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Strategic Review Update
Steinhoff International Holdings Limited
Incorporated in the Republic of South Africa
Registration number 1998/003951/06
Share code: SHF
ISIN: ZAE000016176
(“Steinhoff” or “the Company”)
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR
FORM PART OF ANY OFFER OR THE SOLICITATION OF ANY OFFER TO ACQUIRE, PURCHASE OR
SUBSCRIBE FOR SECURITIES.
STRATEGIC REVIEW UPDATE
This announcement is released in conjunction with an investor presentation on 29 June 2015 and
shareholders’ attention is drawn to the full presentation which is available on the Company’s
website www.steinhoffinternational.com.
European retail operations
Conforama
The Conforama group currently trades from 276 stores. Its main Conforama brand is supported by
the hard discount concept Confo Depot in France and Emmezetta in Croatia.
The Conforama group’s strategy is very much dependant on the maturity of its business in the
different markets that it operates in.
In markets such as France, Switzerland and Croatia where the Conforama group’s market share is
already relatively high the group continues to focus on maximising efficiencies and tactical market
consolidation opportunities. These more mature markets have also showed good growth on e-
commerce and this initiative will continue to be prioritised as a growth avenue for the group.
In markets such as Spain and Portugal the group will continue to focus on accelerated growth
strategies and store roll-outs to gain market share. In Portugal the demise of major competitor will
further support growth opportunities for the group. Conforama is targeting 5 new store openings in
this territory. The Italian market still remains very fragmented and trading conditions are such that
the group remains focussed on maintaining its existing store base and network while investigating
alternative growth strategies in the medium term.
European retail management
The German retail operations remains a priority of the group given this territory’s market size (Euro
31 billion) and the group’s relatively small market share of 4.2%. As reported during the interim
period the group continues to benefit from its marketing initiatives increasing brand awareness
supported by a strong store rollout plan the group is targeting an additional eight new stores in the
next twelve months and has recently opened a store in The Netherlands.
UK and Australasian operations
The UK operations trade from specialist bedding and furniture concepts. In both Australia and the
UK strategic initiatives such as training and especially technology in the sleep and bedding category
continues to be prioritised. In addition, a complete omni-channel solution is being prioritised to
allow the customer to interact with the brand, either through its refurbished stores or its online
trading platforms.
European manufacturing, sourcing and logistics operations
With the recently announced acquisition of Select-o-pedic in Australia and continuing investigations
into additional bedding integration opportunities in Europe, the group’s international bedding
strategy is gaining traction. In addition, the group recently announced the acquisition of the Impuls
kitchen manufacturing facilities in Germany that will support efficiencies and opportunities in this
product family.
Strategically the warehouse and logistic capability of the group continues to be prioritised as a main
driver for lowering cost and increasing efficiencies. Negotiations on some of the group’s pooled
container loads will result in good savings for the group in the following year.
African operations
The group will continue to concentrate on lower risk credit consumers and focus on the introduction
of additional customer solutions such as lay-buys to its lower end customer base. The DIY market
continues to project good growth in the South African market and the group will continue its store
roll-out plan to benefit from this growth. In the automotive retail business the group’s strategy to
support local manufactured brands and balance its diverse income from its new, pre-owned, parts
and services income streams remain relevant.
Pepkor
The Pep South African business has been focussed on providing customers and their families with
everyday essential products at the lowest prices since inception. Since 1999 this best price
leadership strategy supported by focus on availability, product range, investment in the store
network, convenience and a strong relationship of trust with its customers have resulted in double
digit growth both in turnover and operating profit. The 1 422 traditional Pep stores in South Africa is
supported by 316 dedicated Pep Cell stores and 132 Pep Home stores. The investment in supply
chain and systems have proven successful in decreasing costs in the business with the view of
further reducing price to the customer. Going forward, the business will continue to focus on its best
price leadership position, supplier management, and internal culture and values of its loyal
employee-base, to continue building a strong commitment to the business and its customers.
The African business (outside South Africa) remains a growth priority for Pepkor. Focussed on being
a discount retailer of clothing footwear and homeware driven by sales volume, historic growth is
expected to continue.
Trading from 484 stores, kids clothing remains the biggest product category in Ackermans. The focus
is to be the number one value retailer for women with children in their lives by focussing on price,
assortment, quality, fashion, and service. The business is prioritising its ladies wear category and will
open its first store in Zambia during September this year.
The speciality division’s focus has been on establishing a consolidated platform to the benefit of the
existing trading units but also with the ability to add scale to the business by adding more brands
and markets to this division.
Pep South East Asia has been focussed on turning around the Best and Less retail concept, buying
scale by adding more brands into the existing portfolio, and introducing processes to extract
synergies such as introducing central services such as IT and supply chain.
Pepco in Eastern Europe is an uncomplicated mono-brand discount retailer focussed on selling
clothing, footwear, homeware and seasonal products in central Eastern Europe. The growth of the
business will continue to be supported by an aggressive store-opening program but like-for-like
growth has also been encouraging. The historic growth in the business is now being supported by a
formalised process improvement project that focuses on supply-chain, systems, and warehouse
capacity and improving people skills.
Pep&Co in the UK will target the broad fashion end of the market. The first store will open in July
2015 and then 50 stores soon thereafter. The recently acquired MacDan in France is geographically
well positioned and will be testing the Pep concept in France, initially via a low risk strategy that will
introduce a range of existing Pepco clothing and non-clothing ranges in the refurbished store
network.
INTERNATIONAL LISTING
Further to previous market communication in respect of the above, shareholders are advised that
the Company has made substantial progress towards the proposed listing on the Prime Standard of
the Frankfurt Stock Exchange, accompanied by an inward listing on the Johannesburg Stock
Exchange (collectively, “the listing”).
It is anticipated that a Dutch incorporated holding company (which will own the kika-Leiner trading
businesses in Europe), will acquire all of the issued shares in the Company in exchange for shares in
the Dutch holding company, by way of an anticipated scheme of arrangement in terms of the South
African Companies Act, 2008. The Netherlands was selected as the domicile of this holding company,
rather than an Austrian incorporated company, as previously announced.
Subject to regulatory approvals, it is expected that a circular and notice convening an extraordinary
general meeting of Steinhoff Shareholders will be prepared and posted to shareholders in Q3 2015.
The general meeting, at which shareholders will be requested to approve the scheme of
arrangement, necessary for the implementation of the proposed listing, is expected to be held prior
to the release of the audited results for the year ending 30 June 2015, on 8 September 2015. It is
anticipated that the listing will take effect during Q4 2015, subject to market conditions and the
necessary regulatory approvals.
CORPORATE UPDATE
Having completed the implementation and funding of the Pepkor transaction, Steinhoff now owns
100% of Pepkor. Sufficient debt facilities were procured from 8 banks for the debt funding of this
transaction as follows:
- R6bn redeemable preference share issue (4 years)
- R6bn term facility (3,4 and 5 years)
- R2bn revolving credit facility for working capital
The JD scheme of arrangement has also been approved and JD will be delisted and owned 100% by
the group with effect from 6 July 2015.
Following the Moody’s international rating upgrade to Baa3 long term issuer rating (stable outlook)
and national scale issuer rating A3.za, the group successfully diversified its funding profile with an
inaugural Schuldschein transaction in Europe and concluded successful private placement of 3 and 5
year fixed and floating notes under the Steinhoff Services Bond Program.
The Schuldschein transaction attracted more than 80 investors raising EUR 650,000,000 with
maturities of 5 to 10 years. Funding rates ranged from Euribor plus 1.25% (fixed 1.877%) for the 5-
year notes, Euribor plus 1.50% (fixed 2.461%) for the 7-year notes and a fixed rate of 3.079% for the
10 year notes. The transaction marks the biggest non-German Schuldschein issue year to date.
Strong geographic investor diversification was achieved across European and Australasian investors.
Wynberg, Sandton
29 June 2015
Sponsor: PSG Capital Proprietary Limited
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