Steinhoff Africa Retail defends performance as headline earnings halve

Cape Town - Steinhoff Africa Retail [JSE:SRR] on Tuesday announced a decrease in its statutory headline earnings per share from 71c for first half of the 2017 financial year to 36.2c for the six months ended March 2018. 

According to its statutory results, the group's revenue increased by 15.9% from R28.4bn in the first half of 2017, to R33bn in the first half of 2018. 

Profit before taxation decreased 12.7% from R2.4bn to R2.1bn. 

But the retailer, which listed on the JSE in mid-September 2017 and incorporates Steinhoff's Africa-focused retail firms, said the comparability of its statutory results was "limited by the timing of its internal restructure in July 2017, prior to its listing". 

"The issue of 750 million shares - 21.47% of issued share capital - upon listing on 20 September 2017 and acquisitions in both the comparative and current period materially impact the comparability of the results." 

It said that when "comparable" results were used, the firm achieved a 12.2% increase in headline earnings per share between the first half of 2017 and the first half of 2018. 

"STAR had a satisfactory performance for the period under review," it stated.  

STAR does business in 12 sub-Saharan African countries, including South Africa,  Namibia, Botswana, Angola and Nigeria, and owns retail brands such as Pep, Ackermans, Tekkie Town and Timbercity.

It noted that the comparable results were included in the "illustrative purposes only", however, it said it was "understandably difficult" for the investors to gauge what the impact accounting irregularities on Steinhoff International Holdings had been on the retailer. 

While shares in Steinhoff's parent company have fallen by more than 95% since its CEO Markus Jooste abruptly resigned in December last year amid an accounting scandal, shares in STAR have proven to be more resilient. 

STAR shares, which were trading at around R24.60 the day before Jooste resigned, were trading at R15.85 on Tuesday at 11:35, down 6.21% on the day. 

Shares in Steinhoff International, which is listed on the Frankfurt stock exchange, fell by 9% by 11.15 on Tuesday, to reach an all time low of just R1.30 per share.

R500m 

The company said it would also pay a total of R500m to settle "third-party debt related to a Pepkor management investment company". It did not say what the investment company was, or who stands to benefit. 

According to Business Day the R500m payment is being made to pay out executives who face liabilities linked to the Steinhoff International's share price.

"The investment initially consisted of Pepkor shares, but was converted to Steinhoff shares in 2015 following Steinhoff’s acquisition of Pepkor.

"Following the finalisation and publication of STAR’s 2017 annual financial statements and the subsequent decline of the Steinhoff  share price, the risk of liability in this regard can no longer be considered to be remote," it said. 

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER