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Steinhoff – Market Update
Steinhoff International Holdings N.V.
(Incorporated in the Netherlands)
(Registration number: 63570173)
Share Code: SNH
ISIN: NL0011375019
Steinhoff Investment Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1954/001893/06)
JSE Code: SHFF
ISIN: ZAE000068367
STEINHOFF – MARKET UPDATE
Steinhoff International Holdings N.V. (the “Company”) (together with its subsidiaries, the
“Group”)
Introduction
Steinhoff is today providing a further update on the impact of COVID-19 on the Group,
together with details of related changes to its reporting timetable, and an update on its
regulatory engagement activities.
COVID-19 – Trading Update
As we face the COVID-19 challenge, the health and safety of our colleagues has been our
top priority and we are continuing to adopt all specific public health protocols in our stores,
online sales processes and in our office and warehouse facilities.
In its announcements of 20 March 2020 and 20 April 2020, the Group provided detailed
updates on the impact of COVID-19 on its trading activities. In common with businesses
around the world, we have seen a material impact from COVID-19, as government
measures to control the pandemic required stores to close, restricted much economic
activity and had a significant effect on customer behaviour and movement.
More recently, lock-down measures have begun to be relaxed in most of the countries in
which we operate, allowing a phased process of store re-openings to commence, in line
with local circumstances and government guidance. While initial trading has been
significantly better across the Group than what was expected during the early stages of
the pandemic and related lock-down, as stores benefited from pent-up demand at
reopening, the sustainability of this demand is uncertain. The Group’s main trading
subsidiaries, with their more resilient and defensive discount and value positioning, are,
however, confident that they are well positioned to gain market share in the post-COVID-
19 ‘new economy’.
The Group expects the broad-based steps implemented to contain the spread of the virus,
particularly those limiting movement and public gatherings, as well as the effect of COVID-
19 on consumer confidence and economic conditions, to continue to have a negative
impact on operations during the rest of the 2020 financial year.
As previously announced, management are taking an active approach, implementing a
range of mitigating initiatives, including the redesign of various business processes, and
utilisation of selected business support initiatives made available by the respective
governments of the countries in which the Group operates, to protect cashflow and
profitability. Immediate and significant actions have also been taken to reduce costs and
optimise liquidity. While the Group is confident that the actions it is taking to address the
impacts of COVID-19 are appropriate and timely, the situation remains fast moving and
uncertain and these are being kept under constant review.
The extent and duration of the impact on trade remains uncertain and it is still too early to
determine the exact impact of the pandemic on the performance of the Group for the
2020 financial year. However, we expect COVID-19 to have a material negative impact on
overall turnover and the underlying business performance during this period.
Each of the Group’s large operating subsidiaries is independently funded and is not
dependent on the Group for financial support. Currently all subsidiaries, excluding
Conforama France as described below, are producing stronger cash flows than originally
anticipated and have sufficient liquidity arrangements to support their current
management forecast.
Conforama
In its trading update for the three months ended 31 December 2019, the Group announced
that an agreement had been reached for the disposal of the Conforama Iberia business.
While an agreement of sale was signed in February 2020, completion was disrupted by the
significant uncertainties created by the subsequent onset of the COVID-19 pandemic and
the transaction subsequently lapsed.
The position of Conforama’s business in France has remained uncertain in the period
following the COVID-19 outbreak and to date, the Group has been unable to secure the
state-guaranteed loan, for which it was eligible, to support the business through this difficult
period. Discussions are continuing and the Group is exploring all possible options.
Regulatory engagement
Steinhoff is co-operating with the various prosecution authorities and regulators in South
Africa and other jurisdictions as they continue their investigations into individuals and entities
implicated in relation to the events uncovered in December 2017.
The South African authorities have approached PwC, which completed the independent
forensic report commissioned by Steinhoff, and engaged them to perform additional expert
forensic work to assist in the criminal investigation. Steinhoff supports this initiative and has
agreed to contribute funds to cover a substantial portion of the costs of the PwC work, due
to the size and complexity of the investigation required. Steinhoff’s role is limited to co-
operation and providing a portion of the funding for the project only. The funding is to be
provided on an arms-length basis, with Steinhoff having no involvement in the investigation,
the extent thereof and the report-back process.
The Group remains committed to co-operating, and maintaining open communication
lines, with all regulators and this approach forms an integral part of the Group’s
Remediation Plan.
Litigation
Various legal proceedings have been instituted against the Group and litigation remains a
significant challenge. In parallel with these various court processes, the Management
Board, assisted by the Company’s Litigation Working Group and the Group’s legal advisors,
continue to work towards a resolution of the outstanding claims against the Group.
Steinhoff International Holdings N.V. 2019 Annual Report
In its announcement of 20 April 2020, the Group noted that operational restrictions relating
to COVID-19 were having an impact on the timetable for the publication of the 2019 Annual
Report and audited Consolidated Financial Statements. The essential actions to reduce
costs and optimise liquidity in response to COVID-19 are also placing additional demands
on the various finance teams across the Group and this has also had a direct impact on
the financial reporting timelines.
The Group had previously estimated that it would publish its 2019 Annual Report, including
the audited Consolidated Financial Statements, on 30 June 2020 but stated that this date
was provisional and subject to change as the impacts arising from COVID-19 remained fluid
and uncertain.
Good progress has been made and the Group is still aiming to meet the 30 June 2020
publication date.
Steinhoff Investment Holdings Limited 2019 Annual Financial Statements
The audited 2019 Annual Financial Statements for Steinhoff Investment Holdings Limited
were released on Friday, 29 May 2020. These are available on the Company’s website.
Steinhoff International Holdings N.V. 2020 Half-year Results
In light of the additional demands on the financial reporting teams as a result of COVID-19,
the 2020 Half-year results have been delayed, with publication now planned to be prior to
the end of July 2020.
AGM
As previously announced, the delay in the release of the 2019 Annual Report has also
impacted the timing of the forthcoming Annual General Meeting. This meeting is now
scheduled for 28 August 2020.
In light of the current extraordinary circumstances, all of the above dates are being kept
under review and the Group will inform shareholders should it become clear that a further
change is necessary.
JSE Sponsor: PSG Capital
Stellenbosch, 9 June 2020
Date: 09-06-2020 09:00:00
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