Steinhoff history

S t e i n h o f f I n t e r n a t i o n a l , M A R K U S J O O S T E

HISTORY AND DEVELOPMENT OF STE INHOFF

WELCOME 2

H I S T O R Y : S T E I N H O F F

3

Authoritarian regimes

1963-1990: Sourcing in the East for the West

Communist regimes Capitalist regimes

City: 2 mill + inhabitants BDR Bundesrepublik Deutschland

DDR Deutsche Demokratische Republik

INVOLVED IN HOUSEHOLD GOODS TRADING S INCE 1963

H I S T O R Y : S T E I N H O F F E U R O P E

4

1989 : FALL OF THE BERL IN WALL

•  Huge impact on household goods industry •  Presented huge opportunities to Steinhoff

H I S T O R Y : S T E I N H O F F E U R O P E

5

STE INHOFF EUROPE ESTABL ISHED Invests in production and distribution capacity

1 9 9 8 : L I S T I N G O N T H E J S E

Steinhoff Europe

Steinhoff Africa

100%

Manufacturing and sourcing


STEINHOFF INTERNATIONAL HOLDINGS LIMITED

100%

6

C H A I R M A N ’S R E P O R T 1 9 9 8

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STRATEGY

“The Steinhoff group is an integrated lifestyle supplier that manufactures, markets, warehouses and distributes household goods and timber-related products”

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STRATEGY: BUSINESS MODEL

“Our business model is to be a low-cost producer and distributor of furniture. Our marketing thrust is global, catering for the mass middle market in the geographical areas in which we trade” “Logistics is a huge growth area for us with warehousing and distribution networks being key to the future”

8


Control over sourcing, distribution and logistics

Control over direct raw materials

Low-cost production and

sourcing in emerging

economies

Sales strategy

Owned retail outlets & strategic

partnerships

Control over third party sourcing

Control over manufacturing

Wholesale partnerships

Brand partnerships


STRATEGY: BUSINESS MODEL

9

ESTABLISHING THE BASE: 1998 - 2004

1 9 9 8 – 2 0 0 4 E S TA B L I S H I N G T H E B A S E

ESTABLISH A LOW-COST MANUFACTURING BASE

•  Invest in manufacturing capacity in Poland –  German production largely relocates to Poland

•  Cornick group acquisition (presence in Australia and New Zealand)

ENTER UNITED KINGDOM AND AUSTRALIA

•  Acquire Relyon •  Acquire Sprung Slumber •  Acquire manufacturing facilities of Freedom Group in

Australia

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1 9 9 8 - 2 0 0 4 : E S TA B L I S H I N G T H E B A S E

12

FACILITATE ENTRY INTO LOGISTICS AND RAW MATERIAL SUPPLY

•  Acquire Unitrans Limited •  Acquire particle board manufacturer PG Bison

ESTABLISH SOURCING OPERATIONS IN ASIA

•  Open sourcing office in Shenzhen

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D E C E M B E R 2 0 0 4

13

x ü 

Steinhoff Europe

Steinhoff Africa


Logistic services Retail Manufacturing

and sourcing Logistic services Retail

ü  ü  ü  x

Vertically integrated furniture and household goods business

Vertically integrated furniture and household goods business

STEINHOFF INTERNATIONAL HOLDINGS LIMITED

13

CONSOLIDATION 2005 – 2015

1 9 9 8 - 2 0 1 5

ESTABLISHING THE PILLARS OF OUR BUSINESS

Vertically integrated


Logistics services Retail

15

C O N S O L I D AT I O N : 2 0 0 5 – 2 0 1 5

CONSOLIDATE: UNITED KINGDOM AND PACIFIC RIM

•  Acquire the listed retail group Freedom in Australia and

New Zealand •  Acquire the listed retail group Homestyle in the UK •  Acquire Unitrans UK •  Bolster worldwide sourcing operations

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CONSOLIDATE: EUROPE

•  Convert interests of various retail participation agreements

•  Investment in: •  Poco (2008) •  Conforama (2011)

•  Continued investment in store footprint

CONSOLIDATE: AFRICA

•  Acquisition of JD Group

C O N S O L I D AT I O N : 2 0 0 5 – 2 0 1 5

17

C O N S O L I D AT I O N : 2 0 0 5 – 2 0 1 5


Control over direct raw materials

Low-cost production and

sourcing in emerging

economies

Sales strategy

Owned retail outlets & strategic

partnerships

Control over third party sourcing

Control over manufacturing

Wholesale partnerships

Brand partnerships


✔

✔

✔

✔

✔ ✔ ✔

✔

✔

SUCCESSFULLY INTEGRATED RETAIL ONTO LOW-COST SUPPLY CHAIN

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STEINHOFF TODAY

RETAILER RETAIL BRANDS

EUROPE Conforama, POCO, ABRA, LIPO, Emmezeta

UK Harveys, Bensons for Beds, Cargo

ASIA PACIFIC Freedom, Snooze, POCO

AFRICA JD furniture brands, POCO, Incredible Connection, HiFi Corp, Pennypinchers, Timbercity, Hardware Warehouse, The tile house

2 261 RETAIL

OUTLETS

I N T E G R A T E D R E T A I L – H O U S E H O L D G O O D S

24 RETAIL

BRANDS

+/-

3.1m M2 RETAIL

SPACE

20 countries

+/-

50 000 employees

HOUSEHOLD GOODS

20

S T E I N H O F F G R O U P S U P P L Y C H A I N

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Integrated retail business and group procurement initiatives continue to benefit from the enlarged European retail network

PURCHASING POWER

> €4 bn

MANUFACTURING, SOURCING AND LOGISTICS

USING THE BEST RAW MATERIALS AND LATEST PRODCUTION TECHNOLOGY

21 FACTORIES MAKING BEDS/MATTRESSES, UPHOLSTERED FURNITURE AND BATHROOM AND KITCHEN FURNITURE


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ROUTING AND TRANSPORT METHODS ARE OPTIMISED FOR EFFICIENCIES

>85 000+ TEUS OF PRODUCT SHIPPED AND DELIVERED IN EUROPE


23

CUTTING EDGE TECHNOLOGY IS USED THROUGHOUT

MORE THAN 1 000 000 M2 WAREHOUSE SPACE IN EUROPE


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S E G M E N TA L R E V E N U E D E V E L O P M E N T

1998 2015

86%

13% Retail activities

Manufacturing, sourcing,

logistics and corporate

services

100%

REVENUE PER SEGMENT (HOUSEHOLD GOODS)

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2015 EXPANDING DISCOUNT PRODUCT

RANGE

S T E I N H O F F G R O U P O V E R V I E W

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STEINHOFF – PRE PEPKOR

•  Leading European and Southern African retail company

•  Focused on the value-conscious consumer

•  Household goods market segment

•  Revenue of R117 billion in FY14

RETAIL

MANUFACTURING, SOURCING AND LOGISTICS & CORPORATE

PROPERTIES

Gross revenue R104 bn

Gross revenue R33 bn

Gross revenue R3 bn

P e p k o r E n h a n c e s S t e i n h o f f ’ s g r o w t h t r a j e c t o r y

•  Complementary discount retail footprints and opportunity to leverage Steinhoff’s experience in multiple European markets

•  Profitable expansion of the Pepco business model within Steinhoff’s existing European discount formats, thereby:

•  Diversifying product mix with faster moving, less cyclical products

•  Increasing per square metre sales densities on existing overhead base

Further Accelerate Growth Across Europe

•  Combined supply chain and logistics functions, increasing profitability •  Greater buying power and economies of scale

•  Substantial operational and supply chain overlap and cost saving opportunities in:

•  Eastern Europe, Australia and Africa 28

2 261 RETAIL

OUTLETS

2 0 1 5 S T E I N H O F F R E T A I L

1 679 stores

UK

Germany Poland

Switzerland

France Portugal

Spain Italy

Croatia

South Arica, Botswana, Zambia, Namibia, Zimbabwe, Nigeria, Mozambique, Malawi, Angola, Lesotho

Australia New Zealand

homehomehome

THE NATION’S STORE, WHERE YOUR MONEY BUYS YOU MORE!

4 222 stores

471 stores

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Australia 471 Stores c.558 000m2

Europe 1 679 Stores c.2.5 million m2

Rest of Africa 265 Stores c.105 000m2

South Africa(1) 3 957 Stores c.1.9 million m2

Asia Factories and Sourcing Offices

Combined group retail presence

Combined group manufacturing and sourcing presence

Note: (1) Includes Botswana, Lesotho, Namibia and Swaziland.

6 000+ STORES (5 MILLION SQUARE METERS)

THE COMBINED GROUP IS STRONGLY POSITIONED TO TAKE ADVANTAGE OF THE MARKET OPPORTUNITY

S T E I N H O F F / P E P K O R – T R A N S A C T I O N R A T I O N A L E

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2015 results HIGHLIGHTS

F I N A N C I A L P E R F O R M A N C E

Segmental information

NET REVENUE OPERATING PROFIT

FY15 €m

FY14 €m

FY15 €m

FY14 €m

Integrated retail – Household goods 7 623 7 119 956 858

Integrated retail – General merchandise (3 months) 888 - 120 -

Integrated retail – Automotive 1 309 1 198 39 36

Total operations (EURO) 9 820 8 317 1 115 894

Translation rate EUR:ZAR 13.7347 14.1106 13.7347 14.1106

FY15 Rm

FY14 Rm

FY15 Rm

FY14 Rm

Integrated retail – Household goods 104 696 100 449 13 134 12 110

Integrated retail – General merchandise (3 months) 12 199 - 1 645 -

Integrated retail – Automotive 17 973 16 915 536 512

Total operations (ZAR) 134 868 117 364 15 315 12 622


Equity – shares issued during FY15

2,100

3,652

350 220 11

926 45

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Jun-14 ABB & Rights issue

Convertible bonds

Share incentive scheme

Pepkor vendor consideration

PSG vendor consideration

Jun-15

No

of s

ha

res

(m)

WANOS – 2 737m shares increased by 38% (FY14: 1 977m shares)

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FY15 Rm

FY14 Rm

Cash generated from operating activities 20 286 16 141 Investing activities (21 124) (16 684) Asset expansion capex (3 229) (3 070) Asset replacement capex (1 495) (1 807) Net investment in subsidiaries (13 366) (4 518) Other investments and loans (3 034) (7 289) Financing activities 23 630 6 513 Increase in cash and cash equivalents 22 792 5 970

Cash flow summary

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C A P I T A L S T R U C T U R E

Net debt

44,071

30,227

26,142

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

FY13 FY14 Pro forma*

FY15

NET DEBT (Rm)

*Pro forma as announced post rights issue in July 2014

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Y E A R U N D E R R E V I E W

Financial highlights

REVENUE INCREASED*

15% HEADLINE EARNINGS INCREASED*

36%

DILUTED HEADLINE EARNINGS PER SHARE INCREASED*

1%

NET CASH INFLOW FROM OPERATIONS INCREASED

26%

WEIGHTED AVERAGE NUMBER OF SHARES INCREASED

38% NET ASSET VALUE PER SHARE INCREASED

22%

DIVIDEND INCREASED

10%

* From continuing operations 36

STRATEGIC OUTLOOK

S T E I N H O F F B U S I N E S S M O D E L

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The environment shaping Steinhoff’s strategy Steinhoff’s strategy

F R A N K F U R T L I S T I N G

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European prospectus •  Issued at the end of November 2015

PRIMARY EUROPEAN LISTING IN FRANKFURT •  Aligned to the majority of Steinhoff’s geographic

locations

•  Approximately 75% of Steinhoff’s operating profit

is earned outside of Africa, largely in Europe.

•  Reporting currency change to Euro

•  Secondary listing on Johannesburg Stock Exchange

Listing date 7 December 2015 No capital raising at listing

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THANK YOU

Investor Relations

Steinhoff history