Wrap Text
Results For The Year Ended 30 September 2017
Steinhoff Africa Retail Limited
Registration number: 2017/221869/06
Share code: SRR
ISIN: ZAE000247995
(‘STAR’ or ‘the company’ or ‘the group’)
RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2017
PRO FORMA HIGHLIGHTS
- 13.2% INCREASE IN REVENUE TO R58.6BN
- 100 BPS MARGIN INCREASE TO 10.4%
- 25.2% INCREASE IN OPERATING PROFIT* TO R6.1BN
- R6.5BN CASH FROM OPERATIONS**
* Before capital items
** Statutory results
On 20 September 2017, Steinhoff Africa Retail (STAR) successfully listed on the main board of the Johannesburg Stock Exchange.
The listing provides investors the opportunity to directly access an African retail champion with significant scale.
The listing resulted in the issue of 750 million shares (21.47% of issued share capital) at R20.50, in addition to 50 million
shares sold indirectly by Steinhoff International Holdings N.V. The overall placement raised R16.4 billion and represents,
in aggregate, 23.19% of the issued share capital. STAR distributed the placement proceeds to Steinhoff International Holdings N.V.
Results Statutory audited Pro forma
12 months ended 15 months ended 12 months ended 12 months ended
30 September 30 September 30 September 30 September
2017 2016 % 2017 2016 %
(FY17A) (FY16A) change (FY17PF) (FY16PF) change
Revenue (Rm) 57 850 61 154 (5%) 58 582 51 766 13.2%
Operating profit
before capital items (Rm) 5 815 4 050 44% 6 078 4 855 25.2%
Headline earnings per share (c) 133.6 60.4 121%
In evaluating the 2017 financial year’s performance (FY17), the following factors influence comparability:
- Change in financial year-end: STAR’s financial year-end was changed from June to September in 2016, and therefore the comparative
statutory numbers pertain to a 15-month period.
- Impact of acquisitions and one-off restructuring - refer to the ‘Additional information’ section of these results.
- Impact of listing on earnings per share: Issuing 750 million new shares on 20 September 2017 increased the total number of shares
in issue to 3 450 million.
To enhance comparability, performance commentary is provided based on pro forma results that are based on the 12-month periods ending
30 September 2017 (FY17PF) and 30 September 2016 (FY16PF) and adjusted for the impact of acquisitions and one-off restructuring costs.
During a period characterised by downbeat consumer confidence and low growth, STAR delivered a solid operating performance. A continued
focus on price leadership and value offerings across STAR’s expanding store footprint drove market share gains in major retail brands.
For the 12 months to September 2017, pro forma revenue increased by 13.2% to R58.6 billion (FY16PF: R51.8 billion), and pro forma
operating profit was up 25.2% to R6.1 billion.
Notably, trading densities continued to rise above cost inflation while STAR expanded its retail presence through trading space growth
of 5% to 2.3 million square meters. STAR group opened 272 stores on a net basis, and the acquisition of Tekkie Town added 308 stores
to the group’s footprint. As at September 2017, STAR traded from 4 953 retail locations.
STAR’s strategic focus on lowering the cost of doing business and accessing new products and services through existing infrastructure
drove group operating profit growth. The operating margin increased by 100 basis points to 10.4% of total sales. Pep and Ackermans
were the main contributors to group operating profit growth, in addition to the turnaround of the furniture and appliances business.
OPERATIONAL REVIEW
Discount and value
This division reported revenue of R44.1 billion and operating margin strengthened. Revenue growth was largely attributable
to Pep and Ackermans, which, in aggregate, account for 85% of divisional revenue. Like-for-like revenue growth of 6.5% was achieved
by Pep and Ackermans in aggregate, influenced by a weaker fourth quarter. Within product categories, kids’ wear and cellular delivered
stand out performances. Home, adult wear and FMCG also supported growth.
The Flash business, servicing customers in informal areas, performed well, driven by a 23% increase in active traders with the number
of devices exceeding 121 000 at year-end.
Following the closure of approximately 300 stores, the restructuring of the furniture and appliances business is complete. Despite
closing uneconomical trading locations and the operational disruption caused by the restructuring, the business increased revenue
on a comparable basis, reaching break-even operating profit.
Africa, being countries other than South Africa, Botswana, Lesotho, Namibia and Swaziland (SA and BLNS), represents approximately
5% of STAR group revenue. A constrained economic environment and currency volatility in some of these countries continued to weigh
on operations, resulting in reduced momentum in store openings. In addition, adjustment of product costing rates to manage exchange
rate volatility slowed growth in Angola.
Discount and value brands opened a total of 222 stores on a net basis during FY17, expanding the total footprint to 3 679 stores
at 30 September 2017.
Speciality
The speciality division, now enlarged by the Tekkie Town footwear business, contributed approximately 25% to group revenue, supported
by a robust performance from the Clothing, Footwear and Home (CFH) retail brands. Operating margin strengthened, supported by improved
profitability in the do-it-yourself (DIY) business and improved performance in the other retail brands.
In line with its peers, the DIY business experienced a challenging year. Weak market demand for building materials and a store
portfolio review resulted in a revenue contraction and 17 store closures. That said, the portfolio review, which is nearing completion,
contributed to improved profitability through integration cost benefits.
The G2 brands reported an acceptable performance in a challenging market where margins are comparatively lower to other businesses
within the group.
In speciality bedding, Sleepmasters continued to perform well, expanding its store footprint to 168 stores at 30 September 2017.
Speciality brands opened 50 stores on a net basis during FY17, resulting in a total footprint of 1 274 stores at 30 September 2017.
FINANCIAL REVIEW
Good revenue momentum has been maintained in the business and the increased profitability achieved during the year is most encouraging.
All divisions contributed to improved pro forma operating profit compared to the prior year, with group pro forma operating profit
(before capital items) at R6 078 million (FY16PF: R4 855 million) representing growth of 25.2%.
As described in STAR’s pre-listing statement and this set of results, caution should be exercised when comparing the statutory
12-month audited financial statements with the 15-month comparative period. In particular, earnings growth on a statutory basis
is not representative and should be considered on a pro forma basis.
Tax rate
The effective tax rate was 30.9%, marginally higher than the statutory South African tax rate, mainly due to withholding taxes.
Working capital
Net working capital increased by R805 million, largely as a result of the acquisition of Tekkie Town and increased inventory levels
of a larger store base, in anticipation of the festive season trading period.
Capital structure
As part of the listing process, the balance sheet was restructured and the net debt on 30 September 2017 amounted to R12.0 billion,
resulting in a net debt/EBITDA ratio of 1.8 times. Shareholders are reminded that the debt was only introduced as part of the listing
process at the end of the period and the calculated interest cover of 10.9 times is expected to reduce in future.
Debt structure 30 September 30 September
2017 2016
Rm Rm
Interest-bearing long-term liabilities 16 27
Loans due to Steinhoff and its subsidiaries - long term 11 000 -
Interest-bearing short-term liabilities 11 98
Loans due to Steinhoff and its subsidiaries - short term 4 868 18 196
Bank overdrafts and short-term facilities 89 79
Loans due by Steinhoff and its subsidiaries (236) (7 763)
Cash and cash equivalents (3 797) (2 771)
Net interest-bearing debt 11 951
EBITDA 6 775
Net finance charges (620)
EBITDA: interest cover (times) 10.9
Net debt: EBITDA (times) 1.8
Pro forma net debt: EBITDA (times) 1.7
Cash flow
Cash generated from operations before working capital changes increased by 20.8% to R7 269 million (fifteen months to 30 September 2016:
R6 016 million).
The cash conversion (cash generated from operations/operating profit before capital items) was 111%, despite cyclical increased inventory
levels in anticipation of the build-up to the festive season. Cash flow was further supported by the furniture retail business’s focus
on lay-by products and the group’s limited credit sales, which amounted to 12% of total revenue.
Outlook
While real market growth is expected to be subdued, positive sales momentum is expected to continue as STAR’s more affordable offer
and lower prices resonate with a constrained consumer. Similarly, the positive momentum in the speciality division is expected to continue
at improved margins, further supporting group margins.
In addition, the business is well on track to open another 350 stores during the 2018 financial year.
Maintaining a low cost of doing business will remain a focus area within all retail brands. STAR plans to expand its distribution capacity
in South Africa with the fit out of two distribution centres and the development of a new distribution centre in Angola, resulting in an
increase in the capital expenditure-to-revenue ratio to 3%.
The group will continue to explore new trading formats and also expand its market share in ladies’ wear and additional services.
As communicated during the listing process, STAR was only listed for 11 days during the 2017 financial year and thus no further dividend
will be declared for FY17. The group targets a dividend cover of two times headline earnings for the next financial year.
Appreciation
STAR’s board of directors would like to thank the group’s employees, shareholders, customers and suppliers for their continued support
and loyalty.
On behalf of the board
Jayendra Naidoo Ben la Grange Riaan Hanekom
Chairman Chief executive officer Chief financial officer
30 November 2017
SUMMARISED CONSOLIDATED INCOME STATEMENT
Twelve months Fifteen months
ended ended
30 Sept 2017 30 Sept 2016
Audited Audited
Notes Rm Rm
Revenue 57 850 61 154
Cost of sales (37 412) (41 154)
Gross profit 20 438 20 000
Other income 701 1 107
Operating expenses (14 364) (15 926)
Operating profit before depreciation, amortisation
and capital items 6 775 5 181
Depreciation and amortisation (960) (1 131)
Operating profit before capital items 5 815 4 050
Capital items 2 (29) (408)
Operating profit 2 5 786 3 642
Net finance charges (620) (738)
Share of profit of equity accounted companies - (5)
Profit before taxation 5 166 2 899
Taxation 3 (1 599) (1 582)
Profit for the period 3 567 1 317
Profit attributable to:
Owners of the parent 3 550 1 290
Non-controlling interests 17 27
Profit for the period 3 567 1 317
Basic earnings per share (cents) 5 132.6 50.2
Headline earnings per share (cents) 5 133.6 60.4
Diluted earnings per share (cents) 5 132.6 50.2
Diluted headline earnings per share (cents) 5 133.6 60.4
SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Twelve months Fifteen months
ended ended
30 Sept 2017 30 Sept 2016
Audited Audited
Rm Rm
Profit for the period 3 567 1 317
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations (84) 92
Net fair value gain/(loss) on cash flow hedges and other fair
value reserves 768 (751)
Deferred taxation (74) 165
Foreign currency translation reserve released to profit or loss
on disposal of investment - (70)
Other reserves transferred to non-controlling interests - 3
Total other comprehensive income/(loss) for the period 610 (561)
Total comprehensive income for the period 4 177 756
Total comprehensive income attributable to:
Owners of the parent 4 160 729
Non-controlling interests 17 27
Total comprehensive income for the period 4 177 756
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Twelve months
ended
30 Sept 2017
Audited
Rm
Balance at the beginning of the period 52 695
Changes in ordinary stated capital
Shares issued in terms of internal restructure 70 177
Common control adjustment (10 471)
Shares issued upon listing 15 375
Share issue expenses capitalised (230)
Capital distribution (20 632)
Changes in reserves
Total comprehensive income for the period attributable to owners of the parent 4 160
Dividends paid (2 013)
Net shares bought from non-controlling interests (5)
Share-based payments (2)
Other reserve movements 693
Common control adjustment (56 826)
Changes in non-controlling interests
Total comprehensive income for the period attributable to non-controlling interests 17
Net shares bought from non-controlling interests (21)
Balance at end of period 52 917
Comprising
Ordinary stated capital 64 690
Common control reserve (11 755)
Distributable reserves (88)
Share-based payment reserve 33
Other reserves 12
Non-controlling interests 25
Balance at the end of the period 52 917
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 Sept 2017 30 Sept 2016
Audited Audited
Rm Rm
ASSETS
Non-current assets
Goodwill and intangible assets 60 826 57 341
Property, plant and equipment 4 613 3 714
Investments and loans 170 950
Deferred taxation assets 1 586 2 553
67 195 64 558
Current assets
Inventories 10 954 8 732
Trade and other receivables 4 931 5 021
Loans due by Steinhoff and its subsidiaries 236 7 763
Cash and cash equivalents 3 797 2 771
19 918 24 287
Total assets 87 113 88 845
EQUITY AND LIABILITIES
Capital and reserves
Ordinary stated capital 64 690 10 471
Reserves (11 798) 42 195
Total equity attributable to equity holders of the parent 52 892 52 666
Non-controlling interests 25 29
Total equity 52 917 52 695
Non-current liabilities
Interest-bearing loans and borrowings 16 27
Loans due to Steinhoff and its subsidiaries 11 000 -
Employee benefits 112 134
Deferred taxation liabilities 4 050 3 724
Provisions 727 993
Trade and other payables 533 501
16 438 5 379
Current liabilities
Trade and other payables 11 722 11 364
Loans due to Steinhoff and its subsidiaries 4 868 18 196
Employee benefits 737 425
Provisions 331 609
Interest-bearing loans and borrowings 11 98
Bank overdrafts and short-term facilities 89 79
17 758 30 771
Total equity and liabilities 87 113 88 845
Net asset value per ordinary share (cents) 1 533.1 2 050.6
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
Twelve months Fifteen months
ended ended
30 Sept 2017 30 Sept 2016
Audited Audited
Notes Rm Rm
CASH FLOWS FROM OPERATING ACTIVITIES
Operating profit: 5 786 3 642
Adjusted for:
Debtors' costs 284 425
Depreciation and amortisation 960 1 131
Non-cash adjustments 239 818
7 269 6 016
Working capital changes
Inventories (1 910) (967)
Receivables 31 (1 899)
Payables 1 074 1 882
Changes in working capital (805) (984)
Cash generated from operations 6 464 5 032
Net movement in installment sale and loan receivables (188) (369)
Net dividends paid (1 963) (40)
Net finance charges (670) (744)
Taxation paid (1 396) (1 523)
Net cash inflow from operating activities 2 247 2 356
CASH FLOWS FROM INVESTING ACTIVITIES
Net additions to property, plant and equipment and intangible assets (1 667) (1 514)
Acquisition of businesses, net of cash on hand at acquisition 6 (429) (1 264)
Decrease/(increase) in long-term investments and loans 780 (480)
Net increase in investments in equity accounted companies - (16)
Net cash outflow from investing activities (1 316) (3 274)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of ordinary shares issued 15 375 -
Capital distribution (15 132) -
Share issue expenses (123) -
Transactions with non-controlling interests (26) (9)
Net movement in other financing activities (172) (3 012)
Increase in related party loans and receivables 293 4 384
Net cash inflow from financing activities 215 1 363
NET INCREASE IN CASH AND CASH EQUIVALENTS 1 146 445
Effects of exchange rate translations on cash and cash equivalents (120) -
Cash and cash equivalents at beginning of the period 2 771 2 326
CASH AND CASH EQUIVALENTS AT END OF PERIOD 3 797 2 771
NOTES TO THE SUMMARISED ANNUAL FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 SEPTEMBER 2017
Statement of compliance
The provisional summarised consolidated financial statements have been prepared and presented in accordance with the framework concepts
and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting
Standards Council, the Listings Requirements of the JSE Limited as applicable to provisional reports, the information at a minimum
as required by IAS 34: Interim Financial Reporting and the requirements of the South African Companies Act, No. 71 of 2008 as applicable
to the summarised financial statements. The summarised consolidated financial statements have been prepared using accounting policies that
comply with IFRS, which are consistent with those applied in the consolidated financial statements for the period ended 30 September 2016.
Basis of preparation
The summarised consolidated financial statements are prepared in millions of South African rand (Rm) on the historical cost basis, except
for certain assets and liabilities that are carried at amortised cost, and derivative financial instruments that are stated at their fair
values. The preparation of the summarised consolidated financial statements and the full set of consolidated financial statements for the
year ended 30 September 2017 was supervised by RG Hanekom CA(SA), the group’s chief financial officer. The full set of financial statements
was approved by the board on 30 November 2017. The comparative amounts comprise the aggregated historical financial information, being
the Steinhoff Africa Retail Assets group recorded historical information, which was prepared in accordance with IFRS and section 8.1
to 8.13 of the JSE Listings Requirements for the 15 months ended 30 September 2016.
Internal restructure accounting
The acquisition by Steinhoff Africa Retail Limited of the Steinhoff Africa Retail Assets are common control transactions, as all
the combining entities, being Steinhoff Africa Retail Limited and the Steinhoff Africa Retail Assets, are ultimately controlled by
the same party, being Steinhoff International Holdings N.V., before and after the combination, and that control is not transitory.
As IFRS provides no guidance for common control transactions, the following principles of US GAAP have been applied:
When accounting for a transfer of assets or exchange of shares between entities under common control, the entity that receives the net
assets or the equity interests shall initially measure the recognised assets and liabilities transferred at their carrying amounts in the
accounts of the transferring entity at the date of transfer. If the carrying amounts of the assets and liabilities transferred differ from
the historical cost of the parent of the entities under common control, for example, because fair value adjustments in business combinations
have been recognised on consolidation, then the financial statements of the receiving entity shall reflect the transferred assets
and liabilities at the historical cost of the group. As a result, the receiving entity effectively applies pushdown accounting in its
separate financial statements.
There is no change in value for the net assets received, because there is no change in control over the net asset or equity interests
from the ultimate parent’s perspective. A difference between any proceeds transferred and the carrying amounts of the net assets received
is recognised in equity in the receiving entity’s separate financial statements. No additional goodwill is created.
Earnings per share, diluted earnings per share and headline earnings per share
The calculation of the weighted average number of shares weighed the shares issued in terms of the private placement from the date of issue,
being 20 September 2017, as well as the issue of the shares relating to the purchase of Tekkie Town from the date of acquisition,
1 February 2017. The remaining ordinary shares were assumed to be in issue since the beginning of the 2016 financial year. This treatment
is in line with the principles applied in accounting for the transfer of assets between entities under common control, detailed in the basis
of preparation.
Financial statements
The consolidated financial statements for the year, which 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, are available for inspection at the
company’s registered office. Information included under the headings ‘Outlook’ and ‘Operational review’ and any reference to future
financial information included in the summarised financial information, has not been audited or reviewed. The auditor’s report does
not necessarily report on all the information contained in this announcement. Shareholders are therefore advised that, in order to obtain
a full understanding of the nature of the auditor’s engagement, they should obtain a copy of the auditor’s report together with the
accompanying financial information from the issuer’s registered office. The results were approved by the board of directors on
30 November 2017.
Accounting policies
The accounting policies of the group have been applied consistently to the periods presented in the summarised consolidated financial
statements.
Events subsequent to the balance sheet date
Effective 1 October 2017, Steinbuild acquired 100% of Building Supply Group (‘BSG’). The purchase consideration was based on an enterprise
value of R646 million and is subject to a potential 13% adjustment, up or down, dependent on BSG’s 12-month results to 30 September 2018.
STAR has exercised call options whereby it will indirectly acquire 128.2 million Shoprite ordinary shares from various parties.
The implementation of the call options remains subject to the required regulatory approvals (expected by middle 2018) and will result
in STAR indirectly acquiring a 23.1% economic interest in Shoprite,and voting control of 50.6%.
The consideration payable for the implementation of the call options will be settled through the issue of 1.7 billion STAR shares,
representing approximately 33.6% interest in the ordinary share capital of STAR.
Twelve months Fifteen months
ended ended
30 Sept 2017 30 Sept 2016
Rm Rm
1. SEGMENTAL ANALYSIS
REVENUE
Discount and value 44 130 47 418
Speciality 13 720 13 736
57 850 61 154
OPERATING PROFIT BEFORE CAPITAL ITEMS
Discount and value 5 585 4 191
Speciality 230 (141)
5 815 4 050
SEGMENTAL ASSETS
Integrated retail: consumer goods 82 910 77 361
RECONCILIATION BETWEEN TOTAL ASSETS PER STATEMENT
OF FINANCIAL POSITION AND SEGMENTAL ASSETS
Total assets per statement of financial position 87 113 88 845
Less: Cash and cash equivalents (3 797) (2 771)
Less: Long-term investments and loans (170) (950)
Less: Loans due by Steinhoff and its subsidiaries (236) (7 763)
Segmental assets 82 910 77 361
Despite the fact that the brands have different sales channels, the product sourcing, supply chain and treasury systems are largely
integrated and, as a result, the presentation of segmental assets are limited to one single segment within the group.
2. OPERATING PROFIT
Capital items
Capital items reflect and affect the resources committed in producing operating/trading performance
and are not the performance itself. These items deal with the platform/capital base of the entity.
Capital items are required to be reported by the Johannesburg Stock Exchange (JSE) as part of the
calculation of headline earnings.
Impairments 7 485
Loss/(profit) on disposal of intangible assets 27 (7)
Profit on disposal and dilution of investment (5) -
Foreign currency translation reserve released to profit or loss on disposal of investment - (70)
29 408
3. TAXATION
Reconciliation of profit before taxation to adjusted profit before taxation
Profit before taxation 5 166 2 899
Share of profit of equity accounted companies - 5
Capital items 29 408
Adjusted profit before taxation 5 195 3 312
Reconciliation of taxation to taxation before capital items
Taxation 1 599 1 582
Taxation on capital items 3 148
Taxation before capital items 1 602 1 730
% %
Effective rate of taxation based on adjusted profit before taxation (%) 30.8 52.2
4. FAIR VALUES OF FINANCIAL INSTRUMENTS
Fair value as at Fair value as at
30 Sept 2017 30 Sept 2016
Rm Rm
Derivative financial assets - Level 2 fair value hierarchy 202 83
Derivative financial liabilities - Level 2 fair value hierarchy (27) (825)
175 (742)
Level 2 financial instruments consist of foreign exchange contracts that are valued using techniques where all of the inputs that
have a significant effect on the valuation are directly or indirectly based on observable market data. These inputs included foreign
exchange rates.
Twelve months Fifteen months
ended ended
30 Sept 2017 30 Sept 2016
Audited Audited
Million Million
5. EARNINGS PER SHARE
5.1 Weighted average number of ordinary shares
Issued ordinary shares at beginning of the period 2 568 2 568
Effect of shares issued during the period 87 -
Effect of shares issued in terms of initial public offering 23 -
Weighted average number of ordinary shares 2 678 2 568
Effect of dilutive potential ordinary shares - -
Diluted weighted average number of ordinary shares 2 678 2 568
Rm Rm
5.2 Earnings and headline earnings
Profit for the period 3 567 1 317
Attributable to non-controlling interests (17) (27)
Earnings attributable to ordinary shareholders 3 550 1 290
Capital items 29 408
Taxation effect of capital items (3) (148)
Headline earnings attributable to ordinary shareholders 3 576 1 550
5.3 Diluted earnings and diluted headline earnings per share
There are no dilutive instruments. Dilutive earnings and headline earnings per share are therefore equal to basic earnings
and basic headline earnings per share.
5.4 As a result of the weighting of shares, the current year’s per share numbers should be adjusted before any future profit
forecasts are based on them.
6. NET CASH FLOW ON ACQUISITION OF BUSINESSES
On 1 October 2016, a call centre and debt collector company was acquired for R471 million. On 1 February 2017, Tekkie Town was acquired
for a purchase price of R 3.4 billion settled through the issue of Steinhoff Africa Retail shares. For Steinhoff N.V. group purposes
the Tekkie Town purchase was settled through a combination of shares and cash. (2016: Iliad was purchased for a net cash consideration
of R1.3 billion).
Call center
Tekkie and debt Total Total
Town collector 2017 2016
Rm Rm Rm Rm
Assets
Intangible assets 766 39 805 478
Property, plant and equipment 69 124 193 176
Deferred taxation assets 23 2 25 73
Cash on hand 32 10 42 179
Liabilities (230) (7) (237) (108)
Working capital 439 21 460 147
Total assets and liabilities acquired 1 099 189 1 288 945
Goodwill attributable to acquisition 2 251 282 2 533 498
Total consideration 3 350 471 3 821 1 443
Cash on hand at date of acquisition (32) (10) (42) (179)
Paid in issue of shares (3 350) - (3 350) -
Net cash (inflow)/outflow on acquisition
of subsidiaries (32) 461 429 1 264
The goodwill arising on the acquisition of these companies is attributable to the strategic business advantages acquired, principal retail
locations and leases, as well as knowledgeable employees and management strategies that did not meet the criteria for recognition as other
intangible assets on the date of acquisition.
PRO FORMA FINANCIAL INFORMATION
Additional information
Pro forma 12-month results for the financial year ended 30 September 2017 and for the 12 months ended 30 September 2016
The pro forma results have been prepared for illustrative purposes only, in order to provide information about the impact
of the adjustments on revenue, operating profit before capital items (EBIT) and operating profit before depreciation and amortisation
(EBITDA) for the year ended 30 September 2017, and the 12-month period ended 30 September 2016.
The pro forma financial effects are presented in accordance with the JSE Listings Requirements, the Guide on Pro Forma Financial
Information issued by SAICA and the measurement and recognition requirements of IFRS.
Because of its nature, the pro forma financial information may not give a fair reflection on the group’s results from operations
after the adjustments, as detailed below.
The accounting policies applied in quantifying pro forma adjustments are consistent with the STAR group’s accounting policies
at 30 September 2017 and 30 September 2016.
The reporting accountants’ unmodified reports relating to the pro forma information is available for inspection at the company’s
registered address. The pro forma results are the responsibility of the board.
Pro forma 12-month results for the financial year ended 30 September 2017
The pro forma 12-month actual results and pro forma 12-month prior year actual results illustrate the effects of the acquisition
of Tekkie Town (acquired 1 February 2017), the acquisition of Iliad (acquired, January 2016) and the JD Group discontinued brands
(‘the adjustments’) on the group’s revenue, EBIT and EBITDA for the year ended 30 September 2017 and for the 12 months
ended 30 September 2016.
Pro forma Pro forma
12 months ended 12 months ended
30 September 2017 30 September 2016
Rm Rm Growth %
Revenue 58 582 51 766 13.2%
EBITDA 7 046 5 776 22.0%
EBIT 6 078 4 855 25.2%
Pro forma year ended 30 September 2017
STAR group
pro forma
Audited Tekkie Town JD Group after all
STAR group reviewed discontinued brands adjustments
for the 12 months ended four months ended 12 months ended for the year ended
30 September 2017(1) 31 January 2017(2) 30 September 2017(3) 30 September 2017
Rm Rm Rm Rm
Revenue 57 850 732 - 58 582
EBITDA 6 775 199 72 7 046
EBIT 5 815 191 72 6 078
Notes and assumptions
(1) The column titled ‘Audited STAR group for the 12 months ended 30 September 2017’ represents the actual audited results for
the STAR group for the 12 months ended 30 September 2017.
(2) The column titled ‘Tekkie Town reviewed four months ended 31 January 2017’ has been extracted from the Tekkie Town financial
statements, reviewed by Grant Thornton and audit partner C Minie, for the four months ended 31 January 2017. Tekkie Town
was acquired by the STAR group and consolidated as part of the STAR group results from 1 February 2017.
(3) The column titled ‘JD Group discontinued brands 12 months ended 30 September 2017’ includes one-off expenses that the group
was not allowed to provide for during the 2016 financial year, which relates to the one-off JD Group brand consolidation during
the 2017 financial year.
Pro forma period ended 30 September 2016
The pro forma 12-month prior year actual results illustrate the impact of acquiring the Steinhoff Africa Retail Assets (‘SARA’);
acquiring Tekkie Town and Iliad; and removing the one-off JD Group discontinued brands and related restructuring costs. These adjustments
have been described in detail in the pre-listing statement (PLS) dated 4 September 2017. Refer Annexure 1F on pages 194 and 195 of the PLS.
The amounts adjusting revenue, EBIT and EBITDA remain unchanged from previously disclosed amounts.
JD Group
discontinued STAR group
Reviewed Tekkie Town brands and related pro forma
SARA audited restructuring costs Illiad after all adjustments
12 months ended 12 months ended 12 months ended three months ended for the 12 months ended
30 September 2016 28 February 2017 30 September 2016 31 December 2015 30 September 2016
Rm Rm Rm Rm Rm
Revenue 51 234 1 513 (2 087) 1 106 51 766
EBITDA 4 397 344 975 60 5 776
EBIT 3 485 322 998 50 4 855
Announcement date: 4 December 2017
Steinhoff Africa Retail Limited (‘STAR’ or ‘the company’ or ‘the group’)
Non-executive directors: J Naidoo (Chairman)*, JB Cilliers*, MJ Jooste, VP Khanyile*, SH Müller*, HJ Sonn*, AE Swiegers*, DM van der Merwe,
JD Wiese
Executive directors: AB la Grange (Chief executive officer), RG Hanekom (Chief financial officer)
*Independent
Registered address
28 Sixth Street
Wynberg
Sandton 2090
Postal address
PO Box 6100
Parow East 7501
Telephone: 021 929 4800
Facsimile: 021 929 4829
E-mail: info@star-group.co.za
www.steinhoffafricaretail.co.za
Transfer secretaries
Computershare Investor Services Proprietary Limited
Rosebank Towers
15 Bierman Avenue
Rosebank 2196
Company secretary
Steinhoff Secretarial Services Proprietary Limited
Auditors
Deloitte & Touche
Sponsor
PSG Capital Proprietary Limited
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