Steinhoff Investment Holdings records R5.2bn interim operating profit versus R10.6bn loss last year

Steinhoff Investment Holdings ecorded a R5.2 billion operating profit after material expenses in the six months to the end of March compared with a R10.6bn operating loss in the prior year, after foreign exchange gains and a strong performance by Pepkor Holdings boosted the results. Photo: Supplied

Steinhoff Investment Holdings ecorded a R5.2 billion operating profit after material expenses in the six months to the end of March compared with a R10.6bn operating loss in the prior year, after foreign exchange gains and a strong performance by Pepkor Holdings boosted the results. Photo: Supplied

Published Jun 21, 2021

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STEINHOFF Investment Holdings (SIHL), a subsidiary of Steinhoff International, recorded a R5.2 billion operating profit after material expenses in the six months to the end of March compared with a R10.6bn operating loss in the prior year, after foreign exchange gains and a strong performance by Pepkor Holdings (Pepkor) boosted the results.

SIHL, wholly owned by Steinhoff International Holdings NV, is the issuer of preference shares with a R1.5bn capital value, which are listed on the JSE, and it holds Steinhoff’s South African assets, including Pepkor.

Revenue from continuing operations jumped 8 percent to R36.5bn.

The company said it had realised an interim foreign exchange gain of R3.7bn versus a forex loss of R4.8bn last year.

SIHL said the litigation settlement proposal provision was increased to R10.6bn from R9.4bn, resulting in an additional expense of R1.2bn.

Basic earnings a share improved from a loss of 24 187.23 cents to earnings of 4 730.90c.

A dividend of 292.43 cents per preference share was declared on January 27. No interim dividend was declared.

SIHL management said the quality of the operations at Pepkor was highlighted by the fact that the business had to deal with the volatile operating conditions during the second wave of the coronavirus pandemic, and disruptions caused by the delayed start to the academic school year.

The latest results were also compared with those for the six months to March 31 last year, which were largely unaffected by Covid-19.

“The Pepkor Holdings group’s business model and market positioning have sustained performance since the onset of Covid-19 by responding effectively to changes … thereby entrenching its position in the discount and value sector,” SIHL management said.

During this time, Pepkor strengthened its balance sheet and liquidity, which would support investment in growth opportunities.

Pepkor had entered into a sale and purchase agreement for the disposal of The Building Company for a total purchase price of R1.2bn, but the Competition Commission had prohibited the deal, and the matter was being considered by the Competition Tribunal.

The disposal process of the Africa property portfolio had experienced significant delays as a result of Covid19. However, management remained committed to dispose of the remaining properties.

Twelve of the remaining properties were used by Pepkor as distribution centres. One property was used as a corporate head office, and one property was used as a call centre – Pepkor was acquiring these properties.

In the 2018 reporting period, the JSE suspended the listing of SIHL’s preference shares for failure to submit an annual report for the 2017 reporting period, on time.

The shares were allowed to resume trading on January 18, after all outstanding financial statements were published.

SIHL said Pepkor Holdings had reported positive trading momentum

in all retail brands subsequent to March this year. This included a good start to the winter-season trade in the CFH brands, and continued demand for furniture, appliances and consumer electronics.

Revenue increased by 8.1 percent to R36.5bn in the six months to the end of March, while earnings per share and headline earnings per share from continuing operations increased by 56.7 percent and 50.6 percent, respectively.

In December 2017, accounting irregularities at Steinhoff International resulted in a e6.5bn (about R110.44bn) hole in its accounts, causing a share price collapse and multiple lawsuits from former business partners and aggrieved shareholders.

Steinhoff Investment Holdings preference shares closed 2.94 percent lower at R62.50 on the JSE on Friday.

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