Wrap Text
Audited results for the year ended 30 June 2012
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
Audited results for the year ended 30 June 2012
- Operating profit increases by 48% to R8bn
- Cash generated from operations exceeds R10bn
- Headline earnings per share (continuing operations) improves 32%
- NAV per share increases by 20%
- Distribution per share raised by 23% to 80 cents per share
Condensed consolidated income statement
Year Year
ended ended
30 June 30 June
2012 2011
Audited Audited
Notes Rm Rm % change
Revenue 80 434 43 040 87
Operating profit before depreciation,
amortisation and capital items 9 812 6 563 50
Depreciation and amortisation (1 801) (1 139)
Operating profit before capital items 8 011 5 424 48
Capital items 1 (96) (64)
Earnings before interest, dividend
income, associate earnings and taxation 7 915 5 360 48
Net finance charges (1 378) (1 175)
Dividend income 24 13
Share of profit of associate companies 345 55
Profit before taxation 6 906 4 253 62
Taxation (863) (435)
Profit for the year from continuing
operations 6 043 3 818 58
Profit for the year from discontinued
operations – 1 526
Profit for the year 6 043 5 344 13
Attributable to:
Owners of the parent 5 655 5 136 10
Non-controlling interests 388 208
Profit for the year 6 043 5 344 13
From continuing operations:
Headline earnings per ordinary share
(cents) 317.0 239.9 32
Fully diluted headline earnings per
ordinary share (cents) 288.2 225.8 28
Basic earnings per ordinary share (cents) 313.8 237.0 32
Fully diluted earnings per ordinary share
(cents) 285.7 223.4 28
From continuing and discontinued
operations:
Headline earnings per ordinary share
(cents) 317.0 257.7 23
Fully diluted headline earnings per
ordinary share (cents) 288.2 240.5 20
Basic earnings per ordinary share (cents) 313.8 341.3 (8)
Fully diluted earnings per ordinary share
(cents) 285.7 309.6 (8)
Number of ordinary shares in issue (m) 1 756 1 641 7
Weighted average number of ordinary
shares in issue (m) 1 703 1 461 17
Earnings attributable to ordinary
shareholders (Rm) 2 5 345 4 986 7
Headline earnings attributable to
ordinary shareholders (Rm) 3 5 398 3 766 43
Distribution per ordinary share (cents) 80 65 23
Average currency translation rate
(rand:euro) 10.4141 9.5644 9
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.
Additional information
Year Year
ended ended
30 June 30 June
2012 2011
Audited Audited
Rm Rm
Note 1: Capital items
From continuing operations:
Impairments (72) (101)
(Loss)/profit on disposal of investments and associate
companies (84) 99
Loss on disposal of intangible assets (1) –
Loss on disposal of property, plant and equipment (20) (62)
Loss on scrapping of vehicle rental fleet (12) –
Negative goodwill 93 –
(96) (64)
From discontinued operations:
Impairments – (12)
Loss on scrapping of vehicle rental fleet – (10)
Loss on disposal of investments and associate companies – (27)
Loss on disposal of property, plant and equipment – (6)
Profit on disposal of discontinued operations – 1 285
(96) 1 166
Note 2: Earnings attributable to ordinary shareholders
Earnings attributable to owners 5 655 5 136
Dividend entitlement on cumulative preference shares (310) (150)
5 345 4 986
Note 3: Headline earnings attributable to ordinary
shareholders
Earnings attributable to owners of the parent 5 655 5 136
Adjusted for:
Capital items (note 1) 96 (1 166)
Taxation effects of capital items (46) (54)
Non-controlling interests’ portion of capital items 3 –
Dividend entitlement on cumulative preference shares (310) (150)
5 398 3 766
Condensed consolidated statement of cash flows
Year Year
ended ended
30 June 30 June
2012 2011
Audited Audited
Rm Rm
Cash generated before working capital changes 9 748 6 943
Increase in inventories (927) (827)
Decrease/(increase) in receivables 788 (151)
Increase in payables 759 1 237
Changes in working capital 620 259
Cash generated from operations 10 368 7 202
Net movement in instalment sale and loan receivables (523) –
Dividends received 114 13
Dividends paid (339) (106)
Net finance costs (1 020) (860)
Taxation paid (771) (573)
Net cash inflow from operating activities 7 829 5 676
Net cash outflow from investing activities (9 403) (15 100)
Net cash inflow from financing activities 3 038 10 307
Net increase in cash and cash equivalents 1 464 883
Effects of exchange rate changes on cash and cash
equivalents 226 317
Cash and cash equivalents at beginning of year 6 321 5 121
Cash and cash equivalents at end of year 8 011 6 321
Condensed consolidated statement of financial position
30 June 30 June
2012 2011
Audited Audited
Rm Rm
ASSETS
Non-current assets
Intangible assets and goodwill 49 406 35 930
Property, plant and equipment, investment properties
and biological assets 37 015 29 696
Investments in associate companies 2 353 4 274
Investments and loans 884 4 429
Deferred taxation assets 697 420
Other long-term assets 166 –
90 521 74 749
Current assets
Inventories 14 794 8 813
Accounts receivable, short-term loans and other
current assets 19 736 11 036
Cash and cash equivalents 8 011 6 321
42 541 26 170
Total assets 133 062 100 919
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital and reserves 43 292 33 749
Preference share capital 3 837 4 056
47 129 37 805
Non-controlling interests 6 508 3 025
Total equity 53 637 40 830
Non-current liabilities
Interest-bearing long-term liabilities 33 858 26 112
Deferred taxation liabilities 7 765 6 420
Other long-term liabilities and provisions 3 016 2 916
44 639 35 448
Current liabilities
Accounts payable, provisions and other current
liabilities 27 558 20 254
Interest-bearing short-term liabilities 5 136 1 978
Bank overdrafts and short-term facilities 2 092 2 409
34 786 24 641
Total equity and liabilities 133 062 100 919
Net asset value per ordinary share (cents) 2 466 2 056
Net gearing ratio (%) 45 46
Closing exchange rate (rand:euro) 10.3447 9.8654
Condensed consolidated statement of comprehensive income
Year Year
ended ended
30 June 30 June
2012 2011
Audited Audited
Rm Rm
Profit for the year 6 043 5 344
Other comprehensive income/(loss)
Actuarial (loss)/gain on defined benefit plans (284) 47
Exchange differences on translation of foreign
subsidiaries 2 331 1 392
Net value gain/(loss) on cash flow hedges and
other fair value reserves 76 (32)
Deferred taxation 41 3
Other comprehensive income for the year,
net of taxation 2 164 1 410
Total comprehensive income for the year 8 207 6 754
Total comprehensive income attributable to:
Owners of the parent 7 655 6 406
Non-controlling interests 552 348
Total comprehensive income for the year 8 207 6 754
Condensed consolidated statement of changes in equity
Year Year
ended ended
30 June 30 June
2012 2011
Audited Audited
Rm Rm
Balance at beginning of the year 40 830 27 061
Changes in ordinary share capital and share premium
Capital distribution (1 311) (1 178)
Net shares issued 2 700 3 938
Net utilisation of treasury shares 18 167
Profit on treasury share transactions net of capital
gains taxation 17 153
Treasury shares eliminated on disposal of subsidiaries – 471
Changes in preference share capital and share premium
Net shares issued – 2 964
Redemption of preference shares (225) –
Proceeds on disposal of treasury shares 6 50
Changes in reserves
Total comprehensive income for the year attributable
to owners of the parent 7 655 6 406
Equity portion of convertible bond issued net
of deferred taxation 51 570
Preference dividends (349) (89)
Share-based payments 84 58
Discount/(premium) on introduction and recognition of
non-controlling interests 684 (74)
Other reserve movements (6) 4
Changes in non-controlling interests
Total comprehensive income for the year attributable
to non-controlling interests 552 348
Recognised on acquisition of subsidiaries 6 186 –
Dividends and capital distributions paid (111) (24)
Shares purchased from non-controlling interests (3 152) –
Other transactions with non-controlling interests 8 5
Balance at end of the year 53 637 40 830
Comprising:
Ordinary share capital and share premium 9 898 8 474
Preference share capital and share premium 3 837 4 056
Distributable reserves 29 616 24 271
Convertible and redeemable bonds reserve 974 923
Foreign currency translation reserve 1 720 (441)
Share-based payment reserve 637 592
Other reserves 447 (70)
Non-controlling interests 6 508 3 025
53 637 40 830
Segmental analysis
Year Year
ended ended
30 June 30 June
2012 2011*
Audited Audited
Rm Rm % change
Revenue
Retail activities
– International operations 52 459 25 823 103
– African operations 7 451 – –
Manufacturing, sourcing and logistics
– International operations 20 064 18 338 9
– African operations 11 063 8 905 24
Properties 1 658 871 90
Corporate services
– Brand management 383 341 12
– Investment participation 482 433 11
– Central treasury and other activities 274 424 (35)
93 834 55 135 70
Intersegment revenue eliminations (13 400) (12 095)
80 434 43 040 87
Operating profit before capital items
Retail activities
– International operations 2 478 1 162 113
– African operations 639 – –
Manufacturing, sourcing and logistics
– International operations 1 690 1 590 6
– African operations 1 116 1 016 10
Properties 1 638 854 92
Corporate services
– Brand management 383 341 12
– Investment participation 482 433 11
– Central treasury and other activities 290 435 (33)
8 716 5 831 49
Intersegment profit eliminations (705) (407)
8 011 5 424 48
30 June 30 June
2012 2011*
Audited Audited
Rm % Rm %
Total assets
Retail activities
– International operations 52 438 44 43 524 50
– African operations 19 265 16 – –
Manufacturing, sourcing and logistics
– International operations 7 842 6 8 130 9
– African operations 12 938 11 9 756 11
Properties 22 867 19 19 150 22
Corporate services
– Brand management 4 646 4 4 447 5
– Investment participation – – 2 867 3
– Central treasury and other activities 509 – 400 –
120 505 100 88 274 100
* Prior year segments have been restated as the group has decided to
disclose its properties as a separate segment.
Reconciliation of total assets per statement of financial position to
total assets per segmental analysis
30 June 30 June
2012 2011
Audited Audited
Rm Rm
Total assets per statement of financial position 133 062 100 919
Less: Cash and cash equivalents (8 011) (6 321)
Less: Investments in associate companies (2 353) (4 274)
Less: Investments in preference shares (364) (313)
Less: Interest-bearing short-term loans receivable (1 710) (1 495)
Less: Interest-bearing long-term loans receivable (119) (242)
Total assets per segmental analysis 120 505 88 274
Geographical information
Year Year
ended ended
30 June 30 June
2012 2011
Audited Audited
Rm % Rm %
Revenue
Continental Europe 52 390 65 25 825 60
Pacific Rim 2 924 4 2 481 6
Southern Africa 18 350 23 8 926 21
United Kingdom 6 770 8 5 808 13
80 434 100 43 040 100
30 June 30 June
2012 2011
Audited Audited
Rm % Rm %
Non-current assets
Continental Europe 62 708 69 54 256 73
Pacific Rim 1 633 2 1 476 2
Southern Africa 20 459 23 13 624 18
United Kingdom 5 721 6 5 393 7
90 521 100 74 749 100
Notice
The preparation of these condensed annual financial statements was
supervised by Frikkie (FJ) Nel CA(SA) and the financial statements were
audited by Deloitte & Touche in terms of Section 29(1) of the Companies
Act of South Africa.
Revenue per geographical region
23% Southern Africa
65% Continental Europe
4% Pacific Rim
8% United Kingdom
Total assets
44% Retail activities – International operations
16% Retail activities – African operations
6% Manufacturing, sourcing and logistics - International operations
11% Manufacturing, sourcing and logistics - African operations
19% Properties
4% Corporate services
Revenue per segment
56% Retail activities – International operations
8% Retail activities – African operations
21% Manufacturing, sourcing and logistics - International operations
12% Manufacturing, sourcing and logistics - African operations
2% Properties
1% Corporate services
Operational review
International operations
The group performed well in a challenging market supported by our
resilient value proposition and ongoing investment in stores,
infrastructure and properties.
Retail activities: Household goods
The revenue attributable to the group’s international retail activities
increased 103% to R52.5 billion (2011: R25.8 billion), mainly as a result
of the inclusion of Conforama for the full twelve month period (2011: four
months) and the strong growth experienced in central continental Europe.
Operating profit in the international retail business increased by 113% to
R2.5 billion (2011: R1.2 billion) reflecting the improving margin trend in
most of our international retail businesses.
Continental Europe
Despite the challenging consumer environment in France and southern
Europe, particularly in the electronic product division, Conforama
delivered a very solid sales performance driven by the furniture and home
decoration product segment.
Switzerland and Iberica experienced very strong growth while
encouragingly, France gained market share in the important furniture
product category. In line with expectations, Italy and Croatia reported a
decline in sales. Italy performed in line with market trends while Croatia
outperformed the market in furniture and electronic products.
The strongest performing ranges throughout the Conforama business remained
the furniture and home decoration categories. The market share gains in
these core product categories supported the operating profit and margin
growth in Conforama.
The ERM (European Retail Management) business delivered its fourth
consecutive year of positive like-for-like revenue and margin growth.
These results were further supported through store expansion, property
investments and the resilient economies in central and northern
continental Europe, especially the German speaking territories. In the
year under review, Steinhoff increased its controlling stake in this
business to further strengthen its competitive position in these resilient
markets.
United Kingdom
The UK business continues to take steps to augment sales, profitability
and cash flows. These steps include the integration of operations,
consolidation of divisions and customer-centric marketing initiatives.
During the year, both the furniture and bedding divisions finalised new
concept store formats and commenced with the rolling out in the existing
stores. The performance of these new concept stores have outperformed the
balance of the store estate, with increased trading between 24% and 56%,
in these stores.
Pacific Rim
Trading conditions in Australia and New Zealand remained challenging for
the year. The new Freedom store format is proving to be successful and
this division will continue the store rollout in the current financial
year. Snooze delivered strong results, driven largely by increased
mattress sales. Bedding remains the most resilient category under current
market conditions. During the year, progress was made regarding the “big
box” discount concept and we plan to open the first large format discount
household goods store towards the end of the current financial year.
Manufacturing, sourcing and logistics
The European and eastern European manufacturing business, including the
global sourcing division, reported a 9% growth in revenue and a 6%
increase in operating profit to R1.7 billion (2011: R1.6 billion). These
results should be viewed against a currency environment in the low cost
countries where we manufacture and source products, such as the Polish
zloty and Hungarian forint, as well as the strength of the US dollar
against the euro. In addition, the majority of the growth in this segment
stems from our sourcing operations, which requires no investment in
assets, and therefore traditionally earns less margin, the benefit of
which ultimately flows through to the retailer.
Continental Europe
The eastern European manufacturing division continues to increase margins,
largely as a result of higher activity levels, mainly from Conforama and
the UK retail division, and the prevailing weaker Polish zloty. Margins
were further supported by increased component sourcing from Asia and an
improvement in quality, resulting in reduced returns and credit notes. The
German bathroom manufacturing plant reported good growth as a result of
manufacturing efficiencies and improved product quality.
United Kingdom
In line with the results of the rest of the UK group, the group’s mattress
category is performing well. This trend, both from an intragroup and
external customer point of view, has supported the UK foam and mattress
manufacturing division to record double digit growth compared to the
previous year. The sofa factory in Wales continues to perform strongly on
the back of new models manufactured for the furniture retail division.
International sourcing and logistics
The Asian sourcing offices of Steinhoff and Conforama have been
successfully merged with the combined resources operating from the 1st of
July 2012 from one office situated in Shenzhen, China. The European and
Polish sourcing arms continued to perform well, not only achieving the
desired results in increasing the amount of product sourced from low cost
countries, but also negotiating good prices on the combined group volume.
The IT platform design phase, which will provide the group access to
combined global product, suppliers and preferred pricing, is complete and
testing and implementation will commence in the near future. These
initiatives should support further targeted margin improvements.
The group successfully renegotiated a global shipping contract
incorporating all of the group’s European retail divisions, the Asia
Pacific group and JD Group. This initiative resulted in reduced inbound
logistics costs for most of the group’s operations.
Various initiatives to centralise and optimise our warehouse and
distribution facilities and services are underway across Europe. Our mega
warehouses and supply chain services in Germany are benefiting from
increased volumes relating to the success of our external retail partners
in Germany. In the UK, our warehouse centralisation initiatives are
progressing well. Upon occupation of our new central distribution hub in
Lutterworth, improved stock management will be realised with the exit of
inefficient satellite distribution centres.
African operations
The African operations made great strides in firmly establishing its
future strategic positioning through transactions implemented during the
year under review.
The African operations now consist of two independently listed companies,
KAP International Holdings Limited (KAP) and JD Group Limited (JD Group)
and an associate through our 20.2% investment in the listed share capital
of PSG Group Limited (PSG).
Retail activities
JD Group (50.1%)
JD Group, a diversified retail and financial services business, became an
associate of Steinhoff on 30 June 2011 and remained an associate (32%) of
Steinhoff until the end of March 2012. Following the successful
implementation of the Partial Offer to JD Group shareholders, JD Group
became a subsidiary of Steinhoff. Accordingly, JD Group’s results were
equity accounted by Steinhoff for the first nine months of the year under
review and consolidated it for the first time from 2 April 2012, for a
three month period.
JD Group reported headline earnings of R884 million for the ten months
ended 30 June 2012, a 26% improvement when compared to the previous twelve
month reporting period ended 31 August 2011. This increase was mainly
achieved by the improved performance of the retail businesses acquired
during JD Group’s previous reporting period, specifically Unitrans
Automotive. Similarly, the financial services business reported good
results, supported by its product diversification strategy. The newly
introduced unsecured loan product, mainly to existing low risk customers,
showed good growth. In line with the trend experienced by our European
retail businesses, the decline and deflation experienced in electronic
household goods and appliances affected JD Group’s cash retail business.
The furniture retail business marginally increased results, however the
investment in systems and infrastructure in this business is already
improving margins and this trend is expected to continue in the medium
term. JD Group declared a final dividend of 132 cps. Shareholders are
referred to the JD Group results announcement released on the JSE
Limited’s news service (SENS) on 27 August 2012 for a comprehensive review
of the JD Group results.
Manufacturing, sourcing and logistics
KAP (61.9%)
The diversified industrial business, KAP International Holdings Limited
(Traditional KAP) has been an associate investment of Steinhoff since 2005
in which Steinhoff held 34% by the end of March 2012. Steinhoff acquired
the Traditional KAP business through the reverse listing of all of its
African industrial assets (including logistics, timber and manufacturing
assets), thereby increasing its stake in the combined KAP business.
Following the implementation of the Partial Offer, Steinhoff holds 61.9%
in the combined KAP group. Therefore, 34% of the Traditional KAP’s results
were equity accounted until the end of March 2012. Thereafter, the
Traditional KAP’s results were consolidated for the three months since the
2nd of April.
For the twelve months ending 30 June 2012, the combined KAP group’s
reported operating profit and headline earnings were R1 106 million and
R490 million respectively. The 7% improvement in operating profit was
mainly attributed to the good performance of the Unitrans logistics and
passenger divisions. Unitrans increased operating profit by 14% to R701
million. In addition, the Traditional KAP manufacturing businesses
reported good growth, with the integrated timber business and the
furniture component manufacturing businesses suffering margin declines in
an increasingly competitive market. KAP declared a dividend of 6 cps.
Shareholders are referred to the KAP results announcement released on SENS
on 4 September 2012 for a comprehensive review of the KAP results.
Properties
The group has decided to separately disclose its properties as a segment
due to its materiality. This property segment now comprises all properties
managed centrally by corporate services. The industrial and retail
properties are located in Africa, Europe and the UK. This segment
demonstrates the long-term returns achievable on acquired properties.
Corporate services
Investment participation
As reported in prior years, Steinhoff was party to investment
participation agreements with various retailers throughout Europe. Through
these investments, Steinhoff earned interest on the loans receivable and
shared in profits from the retailers.
During the year, the group successfully withdrew from the various funding
initiatives. However, the group acquired the right, title and interest in
the brands, patents and trademarks out of these retail participation
ventures as well as certain properties relating to these. This resulted in
a significant increase in intangible assets and property.
Financial review
As explained in the corporate activity section, JD Group and KAP became
subsidiaries of Steinhoff with effect from 2 April 2012. Both JD Group and
the Traditional KAP were previously associated companies of Steinhoff and
were accordingly equity accounted for nine months of the financial year
and consolidated for three months. In addition, the results for the year
under review include a full twelve month (2011: four months) contribution
of Conforama which was acquired by Steinhoff in March 2011.
Revenue for the year increased 87% to R80.4 billion (2011: R43.0 billion),
mainly as a result of Conforama’s full year inclusion and the
consolidation of JD Group and the Traditional KAP for the last quarter of
the financial year. Operating profit before capital items increased by 48%
to R8.0 billion.
Revenue
The group’s reporting currency (rand) weakened by 9% against the euro from
an average translation rate of R9.56:1 euro in 2011 to R10.41:1 euro
during the year under review.
Turnover in southern Africa increased to R18 350 million (2011: R8 926
million), while turnover generated in currencies other than rand, measured
in euro, increased by 67% to EUR5 961 million (2011: EUR3 567 million).
The quantum and spread of the group’s revenue will further increase and
diversify when JD Group and KAP are consolidated for full reporting
periods in the future.
Operating profit
Operating profit increased by 48% to R8.0 billion (2011: R5.4 billion) at
an operating margin of 10.0% compared to a margin of 12.6% in the previous
financial year. This decline in margins reflects the lower margins
inherent in the acquired businesses.
Earnings per share (EPS) and headline earnings per share (HEPS)
In line with our trading update, dated 27 August 2012, both EPS and HEPS
from continuing operations increased by 32% to 313.8 cps (2011: 237.0 cps)
and 317.0 cps (2011: 239.9 cps) respectively. These increases were
achieved notwithstanding a 17% increase in the weighted average number of
shares in issue to 1 703 million shares (2011: 1 461 million) arising
mainly from the share issuances relating to the Conforama acquisition (on
30 June 2011), the acquisition of the group’s associated investment in PSG
and the capitalisation distribution in shares.
Net finance charges
Net finance charges increased to R1 378 million (2011: R1 175 million)
reflecting the full year effect of the Conforama acquisition debt and the
increased translation rate from euro finance charges to rand. Despite the
increase in finance charges, the group’s EBITDA interest cover increased
to 7.1 times (2011: 5.6 times), evidencing the extent of positive cash
generation of the group.
Taxation
The average tax rate at 12.5% (2011: 10.2%) is mainly due to the higher
mix of profits generated in higher tax jurisdictions in the European
Union. Management estimates that the sustainable average tax rate of the
group should not exceed 15% for the foreseeable future.
Assets
The total assets of the group increased to R133 billion (2011: R101
billion) and reflects its increased scale after JD Group and KAP became
subsidiaries of Steinhoff. The net asset value per share increased to 2
466 cps (2011: 2 056 cps), despite an increase in the number of issued
shares to 1 756 million (2011: 1 641 million).
Debt
Net debt amounted to R24.2 billion (2011: R18.8 billion). The positive
cash generation of the group resulted in the group maintaining its net
debt to equity ratio at 45% (2011: 46%). Accordingly, the group remains
well capitalised with cash and cash equivalents increasing to R8.0 billion
(2011: R6.3 billion) at year end.
The group’s net debt:EBITDA ratio amounts to 2.47 times (2011: 2.86) and
will further strengthen when the results of JD Group and KAP are included
for the full year.
With reference to corporate activity, the group successfully concluded a
repeat issuance of 3 to 10-year term notes of USD200 million in the US
private placement market. The proceeds were used to refinance the 7-year
tranche of the maiden issuance in this market. Following the refinancing,
sufficient provision has been made in respect of all the group’s
facilities (with material maturities falling within the next 18 months)
and its ongoing growth requirements.
In addition, the repositioned Steinhoff business provides substantial
flexibility in terms of access to capital markets at both holding company
and subsidiary levels.
Working capital
Despite its higher activity levels, cash generated from operations
increased to R10.4 billion (2011: R7.2 billion). This result was achieved
by a release in cash flow from working capital of R620 million (2011: R259
million) which demonstrates the benefits inherent in the group’s business
model as an integrated retailer. The increase in inventories was more than
off-set by strict receivables control and improved terms from suppliers
that were achieved as a result of the group’s scale benefits.
The group’s policy of insuring its debtors remains in place. Consequently,
the group did not incur any significant bad debts during the year under
review.
Cash flow
The increase of 44% in cash generated from operations to R10.4 billion
reflects management’s entrenched focus on, and commitment to sustainable
earnings growth supported by solid cash generation, thereby preserving the
group’s cash resources and maintaining its liquidity profile. This
achievement provides the base for continued growth on a sustainable basis
and supports the quality of the group’s earnings, evidenced by the amount
of operating profit before capital items which is fully represented (and
exceeded) by operational cash flows.
Corporate activity
The group implemented the following transactions during the year under
review:
- The acquisition of a 20% shareholding in PSG for a combination of cash
and the issue of 64.1 million new Steinhoff shares was successfully
implemented during the year and, as a result, PSG became an associate of
Steinhoff with effect from 1 February 2012.
- Steinhoff extended a partial offer to JD Group shareholders to exchange
38.2 million JD Group shares for 611.2 million KAP shares on the basis of
an exchange ratio of 16 KAP shares for every JD Group share tendered
(Partial Offer). The Partial Offer was approved by the JD Group
shareholders in a general meeting held on 12 March 2012. The South African
Competition Authorities unconditionally approved the change of control of
JD Group arising from the implementation of the Partial Offer on 30 March
2012. The Partial Offer was successfully implemented and, as a result, JD
Group became a subsidiary of Steinhoff, effective from 2 April 2012 and
Steinhoff’s shareholding in JD Group increased from 32.4% to 50.1%.
- The transaction in terms of which Steinhoff disposed of its African
industrial assets (comprising its PG Bison, Unitrans and Raw Materials
businesses) to KAP in exchange for KAP shares and a loan claim, was
unconditionally approved by the South African Competition Authorities on
30 March 2012 and became effective on 2 April 2012. As a result, KAP
became a subsidiary of Steinhoff. Following the implementation of the
Partial Offer referred to above, Steinhoff’s shareholding decreased to
61.9% of the enlarged issued share capital of KAP.
Outlook
The global markets and future consumer spending trends remain uncertain.
However, the group is confident that the diversity inherent in its
earnings will continue to protect the group against any prolonged downturn
in any one market where we operate. The fragmented European household
goods market and our positioning in the discount sector of the market,
provides comfort of the group’s ability to compete and grow in the future.
The group’s strategy remains to invest in strategic brands and real estate
assets to expand its retail footprint and securing appropriate sites
currently available on attractive terms. The favourable interest rate
environment in Europe is also conducive to property investment
opportunities. These investments should secure the longevity of the retail
operation concerned, without volatility in profitability that may arise as
a result of rental escalations. In addition, the African investment
transactions completed during this year will further strengthen and
diversify the group. These investments have been consolidated for only
three months and will further strengthen the geographical diversity of the
group once these businesses have been consolidated for a full year.
Len Konar Markus Jooste
Independent chairman Chief executive officer
4 September 2012
Selected explanatory notes
Statement of compliance
The condensed financial statements have been prepared in accordance with
the framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS) and the AC 500
standards as issued by the Accounting Practices Board or its successor,
containing the information required by IAS 34 – Interim Financial
Reporting and the requirements of the Companies Act of South Africa.
Basis of preparation
The annual financial statements are prepared in millions of South African
rands (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.
Financial statements
The annual 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. Any reference
to future financial information included in the summarised financial
information has not been audited or reviewed. Full details of the group’s
business combinations for the year, additions and disposals of property,
plant and equipment as well as commitments and contingent liabilities are
included in the group’s consolidated financial statements.
Changes in accounting policies
The accounting policies of the group have been applied consistently to the
periods presented in the consolidated financial statements, except for the
adoption of:
IFRS 7 – Financial Instruments: Disclosures: Transfers of financial assets
Circular 3/2012 – Headline Earnings
Improvements to IFRSs
IAS 1 – Presentation of Financial Statements: Clarification of the
requirements for comparative information
IAS 16 – Property, Plant and Equipment: Classification of servicing
equipment
IAS 32 – Financial Instruments: Presentation: Tax effect of distribution
to holders of equity instruments
IAS 34 – Interim Financial Reporting: Clarification of the requirements
for comparative information; Interim financial reporting and segmental
information for total assets and liabilities
IFRIC 2 – Members’ Shares in Co-operative Entities and Similar
Instruments: Tax effect of distribution to holders of equity instruments
Details of the implementation and adoption of the various IFRSs, IFRICs
and circulars are reflected in the consolidated financial statements.
There was no effect on the consolidated financial statements.
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.
Declaration of capitalisation share award with cash distribution option
The board has resolved to award capitalisation shares to shareholders
recorded in the register at the close of business on Friday, 30 November
2012 (the share award). Shareholders will, however, be entitled to decline
the share award or any part thereof and instead elect to receive a cash
distribution of 80 cents (2011: 65 cents) per share (the capital
distribution). The share award and capital distribution alternative will
be awarded from the share premium account and will accordingly be achieved
by way of a reduction of the Contributed Tax Capital of the Company, as
defined in the Income Tax Act, No 58 of 1962 (as amended) (the ITA).
Therefore, the share award and capital distribution alternative will not
be a dividend as defined in the ITA.
The last day to trade Steinhoff shares on the JSE to ensure that the
purchaser appears as a shareholder on the record date (30 November 2012)
will be Friday, 23 November 2012. Shares will commence trading ex
distribution from the commencement of trading on Monday, 26 November 2012.
Payment and issue date will be Monday, 3 December 2012.
The terms of the share award will be announced on Wednesday, 7 November
2012, and documentation relating thereto will be posted by Thursday, 8
November 2012. Elections in respect of the capital distribution will close
on Friday, 30 November 2012, at 12:00 pm.
Shareholders are required to timeously notify their duly appointed
participant or broker of their election in terms of the capital
distribution.
Share certificates may not be dematerialised or rematerialised between
Monday, 26 November 2012, and Friday, 30 November 2012. Shareholders will
have their CSDP or broker accounts credited with the share award on
Monday, 3 December 2012.
The capital distribution will be electronically transferred to the bank
accounts of certificated shareholders who utilise this facility on Monday,
3 December 2012. In all other instances of certificated holders, cheques
dated 3 December 2012 or the relevant capitalisation share certificates
will be posted on or about that date.
Steinhoff African Secretarial Services Proprietary Limited
Company secretary
4 September 2012
Annual general meeting
The annual general meeting will be held on Monday, 3 December 2012.
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 Grové, A Krüger-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
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
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 of Steinhoff Investment has resolved to declare a gross dividend
of 370 cents per share, in respect of the period from 1 January 2012 to 30
June 2012 (the dividend period), payable on Monday, 29 October 2012, to
those preference shareholders recorded in the books of the company at the
close of business on Friday, 26 October 2012. The dividend will be payable
in the currency of South Africa. No credits for secondary tax on companies
(STC) were utilised as part of this declaration. The dividend is subject
to a local dividend tax rate of 15%, resulting in a net dividend of 314.5
cents per share, unless the shareholder is exempt from paying dividend tax
or is entitled to a reduced rate in terms of the applicable double-tax
agreement. The company’s income tax reference number is 9375046712.
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, 19 October
Shares trade ex-dividend Monday, 22 October
Record date Friday, 26 October
Payment date Monday, 29 October
Share certificates may not be dematerialised or rematerialised between
Monday, 22 October 2012, and Friday, 26 October 2012, both days inclusive.
On behalf of the board of directors.
Len Konar Piet Ferreira
Director Executive director
Wynberg
4 September 2012
Sponsor:
PSG Capital Proprietary Limited
Date: 04/09/2012 02:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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