Publications
Partners
Events at Steinhoff’s parent company have contributed to a difficult trading environment, negatively impacting the group’s operational entities.
The group released its unaudited trading update for the nine months ended June 30, which was released on Friday.
The share price, which opened at R2.89, was trading at R2.87 on the release of the trading statement at 12:00. By 12:15, it had climbed to R3.05. By 14:30 it was trading down 1.41% at R2.80.
According to the report, operational entities faced a difficult trading environment and revenue for the period grew by 2% to €12.9bn (about R221.35bn).
"The extraordinary events during the current year have created significant uncertainties for the group and its operating businesses," the report read.
"The various announcements regarding current and previous financial results; the resignation of the former CEO [Markus Jooste] and changes to the senior leadership team; the material decline in the share price; and withdrawal of various credit and trade facilities has had a profound impact on the group and its stakeholders," Steinhoff said.
During the period the group had to address challenges such as its liquidity management - as the group had to secure funding given the withdrawal of creditors.
Steinhoff’s chair of the supervisory board, Heather Sonn, told Parliament this week that the group managed to pay off its African debt and reached lock-up agreements with banks. This would give Steinhoff three years to implement a debt structure.
"We remain determined to pursue every available avenue to complete the implementation within the agreed timeframes and to ensure that Steinhoff can benefit from the three-year period of stability," the group reiterated in the report.
Another challenge over the period was reduced consumer confidence.
"The negative press surrounding the group influenced customer behaviour in many of the operations, and during this period enhanced communication was required," the report read. Transactions related to multi-year customer guarantees were affected due to the uncertainty of the stability of the group.
Organic growth was also affected as store openings and capex projects were put on hold. "Business plans of all the operations have been thoroughly interrogated and management has been tasked to focus on profitability, cash flow, inventory management and overall cost reduction."
The group is now focusing on maintaining stability.
"As a management team we are focused on maintaining stability within the operations, finalising the implementation of the restructuring plan with the group’s financial creditors, improving governance at all levels, and finalising the financial results," the report read.
PwC’s investigation is expected to be completed in December 2018. The annual results for 2017 are to be released in December 2018, and the results for 2018 will be released by the end of January 2019.
Sonn also assured Parliament that the company is focusing on servicing existing debt and possible avenues for growth, in an effort to recover some of the lost value to shareholders. She said this is a better strategy than embarking on a wind down of the business.
*Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER
