Steinhoff Africa Retail (Star) reported a 49.1% drop in headline earnings per share (HEPS) for the six months to end-March, citing debt obligations to Pepkor management.
The debt was converted from Pepkor shares into Steinhoff shares in 2011. HEPS fell to 36.2c in the period.
Star’s exposure to the third-party debt, relating to a Pepkor management investment company, amounted to R440m, it said.
"The Star board has taken the conservative approach to fully provide for Star’s exposure in this regard," the company said.
In addition, there was a provision for an impairment of loans associated with the third-party debt, amounting to R60m, thereby sufficiently providing for Star’s exposure.
At 10.37am Star shares on the JSE had fallen 4.08% to R16.21. Steinhoff International dropped 6.99% to a record low of R1.33.
No interim dividend was declared by Star.
Star revenue for the six months rose 15.9% to R33bn, while operating profit before capital items fell 2.9% to R2.7bn.
On a comparable basis, Star said HEPS rose 12.2% to 52.6c and operating profit 9% to R3.3bn.
Star described the six months as "very challenging" but regarded the removal of all cross guarantees pertaining to the Steinhoff shareholder funding as a "major milestone".
Pep and Ackermans brands in aggregate reported 8.9% sales growth, supported by the opening of 80 stores on a net basis. Like-for-like sales growth was 3.5%.
Star said it expected the retail environment to remain competitive, inhibiting real growth for the remainder of the 2018 financial year. But sales momentum was expected to be positive.
Star was up 1.88% so far in 2018.
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