised tax rate given the range of jurisdictions where we operate. Earnings per share (EPS) and headline earnings per share (HEPS) EPS increased by 56% to 166.3 cps (1H11: 106.4 cps) and increased by 48% as measured against an EPS of 112.6 cps that included discontinued operations. HEPS at 166.5 cps increased by 57% (1H11: 106.1 cps) and increased 48% as measured against the HEPS that included discontinued operations. These increases were achieved despite an increase of 15% in the weighted average number of ordinary shares in issue to 1 658m (1H11: 1 446m). The additional shares were largely due to the shares issued in part funding of the Conforama acquisition. The average translation rate increased to R10.5137:EUR1 from R9.4495:EUR1 (11% change) for the six months ended 31 December 2011. Assets The total assets of the group increased to R111.8bn (FY11: R100.9bn) which reflects the increased scale of the group after the implementation of the acquisition of Conforama, the investment in new stores, as well as the investment in the associate, JD Group. The net asset value per share increased 9% and amounted to 2 249 cps (FY11: 2 056 cps). Debt The group remains well capitalised with net debt at 31 December 2011 of R20.9bn, translating to the debt:equity ratio reducing to 45% (FY11: 46%). At 31 December 2011, the group had R6.2bn (FY11: R6.3bn) cash and cash equivalents and with confirmed unutilised facilities, is comfortable that the business is well capitalised for the medium term. Working capital In line with increased activity levels, and the peak trading period in Europe during December and January, working capital consumed increased to R1 416m (1H11: R1 064m). In addition, the group increased the furniture range available from stock (versus from order) during the peak season to boost sales and drive efficiencies through the supply chain. This tactical marketing campaign was continued in January to mitigate the delivery risk experienced in the previous year resulting from the Chinese new year slow- down. The group remains confident that the integrated supply chain model will be working capital neutral on a normalised basis. The group insures the majority of its debtors, as well as all retailers where we are exposed in terms of retail participation investments. As a result, the group did not incur any significant bad debt during the period under review. Cash flow The group`s cash flow dynamics will change from its historic performance, given the inclusion of the Conforama business. For the period under review, the group exchanged the cash contribution from the southern African retail businesses for the non-cash associate earnings of JD Group. Despite this, cash generation remained strong, with cash generated from operations of R3 136m against an operating profit of R3 699m. Taking into account this performance, and the busy trading period experienced in our European businesses in December and January, the group remains confident that current trading will continue to result in strong cash flows for the remainder of the year. Capital expenditure The group is motivated by the success of its retail offering in Europe in a fragmented but consolidating market. In the past six months, the group opened seven stores in Germany, two stores in Spain, and acquired nine previously franchisee stores that will now be trading as owned Conforama stores. Conforama also opened two Confo Deco stores. These new stores comprise 145 351 m2 and account for the majority of the expansion capital invested in the group during the period under review. Maintenance capital expenditure remains in line with the higher depreciation charge, arising from the Conforama acquisition. Corporate activity The group announced the following corporate actions during the period under the review: - On 18 October 2011, it was announced that Steinhoff concluded an agreement with KAP in terms of which KAP would acquire all of Steinhoff`s Industrial Assets, comprising its PG Bison, Unitrans and raw materials businesses ("the KAP transaction"). The KAP transaction was approved by KAP shareholders on 18 January 2012 and the only condition precedent remaining is the approval of the South African Competition Authorities. When implemented, KAP will be reconstituted as Steinhoff`s separately listed operating subsidiary, owning and operating a large industrial portfolio in southern Africa. Steinhoff`s shareholding in KAP will increase to 88% of its enlarged issued share capital following the implementation of KAP transaction, subject to the additional transaction relating to JD Group (refer below). - On 18 October 2011, it was announced that Steinhoff had procured call options and undertakings from JD Group shareholders to make a number of shares in JD Group available to Steinhoff, sufficient for Steinhoff to acquire control of JD Group on the basis of an exchange of 16 KAP shares for every JD Group share ("the JD share exchange"). The JD share exchange will be implemented by way of a partial offer to all JD Group shareholders, other than Steinhoff ("the partial offer"). Full details of the partial offer are contained in the circular dated 11 February 2012 which also contains a notice of general meeting to be held on 12 March 2012 for the purposes of approving the partial offer. If the requisite approval is obtained from JD Group shareholders at the aforesaid general meeting, the outstanding conditions precedent to this transaction will be that the KAP transaction becomes unconditional, as well as the approval of the South African Competition Authorities to the change of control of JD Group arising from the implementation of the partial offer. Steinhoff`s shareholding in JD Group will increase from 32.4% to 50.1% and its shareholding in KAP will decrease to 62%. - On 15 December 2011, it was announced that Steinhoff entered into agreements for the acquisition of a 20% shareholding in PSG Group Limited for a combination of cash and the issue of Steinhoff shares. The issue of shares by the company in terms of section 41 of the Companies Act was approved by a majority of 82% of the total votes received from Steinhoff shareholders in terms of a written resolution which closed on 27 January 2012. Outlook During the period under review, the group established the future strategic intent and positioning of its constituent businesses comprising: - Steinhoff Europe, an integrated mass market retailer of furniture and household goods, predominately serving the discount segment. - Steinhoff Africa, a diversified industrial company operating in the logistics, integrated timber and industrial raw materials sectors, including our associate investment in KAP, which on implementation of the KAP transaction will become a listed subsidiary of Steinhoff. - Associate company, JD Group, an emerging market retailer of furniture and household goods, motor vehicles and DIY products, supported by a consumer finance business. On implementation of the partial offer, JD Group will become a listed subsidiary of Steinhoff. - Associate investment in PSG Group, an investment holding company invested in a variety of complementary assets at various stages of development and maturity. - A property portfolio comprising commercial, industrial and retail real estate assets throughout the jurisdictions where we operate. The directors are confident that the above repositioning establishes the base that will provide focus from which the separate operating units will continue to deliver sustainable earnings growth. Len Konar Markus Jooste Independent chairman Chief executive officer 6 March 2012 Selected explanatory notes Statement of compliance The consolidated interim financial information for the six months ended 31 December 2011 has been prepared in accordance with International Financial Reporting Standards (IFRS), the AC 500 standards as issued by the Accounting Practices Board and the interpretations adopted by the International Accounting Standards Board (IASB). This set of condensed interim financial statements are presented in compliance with IAS 34 - Interim Financial Reporting and should be read in conjunction with the annual financial statements for the year ended 30 June 2011. Basis of preparation The condensed interim financial statements are prepared in millions of South African rand (Rm) on the historical-cost basis, except for certain assets and liabilities which are carried at amortised cost, and derivative financial instruments, available for sale financial assets and biological assets which are stated at their fair value. Accounting policies The accounting policies adopted in the preparation of the condensed interim financial information are consistent with those of the annual financial statements for the year ended 30 June 2011. For a full list of standards and interpretations which have been adopted, we refer you to our 30 June 2011 annual financial statements. During the period under review, the group adopted all the IFRS and interpretations being effective and deemed applicable to the group. None of these standards and interpretations had a material impact on the results. Other notes 1. Corporate governance Steinhoff has embraced the recommendations of the King Report on Corporate Governance and strives to provide reports to shareholders that are timely, accurate, consistent and informative. 2. Social responsibility The group remains committed to behaving in a socially responsible manner and is conscious of its responsibilities in this regard. 3. Human resources A constructive working relationship is maintained with our group employees and the relevant unions. Ongoing skills and equity activities ensure compliance with current legislation. 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. Further events No significant events have occurred in the period between the reporting date and the date of this report. For more detail on the group`s listed investments, shareholders are referred to the results and/or corporate announcements and financial information of: KAP International Holdings Limited - 6 March 2012 www.kapinternational.com, JD Group Limited - 17 February 2012 www.jdgroup.co.za and PSG Group Limited www.psggroup.co.za. Administration Registered office 28 Sixth Street, Wynberg, Sandton 2090, Republic of South Africa Tel: +27 (11) 445 3000 Fax: +27 (11) 445 3094 Directors D Konar (chairman), MJ Jooste (chief executive officer), SF Booysen, DC Brink, YZ Cuba, CE Daun*, HJK Ferreira, SJ Grobler, TLJ Guibert#, MT Lategan, JF Mouton, FJ Nel, FA Sonn, BE Steinhoff*, PDJ van den Bosch+, DM van der Merwe Alternate directors JNS du Plessis, KJ Grove, A Kruger-Steinhoff*, AB la Grange, M Nel +Belgian #French *German non-executive Company secretary Steinhoff Africa Secretarial Services (Proprietary) Limited Auditors Deloitte & Touche Sponsor PSG Capital (Proprietary) Limited Transfer secretaries Computershare Investor Services (Proprietary) Limited 70 Marshall Street Johannesburg 2001 Website www.steinhoffinternational.com To view results on mobile www.steinhoff.mobi Steinhoff Investment Holdings Limited Registration number: 1954/001893/06 (Incorporated in the Republic of South Africa) ("Steinhoff Investment") JSE share code: SHFF ISIN code: ZAE000068367 Proposed dividend to preference shareholders Preference shareholders are referred to the above results of Steinhoff for a full appreciation of the consolidated results and financial position of Steinhoff Investment. The board has recommended that a dividend of 374 cents per preference share be declared on or before 3 April 2012, in respect of the period from 1 July 2011 to and including 31 December 2011 (the dividend period), payable on Monday, 23 April 2012, to those preference shareholders recorded in the books of the company at the close of business on Friday, 20 April 2012. The dividend will be payable in the currency of South Africa. This dividend will be subject to Dividends Tax. Anticipated dates: 2012 Last date to trade cum dividend Friday, 13 April Shares trade ex dividend Monday, 16 April Record date Friday, 20 April Payment date Monday, 23 April Share certificates may not be dematerialised or rematerialised between Monday, 16 April 2012 and Friday, 20 April 2012, both days inclusive. Dividends taxation We refer to previous communications regarding the introduction of Dividends Tax. Dividends Tax will come into operation with effect from 1 April 2012 and will apply to all declarations of dividends to shareholders on or after that date. The existing terms and conditions of the preference shares do not provide for any adjustment to the dividend rate, in respect of the introduction or of changes to Dividends Tax. However, the board has decided to adjust the preference share dividend rate from 75% to 82.5% of the prime bank overdraft lending rate of Absa Bank Limited prevailing over the relevant dividend period, effective in respect of all dividends declared after date of this notice. On behalf of the board of directors. Len Konar Piet Ferreira Independent director Executive director 6 March 2012 Date: 06/03/2012 14:00:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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