Wrap Text
STEINHOFF - UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2003
STEINHOFF INTERNATIONAL HOLDINGS LTD
Registration number: 1998/003951/06
SHARE CODE :SHF
ISIN CODE :ZAE000016176
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2003
Highlights
- Group revenues up by 22% in euros
- 30% growth in euro headline earnings
- Strong balance sheet
- Improved margins
- Strong operating cash flow
Our strength and strategies continue to deliver sustainable growth
Bruno Steinhoff, Executive Chairman commented:
"We are particularly pleased with our growth achievements in Euro terms while
maintaining our earnings per share in Rand terms."
Consolidated income statement for the six months ended 31 December 2003
Unaudited Unaudited Audited
six six twelve
months months months
ended ended ended
31/12/03 31/12/02 % 30/06/03
Note R"000 R"000 change R"000
Revenue 5 387 194 5 299 962 2 9 948 595
Operating 714 186 609 799 17 1 300 913
income before
depreciation
Depreciation (114 136) (111 813) (191 858)
Operating 600 050 497 986 20 1 109 055
income after
depreciation
Exceptional 1 (14 736) (15 307) (79 389)
items
Earnings before 585 314 482 679 21 1 029 666
goodwill,
interest and
taxation
Goodwill (13 826) (28 506) (31 429)
amortised
Earnings before 571 488 454 173 26 998 237
interest and
taxation
Net finance (64 125) (19 492) (121 181)
charges
Earnings before 507 363 434 681 17 877 056
taxation
Taxation (61 452) (31 484) (97 950)
Earnings after 445 911 403 197 11 779 106
taxation
Share of 54 091 44 515 22 91 056
associate
companies"
retained income
Attributable to (325) (8 281) 2 881
outside
shareholders
Income 499 677 439 431 14 873 043
attributable to
shareholders
Number of 1 128 099 951 800 19 946 055
shares in issue
("000)
Weighted 999 308 929 537 8 939 970
average number
of shares in
issue ("000)
Attributable 499 677 439 431 14 873 043
income (R"000)
Headline 2 528 717 487 536 8 984 865
earnings
(R"000)
Earnings per 50 47 6 93
share (cents)
Headline 53 52 2 105
earnings per
share (cents)
Dividend per 18
share (cents)
Average 8,2051 9,8500 9,4150
currency
translation
rate (rand:
euro)
Note 1:
Exceptional
items (R"000)
- Profit on 12 000
disposal of
businesses
- Loss on (9 793)
disposal of
businesses
- Impairment of (5 954)
intangible
assets
- Closure costs (15 307) (37 362)
- Impairment of (14 736) (38 280)
property, plant
and equipment
(14 736) (15 307) (79 389)
Note 2:
Headline
earnings
calculation
Income 499 677 439 431 873 043
attributable to
shareholders
Adjustment for:
- Exceptional 14 736 15 307 79 389
items
- Goodwill 13 826 28 506 31 429
amortisation
- (Profit)/loss (1 414) 4 292 4 977
on disposal of
property, plant
and equipment
- Loss on (66) 107
disposal of
property, plant
and equipment
included in
share of
associate
income
- Goodwill 1 958 4 590
amortisation
included in
share of
associate
income
- Negative (8 670)
goodwill
included in
share of
associate
income
Headline 528 717 487 536 8 984 865
earnings for
the period
Abridged consolidated balance sheet at 31 December 2003
Unaudited Unaudited Audited
31/12/03 31/12/02 30/06/03
R"000 R"000 R"000
ASSETS
Non-current assets
Property, plant and 2 746 626 2 830 639 2 529 182
equipment and intangible
assets
Investments and loans 1 309 539 1 240 035 1 180 365
Deferred taxation 35 099 23 515 33 750
4 091 264 4 094 189 3 743 297
Current assets
Accounts receivable and 3 347 655 2 824 401 2 850 635
short term loans
Inventories 1 110 654 1 124 779 893 754
Cash and cash equivalents 2 788 090 389 780 1 462 943
7 246 399 4 338 960 5 207 332
Total assets 11 337 8 433 149 8 950 629
663
EQUITY AND LIABILITIES
Capital and reserves
Ordinary shareholders" 6 322 714 4 693 236 4 942 186
equity
Outside shareholders" 14 131 26 592 14 782
interest
6 336 845 4 719 828 4 956 968
Non-current liabilities
Deferred taxation 50 634 12 576 44 360
Long-term liabilities 2 569 156 655 914 1 437 591
Long-term licence fee 201 337 216 381 209 188
liability
2 821 127 884 871 1 691 139
Current liabilities
Net interest bearing debt 409 798 936 560 624 916
Accounts payable and 1 769 893 1 891 890 1 677 606
provisions
2 179 691 2 828 450 2 302 522
Total equity and 11 337 8 433 149 8 950 629
liabilities 663
Net asset value per share 560 493 522
(cents)
Gearing ratio (net) (%) 6 33 15
Closing conversion rate 8,3773 9,0000 8,6100
(rand: euro)
Abridged consolidated cash flow statement for the six months ended 31 December
2003
Unaudited Unaudited Audited
six months six months year
ended ended ended
31/12/03 31/12/02 30/06/03
R"000 R"000 R"000
Operating profit 712 930 586 048 1 253 339
before working capital
changes
Net changes in working (234 916) (344 858) (355 074)
capital
Cash generated from 478 014 241 190 898 265
operations
Net finance costs (64 125) (19 492) (121 181)
Dividends paid (34 025) (16 562) (16 763)
Dividends received 18 560 17 230 17 230
Taxation (61 671) (22 091) (85 728)
Net cash inflow from 336 753 200 275 691 823
operating activities
Net cash outflow from (897 250) (515 501) (812 189)
investing activities
Net cash inflow from 1 366 476 691 459 993 633
financing activities
Net increase in cash 805 979 376 233 873 267
and cash equivalents
Effects of exchange 3 031 (121 449) 147 790
rate changes on cash
and cash equivalents
Cash and cash 2 000 226 979 169 979 169
equivalents -
beginning of period
Cash and cash 2 809 236 1 233 953 2 000 226
equivalents - end of
period
Cash and cash
equivalents can be
reconciled to the
balance sheet as
follows:
Cash and cash 2 809 236 1 233 953 2 000 226
equivalents above
Overdrafts included 21 146 844 173 537 283
in financing
activities
Cash and cash 2 788 090 389 780 1 462 943
equivalents per
balance sheet
Statement of changes in equity for the six months ended 31 December 2003
Non-
Share distribut Distribut
capital able able
and reserves reserves Total
premium
R"000 R"000 R"000 R"000
Balance at 2 253 603 251 788 2 436 795 4 942 186
beginning of
period
Earnings 499 677 499 677
attributable to
shareholders
Dividends paid (34 025) (34 025)
Issue of shares 980 820 980 820
Decrease in (68 504) (68 504)
foreign currency
translation
reserve
Increase in 2 560 2 560
investment
reserve
Share of 35 531 (35 531)
associate
companies"
retained earnings
transferred to
non-distributable
reserves
Balance at end of 3 234 423 221 375 2 866 916 6 322 714
period
Notes
1. Compliance with GAAP
These interim results have been compiled in accordance with the South African
Statements of Generally Accepted Accounting Practice.
2. Accounting policies
The accounting policies used in the preparation of the interim financial
statements are consistent with those adopted in the annual financial statements
for the year ended 30 June 2003.
3. Material subsequent events
No events of note have occurred subsequent to the half year-end.
Commentary
Review of results
Performance
The group"s headline earnings in rand terms, for the period, grew to R529
million (2002: R487 million) on revenues which were maintained at similar levels
as the previous corresponding period. The average exchange rate used for
converting euro income and expenditure to rand was R8,2051: E1 (2002:R9,85: E1)
representing a strengthening in the rand conversion rate of 17%.
The group generated 81% of its revenues in currencies other than South African
rand, principally euro, pound sterling, US dollar and Australian dollar ("AUD").
The revenue growth achieved in euro terms amounted to 22% from E538 million to
E657 million.
The results, yet again, demonstrate the sustainability of the group"s business
model through expanded geographical spread and diversification. Its strategy of
low cost manufacturing and sourcing, combined with outsourcing of non-core
product ranges, and sales into developed economies, has stood the group in good
stead in a period in which the US dollar, Polish zloty and Hungarian forint were
weak against the euro. The major portion of the European sales is realised in
euro. This has had a particularly beneficial impact on margins. The group"s
ability to generate real earnings growth denominated in the euro as its major
operating currency, whilst maintaining rand earnings notwithstanding a
substantial appreciation in its reporting currency, confirms its long-term
strategy.
The average operating margin of the group (before exceptional items, goodwill
amortisation, associated company income and profit and losses on disposal of
property, plant and equipment) increased to 11,1 % (2002: 9,5%) for the period.
The group continues to benefit from enhanced efficiencies throughout the supply
chain. Steinhoff Africa achieved an operating margin, inclusive of associate
income, of 10 % (2002:9,0%) while the rest of the group generated a margin of 13
% (2002:11%).
Net finance charges at R64 million for the six months are in line with the
charge of R121 million for the full year ended 30 June 2003.
The net interest-bearing debt to equity ratio reduced to 6% (2002: 33%) at 31
December 2003. A portion of the group"s cash resources is earmarked to fund the
PG Bison acquisition.
The group"s cash flow from operations continues to be strong, at R478 million
was nearly double the amount of R241 million for the corresponding period and
further benefited from sound working capital management. Cash generation is
after a net increase in working capital of R235 million (2002: R345 million).
The increase in short-term cash and cash equivalents should be viewed against
the receipt of the proceeds of the international offering which offsets the
requirements relating to the seasonal nature of the business, with December
being the peak funding period for the business cycle in South Africa, and the
funds available from the bond issue, which together with operating cash flows,
have been allocated to investments and acquisitions but not spent at time of
these results.
The group"s tax position has been maintained as in previous periods.
Headline earnings per share increased to 53 cents (2002: 52 cents) on a weighted
average number of 999,3 million (2002: 929,5 million) shares in issue.
For the 12-month and 6-month periods since 31 December 2002 and 30 June 2003 the
net asset value per share improved 13,6% and 7,3% respectively. This improvement
occurred despite an increase in the number of shares in issue to the current 1
128,1 million from 951,8 million and 946,1 million at the above mentioned
periods respectively.
The board is also pleased with the contributions of the group"s major associate
investments, PG Bison Holdings and Unitrans, which showed excellent growth for
the period under review.
Shareholders" funds increased to R6 323 million (2002: R4 693 million) and
return on average shareholders" funds was stable at 20% (2002: 21%) during the
period.
SEGMENTAL ANALYSIS
The group has prepared its operating results in euro terms for the first time,
which are included in its segmental analysis.
The group"s main activity as an integrated global lifestyle supplier is focused
on manufacturing and wholesale & distribution.
Segmental analysis in euro for the six months ended 31 December 2003
Revenue Revenue %
Euro "000 31/12/2003 31/12/2002 change
Manufacturing 446 465 376 261 19
Wholesale and 210 101 161 806 30
distribution
Total 656 567 538 067 22
for the six months ended 31 December 2003
Earnings Earnings
before before
exceptional exceptional
items, items,
goodwill, goodwill,
interest interest
and taxation and %
taxation
Euro "000 31/12/2003 31/12/2002 change
Manufacturing 53 482 36 497 47
Wholesale and 26 260 18 174 44
distribution
Total 79 742 54 671 46
Geographical analysis in euro for the six months ended 31 December 2003
Revenue Revenue %
Euro "000 31/12/2003 31/12/2002 change
Southern Africa 180 664 149 838 21
European Community 313 086 238 067 32
Eastern Europe 134 180 124 208 8
Australia and New 28 636 25 954 10
Zealand
Total 656 567 538 067 22
for the six months ended 31 December 2003
Earnings Earnings
before before
exceptional exceptional
items, items,
goodwill, goodwill,
interest interest
and taxation and %
taxation
Euro "000 31/12/2003 31/12/2002 change
Southern Africa 17 994 13 389 34
European Community 40 041 25 171 59
Eastern Europe 20 785 15 526 34
Australia and New 923 585 58
Zealand
Total 79 742 54 671 46
Segmental analysis in rand for the six months ended 31 December 2003
Earnings
before
exceptional
items,
goodwill,
interest
and
Rand "000 Revenue % taxation % Net %
assets
Manufacturing 3 663 292 68 438 824 67 4 425 899 70
Wholesale and 1 723 902 32 215 470 33 1 896 815 30
distribution
Total 5 387 194 100 654 294 100 6 322 714 100
Earnings before exceptional items, goodwill, interest and taxation includes
share of associate income of R54 091 000.
for the six months ended 31 December 2002
Earnings
before
exceptional
items,
goodwill,
interest
and
Rand "000 Revenue % taxation % Net %
assets
Manufacturing 3 706 175 70 359 494 67 3 383 850 72
Wholesale and 1 593 787 30 179 018 33 1 309 386 28
distribution
Total 5 299 962 100 538 512 100 4 693 236 100
Earnings before exceptional items, goodwill, interest and taxation includes
share of associate income of R44 515 000.
Geographical analysis in rand for the six months ended 31 December 2003
Earnings
before
exceptional
items,
goodwill,
interest
and
Rand "000 Revenue % taxation % Net %
assets
Southern 1 482 370 28 147 642 23 1 435 619 23
Africa
European 2 568 904 48 328 540 50 3 826 202 61
Community
Eastern 1 100 959 20 170 539 26 995 101 16
Europe
Australia and 234 961 4 7 573 1 65 792 1
New Zealand
Total 5 387 194 100 654 294 100 6 322 714 100
Geographical analysis for the six months ended 31 December 2002
Earnings
before
exceptional
items
goodwill,
interest
and
Rand "000 Revenue % taxation % Net %
assets
Southern 1 475 906 28 131 884 24 1 316 350 28
Africa
European 2 344 960 44 247 935 46 2 592 383 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 5 299 962 100 538 512 100 4 693 236 100
An amount of R445 million (2002: R479 million) of Africa"s revenue represents
exports to the European Community and the USA amounting to approximately 30%
(2002: 32%) of its activities. The group"s revenue exposure to the local South
African furniture market amounted to 19% (2002: 19%).
CORPORATE ACTIVITY
The group concluded the following corporate transactions during the period under
review:
- it placed 145 292 871 shares in the off-shore market in November 2003 pursuant
to an International Equity Offering which raised euro 122,6 million, before
expenses. This placing is in line with the group"s stated objective of
increasing its non-resident shareholder base, which, at 19 December 2003, stood
at 53% of the company"s issued share capital. In addition, the average trading
volumes of Steinhoff shares have increased substantially and, inter alia, led to
the inclusion of Steinhoff in the MSCI Emerging Market Indices;
- an investment by a European subsidiary of AUD 115 million effectively in the
sourcing, distribution and manufacturing (Steinhoff Pacific) interests of
Freedom Group Limited ("FGL") pursuant to FGL"s de-listing from the Australian
Stock Exchange;
- the acquisition by Relyon Group (UK) of the Sprung Slumber division of
Airsprung Plc announced on the JSE News Services (SENS) on 5 October 2003;
- in South Africa the group concluded a medium term Corporate Bond issue of R1
billion to facilitate the re-financing of existing short-term facilities and,
accompanied by normal operating cash generation, would accomplish optimal
funding for capital expenditure and strategic acquisitions and investments,
including PG Bison Holdings; and
- the offer by Steinhoff Africa or its nominee for the remaining 65,01% of the
issued shares in P G Bison Holdings on the basis of an immediate cash sale
applicable to corporate shareholders and an earn-out applicable to shareholders
comprising management and certain trusts which hold shares on behalf of other
employees. This offer is still subject, inter alia, to the approval of the
competition authorities in South Africa.
CORPORATE GOVERNANCE
The group complies in all material respects with the JSE Securities Exchange
Listing Requirements and the Code of Corporate Practices and Conduct published
in the King Report on Corporate Governance.
TRIPLE BOTTOM LINE
The group"s support of HIV/AIDS initiatives, sound labour relations, skills
training and development and creating an environment where all of its employees,
worldwide, can develop to their fullest potential, continues.
Compliance with environmental regulations remains a priority. The group"s
production facilities, processes and raw materials used are continuously
evaluated to ensure sustainability and acceptable standards. Black Economic
Empowerment of enterprises within our South African operations remains an
integral part of the group"s strategy.
CHANGES TO BOARD
Mr Rodney Howard Walker, the Chief Executive Officer of FGL in Australia, has
been appointed to the company"s board with effect from 1 March 2004.
DIVIDEND
Going forward the board will be reviewing its dividend policy. It intends to
offer cash dividends covered not more than 5 times by its earnings per share, in
lieu of capitalisation shares.
It is the group"s stated policy to declare dividends once a year after its
financial year-end at 30 June.
OUTLOOK
The European and Australian operations are continuing to grow through leveraging
their core strengths and competencies. It is expected that the expanded
Australian investment will further benefit from the critical mass achieved
through combining the sourcing capabilities and expertise of Steinhoff Europe
and the businesses of FGL. The expanded manufacturing base in Poland, Hungary
and Ukraine, particularly with respect to the Mail Order market served from the
Polish operations, bode well for increased exports into the European Union.
The additions of complementary products and brands to the group"s offering (e.g.
Puris Bad in Germany (bathroom furniture) and Sprung Slumber in the UK) are
expected to increase the group"s market coverage and synergies in terms of
distribution, sourcing of raw materials and complementary customer bases.
The establishment of the new logistics centre in Leinefelde, Germany, has been
completed and the enhanced centralised distribution and logistics efficiencies
have already had a positive effect on European margins.
Steinhoff Africa will continue to grow its exports from Southern Africa,
benefiting from economies of scale and better utilisation of production capacity
and improved efficiencies, in a strengthening rand environment. The group will
make further investments in raw material production facilities to ensure long-
term sources of supply, particularly in sawmilling and timber resources.
Management expect to achieve growth in headline earnings from the continuing
operations for the remainder of the current financial year.
On behalf of the board of directors
B E Steinhoff M J Jooste
Chairman Chief Executive Officer
1 March 2004
Administration
Registration number: 1998/003951/06
JSE share code: SHF ISIN code: ZAE 000016176
Registered office
28 Sixth Street, Wynberg, Sandton, 2090, Republic of South Africa
Tel +27 (11) 445 3000, Fax +27 (11) 445 3099
Transfer secretaries: Computershare Limited
70 Marshall Street, Johannesburg, 2001
Company secretary
S J Grobler
Auditors
Deloitte & Touche
Sponsor
PSG Capital Limited
Directors:
B E Steinhoff* (Chairman), M J Jooste (Chief Executive Officer), D E Ackerman+,
C E Daun+*,
J N S du Plessis+, K J Grov +, D Konar+, J F Mouton+, F J Nel, F A Sonn+, N W
Steinhoff+*,
D M van der Merwe, J H N van der Merwe, R H Walker# #Australian *German
+Non-executive
Date: 02/03/2004 07:30:14 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
Sharenet Sites 
