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Steinhoff International Holdings Ltd - Unaudited results for the six months

Release Date: 03/03/2003 16:04
Code(s): SHF
Wrap Text

Steinhoff International Holdings Ltd - Unaudited results for the six months ended 31 December 2002 Steinhoff International Holdings Ltd Registration number: 1998/003951/06 Share code: SHF ISIN code: ZAE 000016176 Sustainable growth achieved in challenging international markets * Revenue up 35% * Headline earnings up 33% to R487 million * Headline EPS up 21% * Strong operating cash flow * Sound balance sheet structure Consolidated income statement for the six months ended 31 December 2002 Unaudited *Unaudite d six six Audited
months months year ended ended ended 31/12/02 31/12/01 % 30/06/02 Notes R`000 R`000 change R`000
Revenue 5 299 962 3 912 203 35 8 207 936 Operating income before depreciation 609 799 459 285 33 1 040 014 Depreciation (111 813) (70 060) (163 563) Operating income after depreciation 497 986 389 225 28 876 451 Exceptional 1 (15 307) - (107 174) items Earnings before goodwill, interest and 482 679 389 225 24 769 277 taxation Goodwill (28 506) - (36 549) amortised Earnings before interest and taxation 454 173 389 225 17 732 728 Net finance (19 492) (18 137) (79 299) charges Earnings 434 681 371 088 17 653 429 before taxation Taxation (31 484) (25 365) 24 (52 609) Earnings 403 197 345 723 17 600 820 after taxation Share of associated companies` retained 44 515 21 704 105 55 964 income Attributable to outside shareholders (8 281) 856 1 809 Income attributable to shareholders 439 431 368 283 19 658 593 Number of 951 800 864 845 10 906 616 shares in issue (`000) Weighted average number of shares in 929 537 855 528 9 864 754 issue (`000) Attributable 439 431 368 283 19 658 593 income (R`000) Headline 2 487 536 367 267 33 785 021 earnings (R`000) Earnings per 47 43 9 76 share (cents) Headline earnings per share before 52 45 98 restatement (cents) Changes in accounting policies to comply with new accounting standards and circular - (2) (7) 7/2002 Headline earnings per share 52 43 21 91 (cents) Dividend per - - 15 share (cents) Note 1: Exceptional items (R`000) Closure costs (15 307) - (83 171) Impairment of - - (24 003) assets (15 307) - (107 174) Note 2: Headline earnings calculation Income attributable to shareholders 439 431 368 283 658 593 Adjustment for: - (Profit)/Loss on disposal of fixed 4 292 (1 016) (17 295) assets - Exceptional 15 307 - 107 174 items - Goodwill 28 506 - 36 549 written off Headline earnings for the period 487 536 367 267 33 785 021 Changes in accounting policies to comply with new accounting standards and circular (4 292) 17 630 62 195 7/2002 Headline earnings before 483 244 384 897 847 216 restatement *The figures for the six months ended 31/12/2001 have been restated to comply with Accounting Statement AC 135 as well as circular 7/2002. Abridged consolidated cash flow statement for the six months ended 31 December 2002 Unaudited Unaudited six six Audited months months year
ended ended ended 31/12/02 31/12/01 30/06/02 R`000 R`000 R`000 Operating profit 586 048 458 269 932 557 before working capital changes Net changes in (344 858) (159 832) 22 454 working capital Cash generated from 241 190 298 437 955 011 operations Net finance costs (19 492) (18 137) (79 299) Dividends paid (16 562) (26 694) (26 694) Dividends received 17 230 7 506 7 506 Taxation (22 091) (60 457) (59 457) Net cash inflow 200 275 200 655 797 067 from operating activities Net cash outflow (515 501) (1 134 016) (1 380 076) from investing activities Net cash inflow 421 403 32 153 308 145 from financing activities Net 106 177 (901 208) (274 864) increase/(decrease) in cash and cash equivalents Effects of exchange rate changes on cash and cash (121 449) 142 732 (308 989) equivalents Cash and cash 405 052 988 905 988 905 equivalents - beginning of period Cash and cash 389 780 230 429 405 052 equivalents - end of period Abridged consolidated balance sheet at 31 December 2002 Unaudited *Unaudited Audited 31/12/02 31/12/01 30/06/02 R`000 R`000 R`000 ASSETS Non-current assets Property, 2 830 639 2 786 699 2 729 956 plant and equipment and intangible assets Investments 1 240 035 808 089 1 246 109 and loans Deferred tax 23 515 - 5 727 asset 4 094 189 3 594 788 3 981 792
Current assets Accounts 2 824 401 2 480 458 2 563 859 receivable Inventories 1 124 779 1 127 763 1 109 204 Cash and cash 389 780 230 429 405 052 equivalents 4 338 960 3 838 650 4 078 115
Total assets 8 433 149 7 433 438 8 059 907 EQUITY AND LIABILITIES Capital and reserves Ordinary 4 693 236 3 796 269 4 382 901 shareholders` equity Outside 26 592 9 182 28 073 shareholders` interest 4 719 828 3 805 451 4 410 974
Non-current liabilities Deferred 12 576 4 531 7 223 taxation Long-term 655 914 1 054 260 746 811 liabilities Long-term 216 381 287 250 237 873 licence fee liability 884 871 1 346 041 991 907 Current liabilities Net interest 936 560 444 800 622 083 bearing Accounts 1 891 890 1 837 146 2 034 943 payable and provisions 2 828 450 2 281 946 2 657 026 Total equity 8 433 149 7 433 438 8 059 907 and liabilities Net asset 493 439 483 value per share (cents) Gearing ratio 33 33 24 (net) (%) *The figures for the six months ended 31/12/2001 have been restated to comply with Accounting Statement AC 135. Statement of changes in equity for the six months ended 31 December 2002 Share capital Non-
and distributable Distributable premium reserves reserves Total R`000 R`000 R`000 R`000 Balance at 2 155 425 577 445 1 650 031 4 382 901 beginning of period Earnings 439 431 439 431 attributable to shareholders Decrease in foreign currency translation (246 423) (246 423) reserve Dividends (16 562) (16 562) paid Issue of 133 889 133 889 shares Share of associate companies` retained earnings transferred to non- 18 542 (18 542) distributable reserves Balance at 2 289 314 349 564 2 054 358 4 693 236 end of period Note The accounting policies and methods of compilation for the financial statements for the six months ended 31 December 2002 are in all material respects consistent with those applied in previous periods, except for the provision of depreciation on owner-occupied buildings (AC 135) and post-retirement medical aid benefits (AC 116), which were accounted for the first time in the year ended 30 June 2002, and are in accordance with South African Statements of Generally Accepted Accounting Practice. The comparative results for the six months ended 31 December 2001 have been restated to recognise these changes, which has had the effect of reducing headline earnings for that period by R16,6 million with a prior year adjustment at 30 June 2001 of R114,7 million, which has been adjusted to the opening balance of retained income. Review of results Performance The Board takes pleasure in reporting that the Group`s headline earnings for the six months ended 31 December 2002 grew to R487 million (2001: R367 million) on increased revenues of R5 300 million (2001: R3 912 million) in a challenging and competitive global market. The results demonstrate the sustainability of the Group`s business model and core strategies through expanded geographical spread and diversification. Through outsourcing of non-core product ranges, the partial vertical integration of the European supply chain, the strengthening of existing and the creation of new business relationships and the manufacture and sourcing of product in low cost regions and sales into developed economies, the performance of the Group has been sustained. The Group`s ability to generate real earnings growth in its wide geographical areas of operation, without relying on a consistent depreciation in its reporting currency is encouraging. The average operating margin of the Group was maintained at 10% for the period and is expected to continue at this level for the remainder of the current financial year. Steinhoff Africa achieved an operating margin of 9,0% (2001: 9,0%) while the rest of the Group generated a margin of 11% in rand terms. Net finance charges were contained, notwithstanding the growth reported for the period as a result of continued sound working capital management and comparatively lower interest rates in Europe. The relatively low effective tax rate is due mainly to the favourable tax dispensations in certain jurisdictions in central Europe, as well as the partial utilisation of assessed losses brought forward through profitable trading. The effective tax rate is not anticipated to change materially in the foreseeable future. The Board is also pleased with the contribution of the Group`s associated investments, P G Bison Holdings and Unitrans, which more than doubled for the period under review. The results of Relyon (UK) and Steinhoff Pacific (Australia) are now included for the full six month period compared to only three months for the comparative period. Headline earnings per share increased by 21% to 52 cents (2001: 43 cents) on a weighted average number of 929,537 million (2001: 855,528 million) shares in issue. Segmental analysis The Group`s main activities as an integrated global lifestyle supplier is focused on manufacturing and wholesale & distribution. six months ended 31 December 2002 Earnings
before exceptional items, goodwill,
interest and Net R`000 Revenue % taxation* % assets % Manufacturing 3 706 175 70 363 483 67 3 383 72 846 Wholesale & 1 593 787 30 179 018 33 1 309 28 distribution 382 Total 5 299 962 10 542 501 10 4 693 100 0 0 228 * Earnings before exceptional items, goodwill, interest and taxation includes share of associate income of R44 515 000. six months ended 31 December 2001 Earnings before exceptional items,
goodwill, interest and Net R`000 Revenue % taxation** % assets % Manufacturing 2 871 616 73 252 396 61 2 699 661 71 Wholesale & 1 040 587 27 158 533 39 1 096 608 29 distribution Total 3 912 203 100 410 929 100 3 796 269 100 **Earnings before exceptional items, goodwill, interest and taxation includes share of associate income of R21 704 000. Geographical analysis The Group`s operations are located in southern Africa, the European community, eastern Europe and Australia. six months ended 31 December 2002 Earnings before
exceptional items, goodwill, interest
and Net R`000 Revenue % taxation % assets % Southern 1 475 906 28 131 884 24 1 316 350 28 Africa European 2 344 960 44 251 924 47 2 592 375 55 Community Eastern 1 223 449 23 152 931 28 706 149 15 Europe Australia and 255 647 5 5 762 1 78 354 2 New Zealand Total 5 299 962 100 542 501 100 4 693 228 100 six months ended 31 December 2001 Earnings before exceptional items,
goodwill, interest and Net R`000 Revenue % taxation % assets % Southern 1 275 842 33 110 364 27 1 259 815 33 Africa European 1 690 828 43 207 151 51 1 785 926 47 Community Eastern 820 080 21 88 174 21 678 983 18 Europe Australia 125 453 3 5 240 1 71 545 2 and New Zealand Total 3 912 203 100 410 929 100 3 796 269 100 The average exchange rate used to translate foreign currency income and expenditure into South African rand was R9,85: Euro1 (2001: R8,33: Euro1). R479 million (2001: R414 million) of Africa`s revenue represents exports to the USA and the European community, amounting to approximately 32% (2001: 32%) of its activities. It is the intention of the Group to continue to increase these exports into the future. The Group`s revenue exposure to the local South African furniture market amounted to 19% (2001: 20%). FUNDING AND GEARING The Group redeemed Euro30 million of short-term debt outstanding on 30 June 2002 from the proceeds of a six-year redeemable bond, having a fixed six-monthly coupon rate of 3,625% per annum. In addition, Steinhoff Europe intends to access a Euro syndicated term loan facility, which, if implemented and together with the bond, should improve the Group`s financial risk profile. Further, the Group`s European operations are gaining greater visibility in the international markets. The company strengthened its equity through the issue of 20,8 million shares to shareholders electing to receive the capitalisation shares in lieu of the cash dividend of 15 cents per share. The company also placed 20 million shares in the off-shore market in December 2002. The proceeds are to be used to fund capital expenditure and future business opportunities in the European division. This placing is in line with the Group`s stated objective of increasing its non- resident shareholder base. The company maintained its gearing ratio at 31 December 2002 at 33% (2001: 33%) and had an annualised net debt : EBITDA ratio of 1,27 times (2001: 1,37 times). CORPORATE ACTIVITY The Group did not make any material acquisitions during the period under review, but continues to integrate recent acquisitions and joint ventures. RELATED PARTY TRANSACTIONS During the period the company and its subsidiaries in the ordinary course of business, entered into various sale and purchase transactions with associates and joint ventures. These transactions were subject to terms that are no less favourable than those arranged with third parties. CORPORATE GOVERNANCE The Group complies in all material respects with the Code of Corporate Practice and Conduct published in the King Report on Corporate Governance. TRIPLE BOTTOM LINE The Group`s commitment to support of HIV/AIDS interventions, sound labour relations, skills training and development and creating an environment where all of its more than 30 000 employees worldwide can develop to their fullest potential, continues as planned. Compliance with environmental regulations remains a priority. Black Economic Empowerment of enterprises within our South African communities is an integral part of the group`s strategy. DIVIDEND It is the Group`s stated policy to declare dividends once a year, after its financial year-end at 30 June. PROSPECTS The Group`s operations in Europe and Australia are expected to gain market share through their competitive advantages, strategic alliances and recent expansions. The drive towards higher margin branded products continues. Management is examining areas that will enhance efficiencies in raw material supply from inter group sources, centralised distribution and logistics. Steinhoff Africa will continue to grow its exports from South Africa. We will make further investments in raw material production facilities to ensure long- term sources of supply, particularly in sawmilling and the privatisation of state-owned timber resources. Management is confident that, given the existing trading conditions, the Group will achieve real growth in earnings for the year. By order of the Board SJ GROBLER, Company secretary 3 March 2003 Corporate information Registration number: 1998/003951/06 Share code: SHF ISIN code: ZAE 000016176 Registered office 28 Sixth Street, Wynberg, Sandton, 2090 (PO Box 1955, Bramley, 2018) Tel +27 (11) 445 3000, Fax +27 (11) 445 3099 Transfer secretaries Computershare Investor Services Limited (Registration number 1987/003382/06) Ground Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box 7184, Johannesburg, 2000) Company secretary SJ Grobler 28 Sixth Street, Wynberg, Sandton, 2090 (PO Box 1955, Bramley, 2018) Sponsor Gensec Bank Limited, 3A Summit Road, Dunkeld West, Johannesburg, 2196 (PO Box 411420, Craighall, 2024) Directors: BE Steinhoff* (Chairman), MJ Jooste (Managing Director), DE Ackerman+, CE Daun+*, JNS du Plessis+, KJ Grov+, D Konar+, JF Mouton+, FJ Nel, FA Sonn+, NW Steinhoff*, DM van der Merwe *German +Non-executive www.steinhoffinternational.com Edblo Softex Slumberland Sealy Ther-a-pedic Dreamland Sealy Posturepedic Beech Furn Bakker & Steyger Cablefloor Pat Cornick High Point Victoria Lewis Wonder Wood @work 33 South PG Bison Milano Lounge Furniture Alpine Lounge Megacor Group Grafton Everest Gommagomma Roadway Logistics Greaves & Thomas Unitrans House of York Doorwise Bruply Doors (Pty) Ltd Jatex Moxwood Peach & Hatton Steincraft Unita Botswana Foam Supplies Loungeweave Namib Foam Vitafoam Mattex Braecroft Prime Pine Products Malenge Pritex Woodline XVG Relyon Kanizsa Steinhoff UK Furniture Norma Po-Co Designwerk Danubia SKS 1913 Mandante GeFem Steinhoff Pacific Bruno Steinhoff Ego Form Die Klose Kollektion Depol KPM Wim Conforta Mago Dormira Dieter Knoll Collection Schon Brunn Freedom Visita Italine Linea Italia Quattro Mobili Steinpol Collection i Lazboy Habufa Trend Design Marshall Furniture Steinhoff Sofa Nexus Steinhoff Benelux B.V. Hachmer Date: 03/03/2003 04:04:00 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department

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