Audited results presentation for the year ended 30 June 2012
2STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Introduction
Dr Len Konar
Independent Chairman
3STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Agenda
• Year in review
• Operational review
• International operations
• African operations
• Financial performance
4STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Year in review: International operationsVALUE PROPOSITION CONTINUES TO DRIVE PERFORMANCE
Picture wall to come
5STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Year in review: African operationsKAP INDUSTRIAL – INDUSTRY IN MOTION
6STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Year in review: African operationsJD GROUP – IT IS ALL COMING TOGETHER
Year in review
Markus Jooste
Chief Executive Officer
8STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Year in review
International operations
• Integration of Conforama acquisition
• Converted retail participation into underlying operations and brands
• Minority take-out in ERM
African operations
• Reverse acquisition of Steinhoff Industrial assets into KAP
• Acquired majority interest in JD through share swap with KAP
• Acquired 20% stake in PSG Group
Steinhoff International
• Expand property portfolio by further acquisitions in Europe
9STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
New group structure
10STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Year in review: International operationsRETAIL
• Market share gains in Europe despite volatile macro economic conditions
• Continued growth in the mass market discount segment
• Resilient economies in central continental Europe
• Market share gains in the UK
• Economic uncertainty affects discretionary spending
• Italy
• Eastern Europe and Croatia
• Australia
• Continued investment in retail infrastructure and brands
• New store openings
• Franchisee buybacks
• Property investments by Steinhoff International
11STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Year in review: International operationsINTEGRATED SUPPLY CHAIN
• Optimisation of customer base
• Additional Conforama volumes support supply chain synergies
• Merging of Steinhoff and Conforama Asian sourcing office
• Increase focus on warehouse and logistics efficiencies
Operational review
International operations
13STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
International operationsOPERATING RESULTS FOR THE YEAR ENDED 30 JUNE 2012
Operating profit increases by 31% to €483m (2011: €369m)
Gross revenue increases by 50% to €7 047m (2011: €4 698m)
Operating margin decreases to 6.9% (2011: 7.9%)
14STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Retail
International operations
15STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Retail: household goodsINTERNATIONAL OPERATIONS
Operating profit increases by 97% to €238m (2011: €121m)
Gross revenue increases by 87% to €5 037m (2011: €2 700m)
Operating margin increases to 4.7% (2011: 4.5%)
16STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Retail: household goodsINTERNATIONAL OPERATIONS
Gross revenue increases by 87% to €5 037m (2011: €2 700m)
Conforama Group consolidated for 12 months (FY11: 4 months) €3 164m €919m
European Retail Management (ERM) and other €1 094m €990m
United Kingdom (UK) €504m €564m
Pacific Rim €275m €227m
⟷ Conforama France – revenue unchanged year-on-year (despite volatile electronic household goods appliances market, market share gains in furniture and home décor markets)
↑ Conforama Switzerland, Spain and Portugal – strong growth
↓ Conforama Italy – depressed market continue to negatively impact on results
↑ ERM – discount positioning, product range and store expansion continues to drive growth
↑ UK – Harveys and Bensons report solid results. Progress made in closing unprofitable stores
↑ Pacific Rim – solid performance by Snooze despite tough trading conditions
17STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
International retail geographic breakdownREVENUE
47%
29%
10%
14%France
Central continental Europe and Switzerland
UK
Other
18STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
International retail product category breakdownREVENUE
57%24%
11%
8%
Furniture
White-Brown-Grey goods
Decoration
Other
19STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Operating profit increases by 97% to €238m (2011: €121m)
Operating margin increases to 4.7% (2011: 4.5%)
Conforama Group consolidated for 12 months (FY11: 4 months)* €126m €25m
ERM and other* €71m €61m
UK €36m €28m
Pacific Rim €5m €7m
Retail: household goodsINTERNATIONAL OPERATIONS
↑ Disclosure of separate property segment, now discloses true retail margin
↑ Margins are improving in majority of retail businesses
↑ Conforama – Increased sourcing from low-cost countries, increased sales in furniture and home décor ranges and improved geographical sales mix improve margins
↑ ERM – Increased maturity of new store network continues to drive economies of scale
↑ UK – Brand rationalisation savings and impact of new store roll outs improve margins
€238m €121m
* Includes intragroup property rentals
20STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Retail: household goodsCONFORAMA PERFORMANCE
FY12 Pro-forma FY11
Revenue €3 164m 1.0% €3 134m
Operating profit* €153m 5.5% €145m
Operating margin 4.8% 20bps 4.6%
↑ Strong performance in all countries despite depressed electronics market
↑ Market share gains in furniture and home accessories
↑ Margin improvement lead by increased furniture and home décor sales
* Excludes intragroup property rentals
21STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Manufacturing
Sourcing
Logistics
International operations
22STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Manufacturing, sourcing and logisticsINTERNATIONAL OPERATIONS
Operating profit decreases by 2% to €162m (2011: €166m)
Operating margin decreases to 8.4% (2011: 8.7%)
Gross revenue increases by 1% to €1 927m (2011: €1 917m)
23STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Manufacturing, sourcing and logisticsINTERNATIONAL OPERATIONS
Gross revenue increases by 1% to €1 927m (2011: €1 917m)
↓ HUKLA operations sold in the beginning of financial year included in prior year
↑ Increased intra-group volumes: Conforama, UK retail and ERM
↑ Weaker Polish zloty and Hungarian forint
↑ Strong performance from bathroom manufacturing plant in Germany
↑ Encouraging growth of mattress and foam manufacturing operations in UK
24STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Manufacturing, sourcing and logisticsINTERNATIONAL OPERATIONS
Operating margin decreases to 8.4% (2011: 8.7%)
↓ Increased mix of sourcing volumes at a lower margin
↓ Strong US dollar
↑ Weak Polish zloty and Hungarian forint
↑ European manufacturing improvement in quality resulting in lower return of goods
↑ German manufacturing reported good growth
↑ International sourcing increased efficiencies of scale due to additional Conforama volumes
Corporate services
International operations
26STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Retail investment participationINTERNATIONAL OPERATIONS
Investment in retail participation redeemed at year end (2011: €291m)
Retail participation contribution at €46m (2011: €45m)
Annualised return on investment of 14% (2011: 15%)
27STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Brand managementINTERNATIONAL OPERATIONS
Total investment in Swiss-held brands €449m (2011: €451m)
Brand management contribution at €37m (2011: €36m)
Return on investment at 8.2% (2011: 8.0%)
28STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
International operationsRESULTS FOR THE YEAR ENDED 30 JUNE 2012
Gross revenue Operating profit
2012 2011 2012 2011
€’m €’m €’m €’m
International operations 7 047 4 698 483 369
Retail household goods 5 037 2 700 238 121
Manufacturing, sourcing and logistics 1 927 1 917 162 166
Corporate: Retail participation 46 45 46 45
Corporate: Brand management 37 36 37 36
R’m R’m R’m R’m
Steinhoff Europe 73 388 44 935 5 033 3 526
Operating margin 6.9% 7.9%
29STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Group properties STEINHOFF INTERNATIONAL
Property investments R22 867m (2011: R19 150m)
Properties operating profit at R1 638m (2011: R854m)
Return on investment at 7.2% (2011: 4.5%)
30STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Group propertiesSTEINHOFF INTERNATIONAL
• Group owned property strategy
• Manufacturing properties
• Retail properties
• Retail license attached to many of them
• Internal rentals lead to higher profitability
• Market related
• Optimise external rental and property expense
• Lease liability management
• Manage maintenance expense
PROSPECTS
International operations
32STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
• Despite uncertainty in European markets, our positioning in the discount
sector and fragmented European markets provide comfort of group’s ability
to grow
• Consolidate market share in our developed markets, grow our market share
in developing markets
• Minority take-out
• Conversion of investment participation
• Improve margins through group synergies
• Continue to invest in our store network and e-commerce platform
Prospects International operations
African operations
Danie van der Merwe
CEO: Southern Hemisphere
34STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Year in review: African operationsMANUFACTURING AND SOURCING
KAP INTERNATIONAL
• All operations business as usual
• Acquisition has no operational impact
• Continuing increased market demand in outsourced supply chain
management and passenger solutions
• Restructuring of integrated timber operations to better align operations to
market conditions
• Increased demand in majority of manufacturing operations
35STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
KAP InternationalACCOUNTING IMPACT
KAP accounting impact
• Traditional KAP consolidated for Q4 2012 only
• Comparative consist of Steinhoff Africa Industrial assets only
SHF accounting impact
• Consolidate KAP results for last 3 months (62% subsidiary)
• Equity accounted for 9 months to end March 2012 at 34%
36STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
KAP InternationalSALIENT FEATURES
2012 2011 % change
Revenue (R’m) 11 018 8 861 24%
Operating profit (R’m) 1 106 1 029 7%
Operating margin (%) 10% 12%
Headline earnings (R’m) 490 424 16%
Headline earnings per share (cents) 24.2 22.1 10%
Dividend per share (cents) 6 n/a
Cash generated from operations (R’m) 1 906 1 460 31%
37STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
KAP International DIVISIONAL PERFORMANCE
14%
>100%
>100% (24%)
2%13%
Revenue = R6 822m
Operating profit = R701m
Revenue = R1 993m
Operating profit = R132m
Revenue = R2 286m
Operating profit = R273m
14%
>100%
>100%(24%)
2%
38STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Year in review: African operationsRETAIL: JD GROUP
• Retail business well positioned for sustained market share growth
• Strong automotive retail environment
• Growth in furniture retail
• Deflation and increased competition in electronic and household
appliance business
• Financial services business growth due to introduction of new products
• Introduction of capped unsecured loan product to existing low-risk
customers
39STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
JD GroupACCOUNTING IMPACT
JD Group accounting impact
• 30 June 2012 results for 10 months only due to change in year-end
SHF accounting impact
• Consolidate JD Group results for last 3 months (50.1% subsidiary)
• Equity accounted for 9 months to end March 2012 at 32%
40STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
JD GroupSALIENT FEATURES
2012 (10 months) 2011 (10 months) Change
Headline earnings (R million) 884 724 22%
HEPS (cents) 409.9 335.2 22%
Dividend per share (cents) 232 n/a n/a
Revenue (R billion) 25.3 22.7 11%
Debtors’ cost (R million) 417 572 (27%)
Net asset value per share (cents) 4 026 n/a n/a
41STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
JD GroupDIVISIONAL PERFORMANCE (10 MONTHS LIKE FOR LIKE)
10%11%
4%
Revenue = R5 327m
Operating profit = R311m
3%
1%
Revenue = R5 053m
10%
31%
Revenue = R2 985m
15%
44%
Revenue = R12 194m
Operating profit = R177m Operating profit = R760m Operating profit = R411m
42STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Associate earningsKAP, JD Group and PSG Group
• KAP associate earnings
• KAP profit for 9 months ended 1 April 2012
• 34% average effective holding
• JD associate earnings
• JD profit for 9 months ended 1 April 2012
• 32% average effective holding
• Other associate earnings
• Includes 5 months of PSG associate earnings and various other
associate investments
PROSPECTS
African operations
44STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Prospects African operations
• KAP and JD group to strengthen geographical and product diversity of the
group with 12 months consolidation for the next financial year
• Mobilise our African strategy
• Supported by a clear retail and industrial platform that can drive our
growth
FINANCIAL PERFORMANCE
Ben la Grange
CFO: Southern Hemisphere
46STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Segmental reconciliationSTEINHOFF INTERNATIONAL
Gross revenue Operating profit
2012 2011 2012 2011
R’m R’m R’m R’m
International operations 73 388 44 935 5 033 3 526
African operations 11 063 8 905 1 116 1 016
- KAP International 11 018 8 861 1 106 1 029
- Steinhoff Africa other 45 44 10 (13)
African operations: JD Group 7 451 - 639 -
Central: Group properties 1 658 871 1 638 854
Central: Treasury and other 274 424 290 435
Gross revenue 93 834 55 135 8 716 5 831
Intercompany eliminations (13 400) (12 095) (705) (407)
As shown on income statement 80 434 43 040 8 011 5 424
47STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
June 2012
8%
65%
23%
4%
21%
60%
June 2011
Continental Europe
Southern Africa Pacific Rim
United Kingdom
13%
6%
Continental Europe
Southern Africa Pacific Rim
United Kingdom
Revenue composition – geographical breakdownREVENUE
48STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Revenue composition – segmental breakdownREVENUE
47%
33%
16%
2% 2%
Retail International M, S & L* International
M, S & L* Africa Properties
Corporate services
June 2011
56%
8%
21%
12%2% 1%
Retail International Retail Africa
M, S & L* International M, S & L* Africa
Properties Corporate services
June 2012
*Manufacturing, Sourcing and Logistics
49STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
* Cash generated from operations/operating profit
2012 2011 Change
Revenue (R’m) 80 434 43 040 87%
Operating profit (R’m) 8 011 5 424 48%
Operating margin (%) 10% 13%
Headline earnings (R’m) 5 398 3 766 43%
HEPS (cents) 317.0 239.9 32%
Diluted HEPS (cents) 288.2 225.8 28%
NAV per share (cents) 2 466 2 056 20%
Distribution per share (cents) 80 65 23%
Cash generated from operations (R’m) 10 368 7 202 44%
Cash flow/profit percentage* 129% 133%
Financial performance – continuing operationsSALIENT FEATURES
50STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Average translation rate Closing translation rate
2012 2011 % change 2012 2011 % change
EUR:ZAR 10.41 9.56 8.9% 10.34 9.87 4.9%
EUR:PLN 4.26 3.97 7.4% 4.25 3.99 6.6%
EUR:GBP 0.85 0.86 (1.3%) 0.81 0.90 (10.2%)
EUR:AUD 1.30 1.38 (5.9%) 1.23 1.36 (9.1%)
EUR:USD 1.34 1.36 (1.7%) 1.26 1.44 (12.5%)
EUR:CHF 1.20 1.30 (7.6%) 1.20 1.20 0.4%
EUR:HUF 292.14 274.32 6.5% 287.77 265.61 8.3%
EUR:NZD 1.67 1.80 (7.4%) 1.57 1.76 (10.6%)
Financial performance ZAR DENOMINATED REVENUE: 23% (2011: 21%)
51STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
ZAR:EUR Average exchange rate Headline earnings per ordinary share from continuing operations (cents)
9.56
10.41
30 June 2011 30 June 2012
239.9
317.0
293.9
30 June 2011 30 June 2012 Constant currency
+8.9%
+23%+32%
ZAR weakness affecting earnings translation
52STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Rand million
2012 2011
Operating profit from continuing operations before capital items 8 011 5 424
Operating profit from discontinuing operations before capital items - 380
Depreciation and amortisation 1 801 1 256
Revaluation of biological assets and other non-cash adjustments (64) (117)
Working capital changes 620 259
Inventory (927) (827)
Receivables 788 (151)
Payables 759 1 237
Net movement in instalment sale and loan receivables (523) -
Dividends, taxation and interest (2 016) (1 526)
Cash flow from operating activities 7 829 5 676
Cash flowOPERATING ACTIVITIES
53STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Rand million
2012 2011
Cash flows from operating activities 7 829 5 676
Investing activities (9 403) (15 100)
Assets: replacement capex (602) (260)
Assets: expansion capex (10 024) (5 970)
Investments in subsidiaries (2 104) (8 165)
Increase in other investments and loans 3 724 (337)
Investments in associates (390) (763)
Treasury and other share related transactions (7) 395
Financing activities 3 038 10 307
Movement in cash and cash equivalents 1 464 883
Cash flowCONTINUED
54STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
Cash flowPROFIT UNDERPINNED BY CASH
-
2 000
4 000
6 000
8 000
10 000
12 000
June 02 June 03 June 04 June 05 June 06 June 07 June 08 June 09 June 10 June 11 June 2012
Operating profit Cash generated from operations
Rand m
illio
n
55STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
2012 2011
Total equity (R’m) 53 637 40 830
Ordinary shareholders’ funds (R’m) 43 292 33 749
Preference share capital (R’m) 3 837 4 056
Minority interest (R’m) 6 508 3 025
Net debt (R’bn) 24.2 18.8
Gearing 45% 46%
Interest cover 5.8 4.6
EBITDA cover 7.1 5.6
Closing rate ZAR:EUR 10.34 9.87
Annualised: EBITDAR cover 3.6 3.7
Capital structure
56STEINHOFF INTERNATIONAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2012
( 15)
( 10)
( 5)
0
5
10
15
Cash and cash
equivalents
Unutilised
facilities
June 2013 June 2014 June 2015 June 2016 June 2017 Thereafter
African International
Committed debt repayments and maturity profile
Liquidity and maturity profileAS AT 30 JUNE 2012
Ra
nd
bill
ion
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