Sanlam warns investors of Steinhoff setback

Cape Town - Steinhoff’s share price collapse has knocked about 1% off the annual returns of typical Sanlam investors, the Cape Town-based financial services group said in a market announcement. 

The share price of the embattled global furniture retailer [JSE:SNH] has dropped over 90% this month, after its CEO Markus Jooste abruptly resigned and it announced that PwC was investigating “accounting irregularities requiring further investigation” in its books. 

The Stellenbosch-headquartered group’s 2017 audited results are on hold, and it has warned investors to not rely on the figures contained in its 2016 results. 

Steinhoff is now facing at least seven different probes in Europe and South Africa, as well as a number of possible investor lawsuits. 

• READ: Investors want answers as Steinhoff stares into the abyss

Sanlam said that in a “typical balanced portfolio” of an investor, Steinhoff exposure would have accounted for approximately 1.1% of the portfolio assets on 1 December 2017.

At the time Steinhoff shares were changing hands at about R55 a share. At 12:40 on Wednesday, shares were trading at R4.61, down 1.5% from their previous close.

Sanlam said the steep share price decline would cut the returns of typical shareholders by about 1%. 

Investors who held a larger Steinhoff weighting in their portfolios would be worse affected. “The negative impact on the return of a South African Swix Equity index fund would be approximately 2.1%,” it said. 

Steinhoff was for years seen as an integral part of many SA share portfolios. 

Once in the top 10 of the JSE by market capitalisation, the "Ikea of Africa" now risks dropping off the list of the top 100 biggest JSE companies altogether.