To view the PDF file, sign up for a MySharenet subscription.

Steinhoff / Steinhoff Investments - Audited Results For The Year Ended 30 June

Release Date: 12/09/2005 15:50
Code(s): SHF SHFF
Wrap Text

Steinhoff / Steinhoff Investments - Audited Results For The Year Ended 30 June 2005 STEINHOFF INTERNATIONAL HOLDINGS LTD Registration number: 1998/003951/06 (Incorporated in the Republic of South Africa) JSE share code: SHF ISIN code: ZAE000016176 ("Steinhoff" or "the company" or "the Group") STEINHOFF INVESTMENT HOLDINGS LIMITED (Incorporated in the Republic of South Africa) (Registration number: 1954/001893/06) (JSE Code: "SHFF" ISIN: ZAE000068367) ("Steinhoff Investments") RAW MATERIALS MANUFACTURING WAREHOUSING DISTRIBUTION AND RETAIL Audited results for the year ended 30 June 2005 Headlines - Group Revenues increase by 88% in Euros and 81% in Rand - 40% growth in headline earnings in Euros and 35% in Rand - Headline earnings per share increase by 33% in Euros and 28% in Rand - Strong regional independent balance sheets support future growth - R1,4 billion cash generated by operations - Distribution to shareholders increase by 36% to 30 cents per share Geographically expanded operations and regionally focused business model continue to deliver sustainable growth Abridged consolidated income statement for the year ended 30 June 2005 Audited *Audited (restated) year year
ended ended 30/06/05 30/06/04 % Notes R"000 R"000 increase Revenue 19 114 369 10 572 130 81 Operating income 2 452 885 1 515 590 62 before depreciation and exceptional items Depreciation (435 567) (214 302) Operating income 2 017 318 1 301 288 55 after depreciation Exceptional items 1 (24 068) (128 922) Earnings before 1 993 250 1 172 366 70 goodwill amortisation, interest and taxation Goodwill amortised - (38 592) Earnings before 1 993 250 1 133 774 76 interest and taxation Net finance charges (165 728) (76 838) Earnings before 1 827 522 1 056 936 73 taxation Taxation (222 120) (145 444) Earnings after 1 605 402 911 492 76 taxation Share of associate 50 265 115 474 companies" income Attributable to (64 112) (4 012) minorities Income attributable 1 591 555 1 022 954 56 to shareholders Number of shares in 1 130 584 1 122 966 1 issue (`000) Weighted average 1 128 054 1 067 461 6 number of shares in issue (`000) Attributable income 1 591 555 1 022 954 56 (R`000) Headline earnings 2 1 589 840 1 177 840 35 (R`000) Basic earnings per 141 96 47 share (cents) Headline earnings 141 110 28 per share (cents) Diluted basic 138 94 47 earnings per share (cents) Diluted headline 138 108 28 earnings per share (cents) Distribution per 30 22 share (cents) Note 1: Exceptional items (R"000) - Profit on disposal - 234 of business - Loss on disposal (1 434) - of business - Discontinued (7 400) (69 652) operations and closure cost - Impairment of (15 234) (59 504) property, plant and equipment (24 068) (128 922) Note 2: Headline earnings calculation Income attributable 1 591 555 1 022 954 to shareholders Adjustment for: - Exceptional items 24 068 128 922 - Goodwill - 38 592 amortisation - Profit on disposal (27 077) (6 514) of property, plant and equipment - Loss/(profit) on 1 294 (707) disposal of property, plant and equipment included in share of associate income - Goodwill - 3 493 amortisation included in share of associate income - Negative goodwill - (8 900) included in share of associate income Headline earnings 1 589 840 1 177 840 for the year * Prior year figures have been restated to reflect the effect of the changes in the methods of recognising operating lease costs, the restatement of associated companies" figures to reflect the restatement of foreign operations into their functional currency, the proportionate consolidation of joint ventures and the change in the method of accounting for operating lease costs. These adjustments had the effect of reducing basic earnings per share from 97c to 96c and headline earnings per share from 112c to 110c. Abridged consolidated cash flow statement for the year ended 30 June 2005 Audited *Audited year ended year ended 30/06/05 30/06/04
R"000 R"000 Operating profit before working 2 414 635 1 441 942 capital changes Net changes in working capital (990 526) 97 420 Cash generated from operations 1 424 109 1 539 362 Net finance costs (165 728) (76 838) Dividends paid (333 076) (34 333) Dividends received 19 957 18 560 Taxation (201 083) (117 480) Net cash inflow from operating 744 179 1 329 271 activities Net cash outflow from investing (2 479 035) (1 363 982) activities Net cash inflow from financing 2 996 213 1 688 230 activities Net increase in cash and cash 1 261 357 1 653 519 equivalents Effects of exchange rate changes (502) 2 392 on cash and cash equivalents Cash and cash equivalents at 3 656 442 2 000 531 beginning of period Cash and cash equivalents at end 4 917 297 3 656 442 of period Cash and cash equivalents can be reconciled to the balance sheet as follows: - Cash and cash equivalents above 4 917 297 3 656 442 - Overdrafts included in (731 948) (10 677) financing activities Cash and cash equivalents per 4 185 349 3 645 765 balance sheet * The changes in accounting policies had no cash flow effect. Abridged consolidated balance sheet at 30 June 2005 Audited *Audited (restated) year ended year ended
30/06/05 30/06/04 R"000 R"000 Assets Non-current assets Property, plant and equipment, 8 876 959 3 291 882 plantations and intangible assets Investments and loans 1 453 101 1 360 458 Deferred tax assets 375 205 129 675 10 705 265 4 782 015 Current assets Accounts receivable and short-term 5 877 610 3 766 704 loans Inventories 2 937 671 1 348 515 Cash and cash equivalents 4 185 349 3 645 765 13 000 630 8 760 984 Total assets 23 705 895 13 542 999 Equity and liabilities Capital and reserves Ordinary share capital and reserves 8 276 191 6 454 606 Preference share capital 643 879 - 8 920 070 6 454 606 Minority interest 1 273 815 35 241 Non-current liabilities Deferred tax liabilities 898 691 118 512 Long-term liabilities 5 393 680 3 174 015 Long-term licence fee liability 143 893 180 621 Long-term provisions 235 478 24 838 6 671 742 3 497 986
Current liabilities Net interest bearing 763 444 523 269 Accounts payable and provisions 6 076 824 3 031 897 6 840 268 3 555 166
Total equity and liabilities 23 705 895 13 542 999 Net asset value per ordinary share 732 575 (cents) Gearing ratio (net) 22% 0% Closing exchange rate - Rand: Euro 8,0965 7,5563 * Prior year figures have been restated to reflect the effect of the changes in the methods of recognising operating lease costs, the restatement of associated companies" figures to reflect the restatement of foreign operations into their functional currency, the proportionate consolidation of joint ventures and the change in the method of accounting for operating lease costs. Consolidated statement of changes in equity for the year ended 30 June 2005 Ordinary Preference
share share capital and capital and premium premium R"000 R"000
Balance at 30 June 2003* 2 240 944 - Earnings attributable to - - shareholders Dividends paid - - Issue of shares 920 934 - Decrease in foreign - - currency translation reserve Financial instruments - - revaluation reserve Share of associate - - companies" retained earnings transferred to non-distributable reserves Share of associate - - companies" retained earnings transferred to distributable reserves Investment reserves - - released to income Increase in investment - - reserve Balance at 30 June 2004 3 161 878 - Non-
distri- Distri butable butable reserves reserves Total R"000 R"000 R"000
Balance at 30 June 2003* 243 609 2 387 948 4 872 501 Earnings attributable to - 1 022 953 1 022 953 shareholders Dividends paid - (34 141) (34 141) Issue of shares - - 920 934 Decrease in foreign (329 837) - (329 837) currency translation reserve Financial instruments (14) - (14) revaluation reserve Share of associate 13 341 (13 341) - companies" retained earnings transferred to non-distributable reserves Share of associate (23 292) 23 292 - companies" retained earnings transferred to distributable reserves Investment reserves (1 125) - (1 125) released to income Increase in investment 3 335 - 3 335 reserve Balance at 30 June 2004 (93 983) 3 386 711 6 454 606 Ordinary Preference
share share capital and capital and premium premium R"000 R"000
Balance at 30 June 2004* 3 161 878 - Earnings attributable to - - shareholders Dividends paid - - Issue of shares 28 977 643 879 Negative goodwill released - - Increase in foreign - - currency translation reserve Share of associate - - companies" retained earnings transferred from non-distributable reserves Financial - - instrumentsrevaluation reserve Decrease in investment - - reserve Balance at 30 June 2005 3 190 855 643 879 Non-
distri- Distri butable butable reserves reserves Total R"000 R"000 R"000
Balance at 30 June 2004* (93 983) 3 386 711 6 454 606 Earnings attributable to - 1 591 555 1 591 555 shareholders Dividends paid - (248 970) (248 970) Issue of shares - - 672 856 Negative goodwill released - 110 957 110 957 Increase in foreign 342 222 - 342 222 currency translation reserve Share of associate (126 893) 126 893 - companies" retained earnings transferred from non-distributable reserves Financial 482 - 482 instrumentsrevaluation reserve Decrease in investment (3 638) - (3 638) reserve Balance at 30 June 2005 118 190 4 967 146 8 920 070 * Prior year figures have been restated to reflect the effect of the changes in the methods of recognising operating lease costs, the restatement of associated companies" figures to reflect the restatement of foreign operations into their functional currency, the proportionate consolidation of joint ventures and the change in the method of accounting for operating lease costs. Notes 1. Basis of preparation The accounting policies used in the preparation of the twelve months results announcement are, unless otherwise indicated herein, consistent with those applied in the previous period. These results are compiled in accordance with the South African Statement of Generally Accepted Accounting Practice AC127 applicable to financial reporting, the Listings Requirements of the JSE Limited and Schedule 4 of the Companies Act of South Africa. Basic earnings per share is calculated by dividing attributable income by the weighted average number of ordinary shares in issue during the 2005 year. Headline earnings per share is calculated by dividing headline earnings by the weighted average number of ordinary shares in issue during the year. Fully diluted earnings and headline earnings per share take into account the dilutive effect of share options held by employees, and the potential ordinary shares issuable as settlement for the vendors liability as a result of the PG Bison acquisition. 2. Changes in accounting policies AC501 accounting for secondary tax on companies ("STC") is effective for years commencing on or after 1 January 2004. This statement was effectively adopted for the first time by the Group in the previous financial year when a deferred tax asset was raised on the STC credits. The amount carried as an asset at 30 June 2005 amounted to R0,16 million (2004: R1,5 million). Circular 7/2005: Operating leases which was issued by the South African Institute of Chartered Accountants on 2 August 2005, and refers to the requirements of AC105: Leases, in terms of which operating leases with fixed rental increases must be accounted for on the straight-line basis. In South Africa, the previous accounting treatment of such operating leases was generally not consistent with the requirements of AC105. The impact of accounting for operating lease costs on the straight-line basis rather than the cash flow basis had the effect that opening retained earnings have been adjusted by approximately R69 million and the operating lease charges for the current and prior years have increased by R10 million and R16 million respectively. These amounts are gross and the deferred tax effect has been accounted for accordingly. AC140 (IFRS 3) Business combinations was adopted for the first time by the Group for the year ended 30 June 2005. The first time adoption of AC140 has the effect that goodwill is no longer amortised but rather tested for impairment annually and previously recognised negative goodwill is released to distributable reserves. The adoption of this statement had a material impact in the current year as the Group successfully concluded a number of significant strategic investment deals on a global basis. These include the acquisition of a further significant portion in Unitrans Limited ("Unitrans") in terms of the Group"s pre emptive right against the Murray & Roberts Limited"s shareholding in Unitrans. This has resulted in Unitrans becoming a subsidiary, effective January 2005. In Germany, the Group acquired certain assets of the Hukla Group of companies and in the United Kingdom, the Group acquired a controlling share in the Homestyle Group Plc. In terms of AC140, the Group also adopted AC129 (Revised) in connection with intangible assets. 3. Audit opinion The consolidated annual financial statements for the year ended 30 June 2005 has been audited by Deloitte & Touche and their accompanying unqualified audit report as well as their unqualified audit report on this set of summarised financial information are available for inspection at the company"s registered office. These summarised financial statements have been derived from the Group financial statements and are consistent in all material respects, with the Group financial statements. 4.Corporate governance The Group subscribes to and complies with the Code on Corporate Governance Practices as contained in the second King Report on Corporate Governance. 5. Social responsibility Steinhoff continues to be recognised for its corporate social investment activities. Management remains committed to the related initiatives. A number of social responsibility projects are currently underway. A sound working relationship is maintained with the relevant Unions. Ongoing skills and equity activities continue to ensure compliance with current legislation. 6. Related party transactions The company entered into various related party transactions. These transactions are no less favourable than those arranged with third parties. 7. Subsequent events No significant events, except for the AMAP transaction referred to under "Corporate Activity", have occurred in the period between the year-end and the date of this report. Commentary REVIEW OF RESULTS PRELIMINARY The average exchange rate used for converting Euro income and expenditure to Rand was R7,9091: Euro 1 compared to R8,2145: Euro 1 in respect of the year ended 30 June 2004, representing a further strengthening in the Rand conversion rate of 4%. The Group"s business model of an expanded geographical base, combining and growing the mix between third party sourcing vis-a-vis own manufacturing, and diversification and integration strategies which differ from region to region, remain effective. The results were delivered in a period where the market conditions in Continental Europe and the United Kingdom continued to be depressed, whereas the Pacific Rim remains competitive. South Africa continued to experience strong consumer demand as a result of consumer confidence and sound economic fundamentals. The competitive situation in the United Kingdom led to the acquisition, with effect from 30 June 2005, of a 60,8% interest in the retailer, Homestyle Group Plc. PERFORMANCE The Group"s revenues increased by 81% from R10 572 million to R19 114 million. A portion of this increase was attributable to the consolidation, for the first time, of the results of Unitrans (6 months) and PG Bison Holdings (Pty) Limited ("PG Bison") (12 months), both of which were previously associates and are now subsidiaries of the Group. The Group generated 52% (2004: 83%) of its revenues in currencies other than South African Rand, principally Euro, Pound Sterling ("GBP"), US Dollar ("US$") and Australian Dollar ("AUD"). The revenue achieved in Euro terms increased by 88% from Euro 1 287 million to Euro 2 416 million. Headline earnings grew by 35% from R1 178 million in 2004 to R1 590 million. Headline earnings per share increased 28% to 141 cents (2004: 110 cents) with basic earnings per share increasing 47% to 141 cents (2004: 96 cents). The weighted average number of shares in issue increased by 6% during the year to 1 128,1 million (2004: 1 067,5 million). Ordinary shareholders" funds at 30 June 2005 amounted to R8 276 million (2004: R6 455 million). Return on average ordinary shareholders" funds increased to 22% (2004: 21 %). The net asset value per ordinary share improved further by 27% from 575 cents to 732 cents per share, notwithstanding an increase in the number of issued shares to 1 130,6 million at 30 June 2005 (2004: 1 123,0 million). The Group"s cash flow from operations was R1 424 million (2004: R1 539 million). Cash generation is calculated after a net increase in working capital of R991 million (2004: decrease of R97 million) This was attributable to an increase in inventory and accounts receivable commensurate with the Group"s growth in activity levels, and the continuation of the policy of accelerated payments to suppliers to obtain preferential treatment. The average operating margin of the Group was 10,6 % for the year. However, in order to facilitate comparison with previous periods, if the effects of Unitrans" lower margins are eliminated on a pro forma basis, the operating margin of the remainder of the Group improved to 13% (2004: 12,5%). The Group continues to benefit from enhanced efficiencies throughout the supply chain, its critical mass and its policy to fund third party suppliers to achieve favourable terms of supply of outsourced products. Net finance charges for the year were R166 million (2004: R77 million). These finance charges include the net finance charges of Unitrans for the latter six months of the year and reflect the higher activity levels of the Group. The impact of the increased finance charges was partially off-set by strong operating cash generation, the lower cost of debt in South Africa as well as in Europe, and the lower average exchange rate at which Euro finance charges were converted to South African Rand. The funding of approximately GBP 87 million required for the Homestyle investment (R1 050 million at the spot rate of R12,0633: 1 GBP ruling at 30 June 2005) was met from the Group"s cash resources in the UK. At 30 June 2005 Steinhoff had net interest bearing debt of R1 972 million (2004: net cash assets of R34 million) resulting in a debt: equity ratio of 22%. The Group"s taxation charge increased to R222 million (2004: R145 million) in line with expectations. Management remains confident that the average tax rate of the Group will not exceed 15% of pre-tax income for the foreseeable future. The Group"s expansion of the buying office in China and the centralisation of all third party sourcing and distribution activities under the Pacific Rim division are continuing to deliver positive results. The wholesale, distribution & retail business segment, which already comprises 51% of Steinhoff"s sourcing revenue, enhances the Group"s flexibility and product offering and continues to contribute to market share gains in the Group"s principal markets. SEGMENTAL ANALYSIS The Group"s main activity as an integrated global lifestyle supplier is focused on manufacturing and wholesale, distribution and retail. Segmental analysis in euro "000 12 months ended 30 June 2005 Revenue Revenue % 30/06/2005 30/06/2004 change Manufacturing 1 189 241 892 890 33 Wholesale, distribution 1 227 516 394 118 211 and retail Total 2 416 757 1 287 008 88 Segmental analysis in euro `000 12 months ended 30 June 2005 Earnings* Earnings* % 30/06/2005 30/06/2004** change Manufacturing 154 865 110 266 40 Wholesale, distribution 95 295 60 179 58 and retail Total 250 160 170 445 47 Geographical analysis in euro `000 12 months ended 30 June 2005 Revenue Revenue# % 30/06/2005 30/06/2004 change Southern Africa 1 278 831 337 487 279 European Community 836 548 746 918 12 Pacific Rim 301 378 202 603 49 Total 2 416 757 1 287 008 88 Geographical analysis in euro `000 12 months ended 30 June 2005 Earnings Earnings# % 30/06/2005 30/06/2004** change Southern Africa 81 836 41 880 95 European Community 137 885 111 711 23 Pacific Rim 30 439 16 854 81 Total 250 160 170 445 47 Segmental analysis in rand "000 year ended 30 June 2005 Revenue % Earnings* % Net % assets Manufactur- 9 405 831 49 1 224 843 62 5 581 701 63 ing Wholesale, 9 708 538 51 753 695 38 3 338 369 37 distribution and retail Total 19 114 369 100 1 978 538 100 8 920 070 100 Year ended 30 June 2004** Revenue % Earnings* % Net % assets Manufactur- 7 334 650 69 905 781 65 4 311 835 67 ing Wholesale, 3 237 480 31 494 341 35 2 142 771 33 distribution and retail Total 10 572 130 100 1 400 122 100 6 454 606 100 Geographical analysis in rand "000 Year ended 30 June 2005 Revenue % Earnings* % Net %
assets Southern 10 114 406 53 647 255 33 2 182 154 24 Africa European 6 616 334 35 1 090 538 55 5 970 158 67 Community Pacific Rim 2 383 629 12 240 745 12 767 758 9 Total 19 114 369 100 1 978 538 100 8 920 070 100 Year ended 30 June 2004** Revenue# % Earnings*# % Net % assets Southern 2 772 290 26 344 029 25 1 458 975 23 Africa European 6 135 558 58 917 650 65 4 381 961 68 Community Pacific Rim 1 664 282 16 138 443 10 613 670 9 Total 10 572 130 100 1 400 122 100 6 454 606 100 * Income before interest, taxation, discontinued operations and impairment writes offs, including share of associate companies" income, and excluding minority interests. ** Prior year figures have been restated to reflect the changes in accounting policies. # Prior year figures have been reallocated between European Community and Pacific Rim to incorporate all trading activities conducted and the expansion in the Pacific Rim area to correspond with the classification in the current period. An amount of R886 million (2004: R947 million) of southern Africa"s revenue comprised exports to the European Community and the USA amounting to approximately 9% (2004: 34%) of its activities. The Group"s revenue exposure to the local South African furniture market amounted to 10% (2004: 17%) CORPORATE ACTIVITY The Group concluded the following corporate transactions during the year under review: - with effect from 1 October 2004, Steinhoff acquired, from the liquidator concerned, the assets, including designs, brands, trademarks, drawings and manufacturing equipment, of Hukla Mobelwerke GmbH. This acquisition is proving to be beneficial and its incorporation as part of the Group is delivering the desired results; - following the exercise by Steinhoff of its pre-emptive right on the 34 216 680 shares held by Murray & Roberts Limited in Unitrans, at 2632 cps, the related offer to Unitrans minorities attracted acceptances in respect of 1 050 Unitrans shares, translating to an additional investment in Unitrans of R900,6 million. As a result, Steinhoff now holds 62,8% of Unitrans" issued share capital; - Steinhoff Europe AG (Austria) ("Steinhoff Europe") successfully placed 7 and 10-year long-term loan notes in the United States private placement market to raise amounts of US$ 284,5 million and Euro 23,5 million. On closing this transaction, the amounts raised were swapped into the Euro equivalent of Euro 244 million. From the proceeds, the term loan portion of Euro 175 million of the previous Syndicated Loan Facility ("SLF") was redeemed and the balance is to be used for general corporate purposes; - Steinhoff Europe concluded a new SLF for an amount of Euro 235 million comprising a new revolving credit facility. The new SLF replaced, and expanded, the previous revolving credit facility of Euro 125 million, at an improved interest margin, and has a term of 3 years from 30 June 2005, with an option to extend for a further year. A syndicated acquisition finance facility of GBP 100 million was raised in the UK at an average margin above LIBOR of 45 bps; - on 15 June 2005, Steinhoff Investments, a wholly-owned subsidiary of the company, issued Perpetual Preference shares to raise an amount of R650 million before costs in order to optimise the Group"s balance sheet structure through the provision of appropriate permanent capital to fund its growth and development. These preference shares are non-participating, non-redeemable and bear a cumulative semi-annual dividend based on 75% of the prime bank overdraft rate from time to time; - in June 2005, Steinhoff Europe acquired 60,8% of Homestyle"s issued share capital, pursuant to a subscription for 157,6 million shares in Homestyle at 55 pence per share and through a series of placements of shares for cash ("the Homestyle re-financing") underwritten by Steinhoff Europe. The Homestyle re- financing raised an amount of GBP 105 million, before expenses, from the proceeds of which Homestyle"s entire amount of bank borrowings were redeemed and an outstanding Value Added Tax claim in respect of structural guarantees settled. In addition, Steinhoff Europe agreed to make available a working capital facility of GBP 20 million to Homestyle for the period ending on 31 October 2006. As a result of the re-financing, Homestyle is largely interest- bearing debt free. It is now in a position to enhance its product offering through better merchandising and increase its margins through improved suppliers" terms. Homestyle operates through two divisions : the Bed division, with 400 stores under the "Bensons for Beds", "Sleepmasters" and "Bedshed" trade names, and the Furniture division which trades through 180 stores under the "Harveys" trade name. Homestyle last reported an annual revenue of approximately GBP450 million (R5 428 million at R12,0633: 1 GBP as at 30 June 2005) none of which was included in the results for the year under review. Following this acquisition, Ian Topping, our UK Chief Executive Officer ("CEO"), was appointed as CEO of Homestyle. Markus Jooste and Jan van der Merwe joined the Board as non executive directors. Homestyle is listed on the London Stock Exchange. In addition, on 1 September 2005 a book-building process managed by Nedcor Securities (Pty) Limited, closed in respect of the sale by Salton Inc. of 111 544 628 shares in Amalgamated Appliance Holdings Limited ("AMAP") (being 52,6% of the issued share capital). The book-build was closed at a price of 495 cents per AMAP share (cum the dividend of 17 cps declared on 24 August 2005) and delivery and settlement will occur on or about 30 September 2005. Steinhoff Africa Holdings (Pty) Limited and its nominee(s) were allocated 53 259 690 AMAP shares (a 25,1% interest) for a total consideration of R263,6 million payable against delivery of the relevant shares in dematerialised form. AMAP is a well-known distributor in South Africa of consumer electronic equipment and electrical appliances. Major brand names include: Appliance division: Russell Hobbs, Remington, Salton, Tedelex, Pineware and Haz, and Consumer Electronics division: Pioneer, Toshiba, Sansui, Tedelex and Tannoy. Substantial synergies between AMAP and Steinhoff Africa exist in respect of, particularly warehousing, logistics and distribution. AMAP, as an associated company of Steinhoff, should also bring other benefits to bear in the form of enhanced utilisation of sourcing, infrastructure and purchasing power. OUTLOOK The previously separate European sourcing activities had been combined with those of the Australian sourcing businesses to form Steinhoff International Sourcing division which now operates an expanded centralised buying office in China. This venture is showing good potential and is expected to become a major growth driver into the future. In the German region, the Group continues to gain market share on the back of the consolidation trend that continued during the year under review. The German economy is showing signs of recovery and increased consumer confidence as a result of political change and economic policy reforms that are expected. The level of order books in respect of our main product categories augurs well for the future. Efficiency enhancements are delivering the desired results and strategies such as, centralised distribution and logistics, have already had a positive effect on European margins. The acquisition of Homestyle, coupled with the Group"s production capacity in Eastern Europe and sourcing and logistic capabilities, point to excellent prospects in terms of incremental business and hence, a better recovery of fixed overheads. The recent corporate failures in the United Kingdom and fully integrated nature of Steinhoff"s operations in that market, positions the Group for growth in market share through the optimisation of Homestyle"s substantial retail distribution base. In South Africa, the buoyancy in the retail sector is expected to continue. PG Bison forms a pivotal part of the Group"s Timber strategy and further investments will be made to secure future sustainable sources of supply. The expansion at PG Bison"s Piet Retief plant was completed in May 2005 and is delivering satisfying results. The Unitrans acquisition and the related operational synergies are expected to contribute favourably to future earnings growth. Management expects to achieve growth in headline earnings from the continuing operations in the financial year ahead. On behalf of the Board of Directors BE Steinhoff MJ Jooste Executive Chairman Chief Executive Officer Steinhoff Investments is a wholly-owned subsidiary of Steinhoff International Holdings Limited ("Steinhoff"), except for the 6 500 000 variable rate, cumulative, non-redeemable, non-participating preference shares with a par value of 0,1 cent each in the capital of Steinhoff Investments, issued at a premium of R99,99 per share ("the Preference Shares)". The Preference Shares were listed on the JSE Limited on 15 June 2005. With effect from 1 May 2005, Steinhoff Investments acquired the entire issued share capital held by Steinhoff in its two main operating subsidiaries, Steinhoff Mobel Holdings Alpha GmbH and Steinhoff Africa Holdings (Proprietary) Limited ("the acquisition") and as such, Steinhoff Investments became the intermediate wholly-owned holding company for all of Steinhoff"s investments. Had the acquisition been effective on 1 July 2004, the relevant financial information on Steinhoff and Steinhoff Investments for the year ended 30 June 2005 would have been identical. However, no consolidated financial statements for Steinhoff Investments have been prepared in respect of the two month period ended 30 June 2005, but preference shareholders are referred to the above results of Steinhoff for a full appreciation of the consolidated results and financial position on the basis of a full twelve-month reporting period. With the annual report of Steinhoff for the year ended 30 June 2005 full details of the audited company financial statements of Steinhoff Investments, together with such notes and other information as will be required to arrive at an informed view of Steinhoff Investments" results and financial position in relation to Steinhoff as a whole, will be provided to preference shareholders. The first dividend to be declared in respect of the Preference Shares will be for the period from their issue date up to and including 31 December 2005. This dividend will be considered and declared in accordance with the terms of issue of the Preference Shares, during March 2006 and, after declaration, be payable by the end of April 2006. On behalf of the Board of Directors D Konar JHN van der Merwe Non Executive Chairman Executive Director 12 September 2005 DISTRIBUTION OUT OF SHARE PREMIUM: CASH DISTRIBUTION Notice is hereby given that, in accordance with the authority granted to the directors of the company in terms of Article 56A of the company"s Articles of Association, a cash distribution from share premium in lieu of a dividend, of 30 cents per share (2004: dividend of 22 cps) has been declared and, subject to shareholders" approval of the necessary ordinary resolution, will be payable to shareholders recorded in the books of the company at the close of business on Friday, 9 December 2005 ("the capital distribution"). The capital distribution will be made in terms of the general authority to be approved by shareholders at the annual general meeting of the company to be held on Friday, 25 November 2005 ("the AGM"). At the date hereof, firm indications to vote in favour of the relevant ordinary resolution have been received from shareholders holding equivalent to 56% of the total votes exercisable at the AGM. The salient dates of this distribution are: 2005
AGM held Friday, 25 November Last date to trade cum capital Friday, 02 December distribution Shares trade ex capital distribution Monday, 05 December Record date Friday, 09 December Payment date Monday, 12 December No dematerialisation or rematerialisation of shares may take place between Monday, 5 December 2005 and Friday, 9 December 2005, both dates inclusive. On Monday, 12 December 2005, the capital distribution will be electronically transferred to the bank accounts of certificated shareholders who utilise this facility. In all other instances of certificated holders, cheques dated 12 December 2005 will be posted on or about that date. Shareholders who have dematerialised their shares will have their accounts credited on 12 December 2005. In terms of the Companies Act, the directors confirm that after the payment of the capital distribution, the company will be able to pay its debts as they come due in the ordinary course of business and its consolidated assets, fairly valued, will exceed its consolidated liabilities. ANNUAL REPORT The Annual Report will be mailed to shareholders in due course. The annual general meeting is scheduled to take place at 08:00 on Friday, 25 November 2005, at the registered office of the Company. By order of the board SJ Grobler Company Secretary 12 September 2005 Administration Registration number: 1998/003951/06 (Incorporated in the Republic of South Africa) JSE share code: SHF ISIN code: ZAE000016176 ("Steinhoff" or "the company" or "the Group") 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 Investor Services 2004 (Pty) Limited 70 Marshall Street, Johannesburg, 2001 Company secretary: SJ Grobler Auditors: Deloitte & Touche Sponsor: PSG Capital Limited Directors: BE Steinhoff* (chairman), MJ Jooste (chief executive officer), DE Ackerman#*, CE Daun#*, JNS du Plessis, KJ Grove, D Konar#, JF Mouton#, FJ Nel, FA Sonn#, NW Steinhoff#*, DM van der Merwe, JHN van der Merwe, RH Walker# #Australian *German #*Non-executive www.steinhoffinternational.com Date: 12/09/2005 03:50:58 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department

Share This Story