Steinhoff International Integrated Report 2015

STEINHOFF INTERNATIONAL INTEGRATED REPORT 2015

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t1 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 B t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 THIS IS STEINHOFF

STEINHOFF IS AN INTEGRATED RETAILER that manufactures, sources and retails furniture, household goods and general merchandise in Europe, Australasia and Africa

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t1 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 THIS IS STEINHOFF

THE GROUP’S INTEGRATED BUSINESS MODEL is based on a strategy of sourcing and manufacturing products at low cost and distributing them to the group’s value-conscious customer base through its extensive retail footprint

AS AT 30 JUNE 2015 THE GROUP OPERATIONS 30 COUNTRIES INCLUDED: 40+ RETAIL BRANDS ± 6 500 RETAIL OUTLETS

90 000+ EMPLOYEES

2 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 WE STRUCTURE OUR OPERATIONS in terms of retail product markets, being household goods, general merchandise and automotive

INTEGRATED RETAIL

20 countries 20 countries 2 countries 24 retail brands 4 111 retail outlets 87 dealerships 2 218 retail outlets ± 1.9m m2 retail space 46 rental outlets ± 3.1m m2 retail space Founded in 1965 ± 5 000 employees ± 50 000 employees ± 37 000 employees

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t3 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 AT A GLANCE

FOR THE YEAR ENDED 30 JUNE 2015 Revenue from continuing operations increased 15% to R134.9 billion (€9.8 billion)

Operating proﬁt before capital items Frankfurt increased 21% to R15.3 million (€1.1 billion) listing approved Read more: page 18 EBITDA increased 20% to R17.5 billion (€1.3 billion)

Headline earnings from continuing operations increased 36% to R12.4 billion (€907 million) Pepkor acquisition Net cash inﬂow from operating activities completed increased 26% to R20.3 billion (€1.5 billion) Read more: page 20 Dividend increased 10% to 165 ZAR cps

CONTENTS

This is Steinhoff 1 Reports to stakeholders 16 At a glance 4 Chairman’s report 18 Strategy and business model 6 Chief executive ofﬁcer’s report 20 Management structure 8

Signiﬁcant progress in the strategic development of the group and capital structure Read more: page 18

A vertically integrated The year under review has value retailer, diversiﬁed been transformational for across markets and Steinhoff geographies Read more: page 50 Read more: page 20

4 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 HouseHold Goods comprises a vertically integrated furniture, household goods and related retail business serving the discount and value consumer market segments in Europe, Australasia and Africa. The retail operations are supported by the integrated supply chain, which includes manufacturing, sourcing and logistics operations, as well as an extensive and strategic property portfolio. Read more: page 24

General MercHandise comprises the operations of the Pepkor Group, acquired during the 2015 fnancial year. Pepkor is a leading retailer selling a range of everyday necessities (excluding food) to its price-sensitive and value-conscious customer base, including clothing, footwear, household goods, personal accessories and cellular products. Its operations include a production facility in Cape Town, and it also provides selected fnancial services to its customer base, such as utility bill payments and money transfer services. Read more: page 40

Operational performance 22 Financial performance 48 Integrated retail: Household goods 24 Finance report 50 Integrated retail: General merchandise 40 Summarised ﬁnancial statements 58 Integrated retail: Automotive 44 Ten-year performance review 66

In reference 68 Retail markets 70 Remuneration report 72 autoMotive comprises the group’s automotive retail businesses in South Africa. About this report 80 Unitrans Automotive represents a number of Share performance and exchange rates 82 international automotive brands and services its Analysis of shareholding 83 customers from its network of dealerships located throughout southern Africa. Shareholders’ diary 84 Hertz car rental conducts its business in Namibia Corporate information 84 and South Africa. Read more: page 44 Further reading on the group’s website: ƺǝĭļĹĭļÊŇëǝāĭŜëļħÊħáëǝļëĹĭļŇ ƺǝ]ĎħāǝDDDǝŇÊàğëǝĭÿǝƋƉǝĹļĎħáĎĹğëŀ ƺǝĭļĹĭļÊŇëǝļëŀĹĭħŀĎàĎğĎŇŨǝĎħÿĭļĦÊŇĎĭħ

in addition, Steinhoff is invested in companies that provide essential products, services and knowledge to the group. Accordingly, the group holds a 43% associate investment in KAP Industrial Holdings Limited, a JSE-listed diversifed industrial company with leading market share positions in the logistics, integrated timber, integrated bedding and other industrial sectors within South Africa. Steinhoff also holds a 27% associate investment in PSG Group Limited, a JSE-listed investment company. Read more: www.kap.co.za, www.psggroup.co.za

www.steinhoffinternational.com

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t5 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STRATEGY AND BUSINESS MODEL

A STRONG, Operating in the discount market segment requires good cost control to protect and increase margins. The group’s decentralised EFFICIENT vertically integrated business model provides signifcant infuence over, and in-depth knowledge of the entire supply chain (from raw material input cost to end-consumer BUSINESS delivery costs), enhancing the group’s ability to manage costs, thereby protecting margins. Global purchasing power and scale of MODEL operations have allowed the group to beneft from its ability to source and produce in bulk Steinhoff’s strategy of sourcing quantity, negotiating long-term, competitive and manufacturing products at agreements in order to decrease fxed low-cost and distributing them to the overhead costs and increase volume and group’s value-conscious customer base other supplier rebates. Active involvement in through its extensive retail footprint has the supply chain further provides assurances underpinned the group’s growth since as to the quality of products, while ensuring availability of products and raw materials and listing on the JSE Limited in 1998. timeous delivery. Maintaining fexibility between sourcing and manufacturing remains key in the group’s ability to effectively manage its product range and pricing strategy. In the recent economic climate, consumers have become increasingly price-sensitive, resulting in them prioritising lower value price Development of consumer preferences segments. Steinhoff’s business is focused relating to how purchases are made requires on this value-conscious consumer with continuous evaluation of the retail concepts operations predominantly positioned in the applied in stores. Continued refurbishment growing discount market segment. This value and upgrade of stores support new proposition has facilitated sustained growth market trends and product demand. The in proftability in volatile economic climates. development of e-commerce drives the group’s integrated omni-channel approach, providing the same service and customer The European household goods markets are experience regardless of how, where and fragmented and remain competitive. This when transactions are made. has created opportunities for market share growth, benefting from Steinhoff’s diverse, multi-brand retail strategy that targets local As a result of the group’s expansive operating consumer brands in each of the regions footprint, a decentralised management where the group operates. structure is employed throughout the group, entrenching an entrepreneurial culture. Each In addition, competitively priced properties in division is empowered to innovate and adapt these markets created the opportunity for the in a way that is responsive, while still being group to grow its owned property portfolio. responsible. Operations are supported by The licence to retail household goods is the Steinhoff International group services frequently attached to a particular property, team, located in various regions, providing making property ownership a strategic assistance in matters including treasury, investment. This has also created an effective mergers and acquisitions, fnancial reporting barrier to entry for the group. and taxation.

6 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 The environment The impact on shaping Steinhoff’s Steinhoff’s strategy strategy

Growth in the value retail market Steinhoff predominantly positioned “Flight to value” in the value retail market

Highly fragmented European Diverse, multi-brand strategy furniture and household goods market Ownership of strategic properties

Vertically integrated supply chain Increase scale to leverage supply chain Operating in the value segment Maintain fexibility between sourcing places pressure on margins and manufacturing Secure supply of and access to raw materials

Continuous investment in new stores, Continuous development store refurbishments and new store of consumer trends formats E-commerce strategy

Decentralised management Expansive operations structure, entrepreneurial culture, across countries and territories with group services support and risk management

Today, Steinhoff has leading market positions in of its business model and highly experienced a number of countries in which it operates.* management team. Steinhoff’s operating performance has historically The group further recognises the importance of been strong in terms of revenue growth, margin sustainability, which management views as a non- expansion and cash generation. This can be negotiable business imperative. ascribed to the underlying strength and effciency

* According to Euromonitor

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t7 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 MANAGEMENT STRUCTURE

A DECENTRALISED APPROACH

MANAGEMENT management board and the supervisory board. Notwithstanding the group’s decentralised The management board is the executive body approach, the ultimate responsibility for retaining managing the company’s operations and strategy, full and effective control rests with the Steinhoff subject to supervision by the supervisory board. International board of directors. The management board will include the chief executive offcer, chief fnancial offcer and chief The group applies the third King Report on operating offcer. Governance for South Africa and the King Code of Governance Principles (jointly King III). King III The supervisory board oversees the management operates on an “apply or explain” basis and the board and the general course of affairs of the group has applied an alternative approach in certain company and the business connected with it. instances. Explanations of these instances are In performing its duties, the supervisory board included in the corporate governance report. is required to be guided by the interests of the company and its business enterprise, taking Steinhoff has met the reporting requirements into consideration the interests of the group’s relating to King III, the Listings Requirements of stakeholders (which include, but are not limited to, the JSE and the 2008 Companies Act (as amended) its customers, its employees and its shareholders). together with the Companies Regulations (jointly The supervisory board will also observe the the Act). corporate social responsibility issues that are Further reading is available on the group’s website: relevant to the group. These will continue to be managed by the existing social and ethics Corporate governance report committee of Steinhoff International Holdings King III table of 75 principles Limited, being a subsidiary of Steinhoff International Holdings NV (refer below). The supervisory board Reporting lines are defned from divisional level to will include the independent chairman and non- the board of Steinhoff International to ensure that executive directors. the divisions’ approach to their business and their corporate governance is in line with group policies. Similar to the current structure, the supervisory Various committees, at divisional and subsidiary board will establish the following committees: level, are in place to review and report on business Executive committee, which consists of the and strategic aspects. The main board committees managing directors and selected senior executive are in turn supported by divisional committees. offcers (being the executive directors) Key policies are in place to guide management Audit and risk committee and employee behaviour and cover important social, environmental and business aspects. A zero- Nomination committee tolerance policy has been adopted with respect Human resources and remuneration committee to compliance with the legislation of each country where the group has a presence. The social and ethics committee in the current structure will remain as part of Steinhoff International FRANKFURT LISTING Holdings Limited as required by the South African Upon listing on the Frankfurt Stock Exchange, Companies Act No. 71 of 2008. there will be little to no change to the management structure of Steinhoff International Holdings Limited. Steinhoff International Holdings NV will be subject Read more: to the Dutch Corporate Governance Code and will Frankfurt Stock Exchange prospectus available have a two-tier board structure consisting of the on www.steinhofﬁnternational.com

8 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 Summarised group structure following the Frankfurt listing

STEINHOFF INTERNATIONAL HOLDINGS NV

GENESIS INVESTMENT STEINHOFF INTERNATIONAL HOLDINGS GmbH HOLDINGS LIMITED

100%

STEINHOFF INVESTMENT HOLDINGS LIMITED

100% 100%

STEINHOFF AFRICA HOLDINGS STEINHOFF FINANCE (PTY) LTD HOLDINGS GmbH

100% 100% 100% 100% 100% 100%

PEPKOR STEINHOFF STEINHOFF HEMISPHERE JD GROUP STEINHOFF HOLDINGS SERVICES PROPERTIES INTERNATIONAL LIMITED EUROPE AG (PTY) LTD LIMITED (PTY) LTD PROPERTIES BV

43% 27%

KAP INDUSTRIAL PSG GROUP HOLDINGS LIMITED LIMITED

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t9 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 BOARD OF DIRECTORS EXECUTIVE DIRECTORS*

MARKUS JOHANNES JOOSTE (54) ANDRIES BENJAMIN LA GRANGE (41) DANIËL MAREE VAN DER MERWE (57) BAcc, CA(SA) BCom (Law), CA(SA) BCom, LLB

Markus is the chief executive officer Ben is the chief financial officer Danie is the chief operating officer of Steinhoff and was appointed to the of Steinhoff and was appointed as of Steinhoff and was appointed to the CPBSEJOBTFYFDVUJWFEJSFDUPS BMUFSOBUFEJSFDUPSJOBOEUPIJT CPBSEJO%BOJFDVSSFOUMZ )FIPMETWBSJPVTPUIFSCPBSEQPTJUJPOT DVSSFOUQPTJUJPOBTDIJFGmOBODJBMPGmDFS TFSWFTPOUIFCPBSETPGPUIFSMJTUFE XJUIJOUIFHSPVQBOETFSWFTPOUIF JO)FIPMETWBSJPVTPUIFSCPBSE HSPVQDPNQBOJFTBOEUIFJSCPBSE CPBSETBOEDPNNJUUFFTPGPUIFSMJTUFE QPTJUJPOTXJUIJOUIFHSPVQBOETFSWFT DPNNJUUFFT DPNQBOJFT POUIFCPBSETBOEDPNNJUUFFTPGPUIFS MJTUFEDPNQBOJFT

FREDRIK JOHANNES NEL (56) HENDRIK JOHAN KAREL FERREIRA (60) BCompt (Hons), CA(SA) BCompt (Hons), CA(SA)

Frikkie is the ﬁnancial director Piet is executive director: mergers of Steinhoff and was appointed to and acquisitions and was appointed UIFCPBSEJO)FBMTPBDUFEBT UPUIFCPBSEJO)FKPJOFE DPNQBOZTFDSFUBSZGPSUIFHSPVQGSPN 4UFJOIPGGJO+BOVBSZ XBT UP BQQPJOUFEBTBOBMUFSOBUFEJSFDUPS JO%FDFNCFSBOEBTFYFDVUJWF EJSFDUPSXJUIFGGFDUGSPN.BZ 1JFUBMTPTFSWFTBTBNFNCFSPGUIF JTTVFSTFSWJDFTSFHVMBUJPOBEWJTPSZ DPNNJUUFFPGUIF+4&-JNJUFE

* Detailed CVs are available on the group’s website at www.steinhofﬁnternational.com

10 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEPHANUS JOHANNES GROBLER (56) JOHANNES NICOLAAS STEPHANUS BCom (Hons) (Economics), LLB DU PLESSIS (66)# BCom, LLB

Stéhan is an executive director: group Johann is an executive member of treasury and ﬁnancing activities and Steinhoff International’s group services XBTBQQPJOUFEUPUIFCPBSEJO team and was appointed to the board *O%FDFNCFS 4UÏIBOXBT BTOPOFYFDVUJWFEJSFDUPSJO)F BQQPJOUFEDPNQBOZTFDSFUBSZPG BEWJTFTPOBOEJTFOHBHFEJONBUUFST 4UFJOIPGG*OUFSOBUJPOBM BQPTJUJPOOPX SFMBUFEUPHPWFSOBODF UBY QSPQFSUZ mMMFECZ4UFJOIPGG"GSJDB4FDSFUBSJBM DPNQFUJUJPOBOEIFBMUI TBGFUZBOE 4FSWJDFT1SPQSJFUBSZ-JNJUFE4UÏIBO FOWJSPONFOUBMSJTLT+PIBOOIBTBDUFE IFBETUIFMFHBMEFQBSUNFOUPGUIF BTBOBMUFSOBUFFYFDVUJWFEJSFDUPSTJODF HSPVQBOEBDUTBTEJSFDUPSGPSWBSJPVT .BSDI HSPVQDPNQBOJFT # Alternate executive director to Stéhan Grobler

KAREL JOHAN GROVÉ (66)# MARIZA NEL (42)# AMP (Oxford) BCom, ACMA (UK)

Jo is the executive deputy chairman Mariza is an executive member of of KAP Industrial Holdings Limited. Steinhoff International’s group services )FKPJOFE4UFJOIPGG*OUFSOBUJPOBM team, appointed to the board as an BTBOPOFYFDVUJWFEJSFDUPSJO BMUFSOBUFEJSFDUPSJO.BZ4IFJT 4FQUFNCFS)FKPJOFE6OJUSBOT SFTQPOTJCMFGPSUIFHSPVQTTUBLFIPMEFS -JNJUFEBTDIJFGFYFDVUJWFPGmDFSJO DPNNVOJDBUJPOBOEJOWFTUPSSFMBUJPOT 4FQUFNCFSøBOEXBTBQQPJOUFE and was appointed global head of BTFYFDVUJWFEFQVUZDIBJSNBOPG IVNBOSFTPVSDFTBOEJOGPSNBUJPO ,"1*OEVTUSJBM)PMEJOHT-JNJUFEJO UFDIOPMPHZJO"QSJM /PWFNCFSø+PXBTBQQPJOUFEBO # Alternate executive director to Piet Ferreira BMUFSOBUFFYFDVUJWFEJSFDUPSPG4UFJOIPGG *OUFSOBUJPOBMJO%FDFNCFSø GPMMPXJOHUIFBQQSPWBMBOE JNQMFNFOUBUJPOPGUIFBDRVJTJUJPO PGUIFNBKPSJUZTIBSFIPMEJOHJO 6OJUSBOT-JNJUFE

# Alternate executive director to Danie van der Merwe

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t11 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 BOARD OF DIRECTORS NON-EXECUTIVE DIRECTORS*

DEENADAYALEN KONAR (61) STEFANES FRANCOIS BOOYSEN (53) DAVID CHARLES BRINK (75) BCom, MAS, DCom, CA(SA), CRMA BCompt (Hons) (Accounting), MCompt, MSc Eng (Mining), DCom (hc), Graduate DCom (Accounting), CA(SA) Diploma in Company Direction

Len is the independent non-executive Steve was appointed to the board Dave was appointed to the board as an chairman of Steinhoff International and as an independent non-executive independent non-executive director in XBTBQQPJOUFEUPUIFCPBSEJO director JO4FQUFNCFS4UFWFJT %FDFNCFS)FXBTBMTPBQQPJOUFE )FJTBNFNCFSPGUIF,JOH$PNNJUUFF UIFGPSNFSHSPVQDIJFGFYFDVUJWFPGm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

CLAAS EDMUND DAUN (71) THIERRY LOUIS JOSEPH GUIBERT (44) MARTHINUS THEUNIS LATEGAN (58) BAcc, CA MBA (FR) BAcc (Hons), MCompt, DCom (Accounting), CA (SA), Advanced Diploma Banking Law

Claas is an independent non-executive Thierry is a non-executive director. Theunie was appointed to the director.)FKPJOFE4UFJOIPGG(FSNBOZ )FTFSWFEBTUIFDIJFGFYFDVUJWF Steinhoff International board as an JOBOEXBTBQQPJOUFEUPUIF PGmDFSPG$POGPSBNBGSPNBOE independent non-executive director 4UFJOIPGG*OUFSOBUJPOBMCPBSEJO BOFYFDVUJWFEJSFDUPSPG4UFJOIPGG JO4FQUFNCFSø5IFVOJFQSFWJPVTMZ $MBBTXBTJOTUSVNFOUBMJOEFWFMPQJOH *OUFSOBUJPOBMGSPN.BZUP BDUFEBTDIJFGFYFDVUJWFPGmDFSGPS UIF,"1CVTJOFTTFTBOEBDUFEBT %FDFNCFS BGUFSXIJDIIFXBT 'JSTU3BOE"GSJDBBOE&NFSHJOH.BSLFUT DIBJSNBOPG,"1*OEVTUSJBM)PMEJOHT DMBTTJmFEBTBOPOFYFDVUJWFEJSFDUPS )FDVSSFOUMZTFSWFTBTWJDFDIBJSNBOGPS -JNJUFEGPSNBOZZFBST$MBBTSFTJHOFE "CTB$PSQPSBUF5IFVOJFJTBNFNCFS GSPNUIF,"1CPBSEPO+VOF PG4UFJOIPGGTBVEJUDPNNJUUFFBOE )FJTDVSSFOUMZBNFNCFSPGUIFCPBSET IVNBOSFTPVSDFTBOESFNVOFSBUJPO PGWBSJPVT(FSNBODPNQBOJFTBOE DPNNJUUFF JTIPOPSBSZDPOTVMPG4PVUI"GSJDBJO -PXFS4BYPOZ (FSNBOZ

* Detailed CVs are available on the group’s website at www.steinhofﬁnternational.com

12 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 JOHANNES FREDERICUS MOUTON (68) HEATHER SONN (44) BRUNO EWALD STEINHOFF (76) BCom (Hons), CA(SA), AEP BA (Political Science), MSc (International Business)

Jannie was appointed to the board Heather was appointed to the Bruno is the founder of the Steinhoff as an independent non-executive board as an independent non-executive groupBOEXBTDIBJSNBOPG4UFJOIPGG director JO0DUPCFSø)FTFSWFEBT directorPO%FDFNCFS4IFIBT *OUFSOBUJPOBMVOUJMUIFFOEPG BNFNCFSPGTFWFSBM+4&DPNNJUUFFT IFMETFOJPSFYFDVUJWFQPTJUJPOTJOUIF 4FQUFNCFS)FSFMJORVJTIFE BOEIBTNPSFUIBOZFBST JOWFTUNFOUNBOBHFNFOU TUPDLCSPLJOH FYFDVUJWFEVUJFTXJUIFGGFDUGSPN FYQFSJFODFJOmOBODJBMNBOBHFNFOU BOECBOLJOHJOEVTUSJFT4IFJTUIF "QSJMBOEDPOUJOVFTTFSWJOHBT BOEJOWFTUNFOUCBOLJOH)FJTUIF NBOBHJOHEJSFDUPSPG(BNJSP*OWFTUNFOU BOPOFYFDVUJWFEJSFDUPS BTTJTUJOHXJUI OPOFYFDVUJWFDIBJSNBOPGUIF14( (SPVQ1SPQSJFUBSZ-JNJUFEBOEDVSSFOUMZ TQFDJBMQSPKFDUTGPSUIFHSPVQ (SPVQ-JNJUFE TFSWFTPOUIFCPBSETPG1SFTDJFOU -JNJUFEBOE&TPS-JNJUFE

PAUL DENIS JULIA VAN DEN BOSCH (52) CHRISTO WIESE (74) ANGELA KRÜGER-STEINHOFF (43)# BEcon, MBA BA, LLB, DCom (hc) BCom (Economic Science)

Paul was appointed to the board Christo was appointed to the board Angela was appointed to the board as non-executive director in as an independent non-executive as an alternate non-executive %FDFNCFSø1BVMKPJOFE)BCVGB director PO.BSDI$ISJTUPIBT director JO%FDFNCFS4IF .FVCFMFO#7JO)BQFSUJO CFFOUIFDIBJSQFSTPOBOEDPOUSPMMJOH KPJOFEUIF4UFJOIPGGHSPVQJO )FJTDVSSFOUMZUIFHFOFSBMNBOBHFSPG TIBSFIPMEFSPG1FQLPS)PMEJOHT CVUSFTJHOFEBUUIFFOEPGBOE UIF7BOEFO#PTDI#FIFFS(SPVQ#7 TJODF)FJTBMTPDIBJSNBOBOE OPXBUUFOETUPUIF4UFJOIPGGGBNJMZ DPOUSPMMJOHTIBSFIPMEFSPG4IPQSJUF JOWFTUNFOUT"OHFMBBMTPIPMETB )PMEJOHT-JNJUFE BOEBEJSFDUPS QPTJUJPOPOUIFBEWJTPSZDPNNJUUFFTPG PG*OWJDUB)PMEJOHT-JNJUFE 5SBEFIPME 0MEFOCVSHJTDIF-BOEFTCBOL"( )4) -JNJUFEBOE#SBJU4"-JNJUFE$ISJTUP /PSECBOL"(BOE$PNNFS[CBOL"( JTBNFNCFSPGUIFOPNJOBUJPO JO(FSNBOZ DPNNJUUFF # Alternate non-executive director to Bruno Steinhoff

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t13 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 MANAGEMENT

Group chief Group chief Group chief Chief financial officer: Financial director executive officer financial officer operating officer Steinhoff Europe 'SJLLJF/FM .BSLVT+PPTUF #FOMB(SBOHF %BOJFWBOEFS.FSXF %JSL4DISFJCFS

INTEGRATED RETAIL Household goods

Conforama United Kingdom African operations Chief executive officer Chief executive officer: UK Retail Chief executive officer "MFYBOESF/PEBMF 4FBO4VNNFST 1FUFS(SJGmUIT Chief financial officer and company Chief financial officer: UK Group Chief financial officer secretary 1IJMJQ%JFQFSJOL "TIMFZ,SFU[NBOO 'SBOL%FTIBZFT Managing director: UK Retail Chief executive: JD Financial Services Managing director: International services $IBSMWBOEFS8BMU 5POJOP1ÏSFJSB 4UFQIFO$BNQCFMM Chief executive: JDG Insurance Chief operating officer: France Managing director: UK Retail 3FOÏF(SJFTTFM $ISJTUPQIF(VÏHBO operations Managing director: SteinBuild Director: Commercial marketing "MBO8JMMJBNT 5IFPEPSFEF,MFSL and e-commerce 5IJFSSZ)V[ Habufa Integrated supply chain Director: Strategy Managing director Chief operating officer: 4UBOJTMBT$POTFJMMFS 1BVMWBOEFO#PTDI European manufacturing Director: Human resources Director: Commercial +àSHFO.VTTNBOO 0MJWJFS(VJHOFS 'SBOT)FSNBO Managing director: UK and European Director: Communications Director: Habufa Research bedding manufacturing *TBCFMMF)PQQFOPU and development "OUIPOZ+PZDF Director: Retail network France %BOOZWBOEFO#PTDI Joint managing directors: -BVSFOU.VTTJHNBOO Operations manager Select-O-Pedic Managing director: Iberian Peninsula #FSOE/JFTTFO /JDL4QBOPT .BOVFM&TUFWF[ (FPSHF(JBOOPQPVMPT Australasia Managing director: Switzerland Managing director: Puris and Impuls #FSUSBOE-FGPSU Managing director: Group services (FPSH#JMMFSU Managing director: Italy and Croatia and chief financial officer: Steinhoff Executive: Steinhoff International 4MPCPEBO4LÚMOJD Asia Pacific Sourcing .JDIBFM(PSEPO 'MPSFODF#BMBOBOU ERM Managing director: Freedom Chief executive officer: SIST* (Asia) and Poco 5PN)VBOH Chairman, supervisory board: ERM 5JN4DIBBGTNB 1FUFS1PIMNBOO Chief executive officer: Steinhoff Managing director: Snooze International Logistics Chief executive officer: Poco 4JNPO#FBUZ 3VEJ3PFY 5IPNBT4UPMMFU[ Chief financial officer: Poco Properties %S)BOT3BMG(SPLPSE Managing director: Hemisphere Chief executive officer: Lipo International %JSL)FS[JH )BOT6MSJDI#VTTBT Chief financial officer: Lipo Property Services UK $BNFO3FUP (PSEPO'PSTZUI Chief executive officer: Abra Chief executive officer: Steinhoff 1JPUS-JTPXTLJ properties – Africa Chief financial officer: Abra %JFUFS)FMNSJDI 1JPUS4[D[FQBOJL

* Steinhoff International Sourcing and Trading

14 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 Group chief Group chief Group chief Chief financial officer: Financial director Director: Group treasury Director: Legal Director: Mergers Director: Corporate Executive: Group executive officer financial officer operating officer Steinhoff Europe 'SJLLJF/FM and financing activities services and acquisitions services audit .BSLVT+PPTUF #FOMB(SBOHF %BOJFWBOEFS.FSXF %JSL4DISFJCFS 4UÏIBO(SPCMFS +PIBOOEV1MFTTJT 1JFU'FSSFJSB .BSJ[B/FM )FJO0EFOEBBM

INTEGRATED RETAIL INTEGRATED RETAIL General merchandise Automotive

Pepkor Automotive Group managing director Managing director: Unitrans 1JFUFS&SBTNVT Automotive Group chief financial officer #SZOO4UFQIFOTPO 5JFLJFEV5PJU Chief financial officer Business development executive /JFM,PU[F 'SBOL,FJK[FS Marketing executive 3JDL#FOEFM Chief executive officer: Pepkor Europe "OEZ#POE Executive: Group services -PVJT#SBOE Managing director: Pep -FPO-PVSFOT Managing director: Ackermans 4FBO$BSEJOBBM Managing director: Pepkor Africa $IBSM$SPOKF Managing director: Speciality 5PN,JNCFSMFZ Managing director: Pepkor SEA +BTPO.VSSBZ Chief executive officer: Harris Scarfe (SBIBN%FBO Managing director: Pepco 3PC5BZMPS Managing director: Pep & Co "ESJBO.PVOUGPSE Executive: PPS (BSZWBO%ZL GROUP SERVICES "MMPQFSBUJPOTBSFTVQQPSUFECZ UIFJOUFSOBUJPOBMHSPVQTFSWJDFT UFBN MPDBUFEJOWBSJPVTSFHJPOT PGUIFHSPVQTPQFSBUJPOT 5IFTFUFBNTJODMVEF NBOBHFNFOUBOETVQQPSU GVODUJPOTUIBUBTTJTUUIF MFBEFSTIJQPGUIFEJWJTJPOTUP TVDDFTTGVMMZJNQMFNFOUUIF HSPVQTTUSBUFHZ

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A VERTICALLY INTEGRATED VALUE RETAILER, diversiﬁed across markets and geographies

16 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 Chairman’s report page 18

Chief executive ofﬁcer’s report page 20

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CHAIRMAN’S REPORT

he board and I are particularly In addition, the group’s growing presence and pleased with the Steinhoff results expertise in Africa, Europe and Australasia continues T reported for the financial year to beneft the group. This is highlighted by its ability ended 30 June 2015. The Pepkor to remain competitive on price, owing to its well acquisition and various other corporate established supply chain, supported by the existing transactions strengthened the group’s infrastructure. balance sheet and business model ahead of the listing on the Prime CORPORATE GOVERNANCE Standard of the Frankfurt Stock Steinhoff’s board of directors and management Exchange (FSE) on 7 December 2015. team are committed to sound governance and good corporate citizenship. We accept that good During the year under review, the group raised governance practices are fundamental to creating, revenue by 15% to R135 billion, supported by protecting and sustaining shareholder a growing discount retail environment. Headline and stakeholder value. earnings from continuing operations increased by 36% to R12.4 billion, refecting the increased Our consolidated approach to corporate governance, operating margin of the group. The board was at both divisional and group level, are in line with especially satisfed with the cash fow generation King III and the South African Companies Act No. 71 of the group that improved by 26% to R20.3 billion, of 2008, as amended (the Companies Act). The and consequently the board has approved and group’s approach to governance focuses on its ability declared a dividend from retained earnings of to manage its businesses and affairs to ultimately 165 cps, representing a 10% increase compared assist with the creation of value in the short, medium to 150 cps declared in FY14. and long term for all stakeholders. The acquisition of the Pepkor Group, supported Group-wide corporate governance frameworks and by 95% of shareholders, became wholly unconditional standards are adopted by all subsidiaries, and new on 31 March 2015 and consequently Pepkor is governance developments are continuously being consolidated for three months of the 2015 monitored in all jurisdictions to ensure that local fnancial year. requirements are met and that developments are adopted, where relevant. The weighted average number of ordinary shares in issue increased to 2.7 billion, mainly as a result of the Our group approach to risk management is foreign placement (announced on 2 July 2014) and functional and effective. The focus of managing the Pepkor acquisition. Despite this 38% increase, the risks facing Steinhoff is based on identifying, diluted headline earnings per ordinary share from assessing, mitigating, managing and monitoring all continuing operations increased by 1% to 420.1 cps known forms of identifable risks, while accepting that (FY14: 416.7 cps). Net asset value per share increased there must be an appropriate balance between risk by 22% to R48.25 (FY14: R39.46). and reward. STRATEGIC DEVELOPMENT We evaluate the composition, skills set and This fnancial year was a busy one for the corporate effectiveness of our board and all committees on team, marked by various successful transactions in an annual basis. I am pleased to report the positive line with the group’s strategy, and included some feedback and momentum emanating from the signifcant developments in terms of the group’s current year’s process. strategy and capital structure. ENVIRONMENT, SOCIAL AND GOVERNANCE Apart from the numerous successful funding (ESG) initiatives discussed in detail in the fnance report, Local socio-economic and environmental challenges, the group completed many strategic investments as as well as key stakeholder requirements, guide the highlighted in the CEO’s report. These transactions group’s integrated approach to business and the will enhance the group’s ability to further expand into management of ESG matters. This is part of the the growing discount market in Africa and Europe. mandate of the group’s social and ethics committee,

18 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 a statutory committee prescribed by the Companies Given that the majority of Steinhoff’s revenues are Act. The board of directors and executive generated outside South Africa, a listing on a major management recognise the importance of group European stock exchange would more accurately reputation and that it should represent an ethical, refect the geographic location of its revenues, proftable and responsible brand in order to continue customers and store locations, accompanied by an its success in attracting affordable capital and retaining enhanced ability to access global capital markets. a loyal workforce and sustainable customer base. Steinhoff’s listing on the Prime Standard of the Across the group, ethical trading practices FSE, together with an inward listing on the JSE, is incorporate standards for suppliers of goods and expected to raise the international profle of the services, and the requirement to work with suppliers group. The Steinhoff board is of the opinion that to ensure compliance with these standards. Steinhoff enhanced access to international capital markets is conscious of its own responsibility to protect the on terms which are better refective of its spread of environment and also of the market advantage that activities and revenues, is a pre-requisite to sustain sound environmental policies and practices can and grow its business. By virtue of its equity being afford us, with increasingly environmentally aware traded on the FSE and JSE, Steinhoff will become consumers and other stakeholders. accessible to a wider global investor base and will be able to adapt its existing employee share incentive For more detailed information on our ESG initiatives, schemes to become more relevant, appropriate and including our health and safety strategies, our valuable for its European recipients. commitment to prevention, detection and treatment of HIV/Aids and transformation, please refer to the Consequently, and as announced on corporate responsibility section on the company’s 7 September 2015, shareholders approved all website: www.steinhoffnternational.com. resolutions required to implement the Steinhoff scheme of arrangement, and on 7 December 2015 The broad-based employee share scheme Steinhoff will list on the Prime Standard of the FSE that Steinhoff concluded in December 2008 made (while maintaining an inward listing on the JSE). B-BBEE and ownership a reality for the company. Through Steinhoff’s special purpose vehicle, APPRECIATION S’khulasonke Investments (RF) Proprietary Limited, I would like to express my gratitude to all the people Steinhoff International shares were acquired for who contributed to Steinhoff’s success in the current the beneft of approximately 12 000 South African year, including the board, management, employees, employees, the majority of whom are previously customers, shareholders and stakeholders. I also look disadvantaged individuals. This scheme continues forward to your continued support and a successful to make a signifcant and meaningful contribution 2016 fnancial year. towards South Africa’s broad-based empowerment initiatives, through both capital appreciation and the payment of substantial cash dividends to employees who are benefciaries. LISTING ON THE PRIME STANDARD OF THE FSE Steinhoff was listed on the Johannesburg Stock Exchange (JSE) in 1998 through the merger of len Konar European and South African furniture and household Chairman goods businesses under Steinhoff as their common holding company. Steinhoff has developed into an integrated retailer with revenues from its international operations comprising the majority of its global revenues.

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CHIEF EXECUTIVE OFFICER’S REPORT

he year under review has been segment. The investment in its store network during very exciting for the Steinhoff the past three years continued during the current T group. A few transactions in year, providing the group with a good pipeline for particular are worth highlighting: future growth and improved operating leverage. Sales for this segment increased by 4% in euro terms, The acquisition of Pepkor, being Steinhoff’s largest led by a strong performance in continental Europe corporate transaction to date, enlarged our exposure and the United Kingdom. Margins increased by to the discount retail segment, and further diversifed 40 basis points to 12.5%, demonstrating the beneft the group’s product mix within this growing market of the integrated supply chain in securing additional segment. margins for the retail operations via selective Following the transaction, the group operates participation in key areas of the supply chain. approximately 6 500 retail outlets across 30 countries, Growth in online sales drives good with a product range now including general performance in France merchandise. Conforama continued to take market share, In May 2015, Moody’s Investors Service upgraded supported by double digit growth in online sales that the long-term issuer rating of the group to Baa3 from now represent in excess of 7% of total sales. The initial Ba1. As part of the rating action, Moody’s assigned an success of this omni-channel approach in the group’s A3.za national scale issuer rating to the company. largest market is encouraging, and will assist the rest The outlook on the ratings is stable. of the group businesses that choose to introduce digital sales channels to their transactional mix. During the year the capital structure of the group was further enhanced through various initiatives Continued investment in stores that included the group’s inaugural Schuldschein Spain and Portugal remain the priority for Conforama transaction of €730 million at favourable interest rates, in terms of further store expansions. The success of starting from 1.25% above Euribor. Additionally, the brand, evidenced by strong like-for-like sales in July the group raised a €1.1 billion convertible growth in mature stores, will continue to pave the way for the store expansion strategy in this region. bond due 2022, at a 35% premium priced at 1.25%. In addition, the increased brand awareness that In order to obtain long-term exposure to the under- resulted from the prior year’s store expansion in lying investments held in the PSG Group Limited, Switzerland and Croatia, has led to increased sales Steinhoff increased its investment in PSG to an densities and market share gains and continues associate investment by increasing its shareholding to support growth in these regions. to 27%. Resilient economies in Germany further support In July 2015, the group acquired the remaining shares investment in the ERM store network, creating good in JD Group Limited. The JD Group was subsequently operating leverage opportunities for the group. delisted. In the United Kingdom, trading densities improved In addition to the transactions highlighted above, as a result of the refurbished store estate. In addition, the group reported pleasing results for the period the enhancement of the quality of the store estate under review, with market share growth supporting further strengthened the brand and performance. good operating leverage and proftability. The new store concept in Australia and New Zealand INTEGRATED RETAIL: HOUSEHOLD GOODS also proved successful, yielding an improved sales Now trading from more than 2 200 stores, with over mix and benefting margins. 2 3.1 million m of trading space, the household goods In contrast, the store rationalisation programme business continued to take market share, supported in South Africa is continuing in respect of the by the resilient and growing discount market household goods store network.

20 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 Vertically integrated supply chain INTEGRATED RETAIL: AUTOMOTIVE At the heart of Steinhoff’s retail operations lies the The automotive business in southern Africa has, integrated supply chain, which reinforces the ability true to its history, reported good performance in of the group to effectively deliver on its price and terms of revenue growth and maintaining operating service proposition. While much scope remains for margins. Challenging economic conditions are the supply chain to integrate further, its fexibility impacting the new vehicle market, however, this is remains key in securing the best price. This fexibility offset by good performance in the pre-owned vehicle was put to the test in the current environment, market. Strong performances were reported by both with fuctuating currencies and decreasing oil the parts and service and Hertz car rental divisions. prices infuencing the competitiveness of Asia as OUTLOOK a procurement destination, compared to eastern European manufacturing on some product During the next fnancial year, further growth is categories. Encouragingly, both the sourcing expected as a result of growing market share in and manufacturing businesses grew revenue and the discount retail market. Organic growth will be effciencies (margin contribution), demonstrating supported by additional investments in the store the capacity of the supply chain to integrate and networks. grow further. Cost saving will be prioritised, mainly in Africa and In addition, the central logistics division continues Australasia, as a result of the common infrastructure to reduce costs, support suppliers and optimise between the general merchandise and household infrastructure through the group’s inbound goods divisions in these regions. In addition, and outbound logistics functions. In particular, decreased freight rates, an optimised warehouse optimisation of warehousing facilities has supported and supplier network, and strong demand in eastern margin improvement in the group. The group Europe should result in savings and increased service secured double digit savings in ocean freight levels. costs by aggregating container volume of 88 000 Listing on the Prime Standard of the Frankfurt containers. Stock Exchange. Strategic property portfolio Following the 89% shareholder approval obtained The group continued its investment in its property on 7 September 2015, the listing of the group portfolio during the year under review. These by introduction on the Prime Standard of the investments remain a key strategic component in Frankfurt Stock Exchange will be completed on securing a relevant infrastructure and store network 7 December 2015. At the same time, the group for its household goods retail business, while will obtain an inward secondary listing on the protecting the long-term cost base of the business. Johannesburg Stock Exchange. Given that the In support of the rapid growth experienced in Spain majority of Steinhoff’s revenues are generated and Portugal, the group acquired two large stores in outside South Africa, a listing on a major European Portugal from a key competitor. stock exchange would more accurately refect the geographic location of its revenues, customers and INTEGRATED RETAIL: GENERAL MERCHANDISE store locations, accompanied by an enhanced ability The Pepkor acquisition became effective on to access global capital markets. 31 March 2015 and, as such, was only included Appreciation for three months in the audited results reported for the year ended 30 June 2015. I thank our shareholders, board of directors, employees, business partners and advisors for their The Pepkor group remains focused on their growth continued support and commitment to the group, mandates throughout the regions where they and I look forward to the next chapter in Steinhoff’s operate, and the FY15 year was no exception. Strong exciting history. like-for-like growth was supported by the rapid footprint expansion, particularly across emerging markets. During the year the group expanded its operations into France (via the acquisition of the MacDan retail business) and, shortly after year-end, into the United Kingdom with the rollout of 50 new Pep & Co stores. MarKus Jooste Pepkor’s operations in Australasia continue to Chief executive offcer improve and are expected to start contributing to the overall group proftability in the near future.

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t21 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 integrated supplychain. through avertically affordable products providing themwith consumer segments, price-conscious (value) positioned towards Retail operations are 22 GROUP STRUCTURE OPER t45&*/)0''*/5&3/"5*0/"-t AT IONA L P E RFORMANCE */5&(3"5&%3&1035

INTEGRATED RETAIL

WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 HOUSEHOLD GOODS Furniture and homeware retail businesses. page 24

Your Project Partner

GENERAL MERCHANDISE Clothing and footwear, accessories and homeware. page 40

AUTOMOTIVE Dealerships and rental outlets in southern Africa provide vehicles, parts, insurance, accessories, servicing and car rental. page 44

INTEGRATED SUPPLY CHAIN AND PROPERTIES The integrated supply chain sources from across the world and supplies both external and group-owned retailers. The property segment includes all properties managed centrally by Steinhoff Properties. page 36, 38

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t23 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 INTEGRATED RETAIL

EUROPE

UNITED KINGDOM

AFRICA

Your Project Partner

AUSTRALASIA

24 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 20 COUNTRIES 24 RETAIL BRANDS 2 218 RETAIL OUTLETS ± 3.1 million m2 RETAIL SPACE ± 50 000 EMPLOYEES

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t25 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 INTEGRATED RETAIL

3 RETAIL BRANDS

8 COUNTRIES

280* RETAIL OUTLETS

± 13 500 EMPLOYEES

± 1.2 million m2 RETAIL SPACE * Excluding ConfoDeco stores

26 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 PERFORMANCE In France, the group’s omni-channel FOR THE YEAR ENDED 30 JUNE 2015 strategy and investment in a customer-centric convenient store network to optimise its click- and-collect capabilities, continue to prove successful. Online sales increased by 22% and now represent 7.2% of total revenue in this country. REVENUE 4% Despite the impact of the strengthening of the Swiss franc on volumes, the combined MARGIN 5.0% group increased revenues and market share in constant currency. Proftability in Switzerland was impacted by the re-branding and restructuring costs resulting from the Conforama is a leading European retailer of combination of the separate regional retail furniture and household goods. Its core product businesses and the decision to exit the lines include furniture, decoration and large remaining Fly stores during the period. homeware appliances. Conforama employs a multi-style product strategy and also operates Excellent revenue and proftability growth were an online sales platform via a “click-and-collect” recorded in Spain and Portugal, bolstered by model, which is supported by its physical critical mass benefts being achieved as a result store network. As at 30 June 2015, Conforama of new store openings in previous years. operated a network of 280 retail outlets, of which 204 are located in France, making it France’s second-largest furniture and household MARKET SHARE GAINS ACROSS MOST goods retailer by market share.1 In addition, TERRITORIES Conforama has leading market positions1 in Switzerland (2nd), Iberica (3rd), Italy (4th) and French furniture category grew 3% Croatia (3rd). compared to furniture market growth 1%1 As at 30 June 2015 Conforama operated 76 of retail outlets located in seven other European 22% countries: 30 in Spain and Portugal, 15 in Italy, Online sales increased by , 7% 22 in Switzerland, seven in Croatia, one in representing of total revenue Luxembourg and one in Serbia. in France Conforama’s DNA is that of a discounter with multi-channel leadership and international GROWTH IN STRATEGIC PRODUCT presence, focused on investment in people. CATEGORIES

Furniture 7% 1 According to Euromonitor, GFK, IpEA White goods up 9%

Homeware 6%

Brown and grey goods (non-strategic) 3%

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t27 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 INTEGRATED RETAIL

3 RETAIL BRANDS

4 COUNTRIES

228 RETAIL OUTLETS

± 8 000 EMPLOYEES

± 800 000 m2 RETAIL SPACE

28 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 PERFORMANCE The German household goods market remained FOR THE YEAR ENDED 30 JUNE 2015 strong and continues to grow year on year, benefting the group’s growing footprint in the region. Another six large format stores were opened during the year, with the group now trading from 107 stores in this region. Despite the costs associated with the store openings, margins continue to improve due to increased brand recognition and trading densities. REVENUE 12% The German concept store was introduced to Poland and the Netherlands during the MARGIN year under review. Both stores are performing 10.1% well, with further expansion planned in the Netherlands during the next year. The eastern European region performed The group’s ERM division has an extensive retail strongly during the year under review, footprint across Germany, Poland, Switzerland supporting both the group’s retail and and recently entered the Netherlands. This manufacturing divisions in these countries. division operates primarily through large-scale discount retail outlets, offering a full range of furniture and household goods. GOOD GROWTH RESULTING FROM: As at 30 June 2015, the ERM retail network comprised 228 retail outlets, including Resilient economies 107 large format furniture and homeware goods retail outlets in Germany, one in both German furniture market the Netherlands and Poland; 22 Lipo furniture 2% for the 2014 calendar year* stores in the German-speaking regions of Switzerland and 97 Abra retail outlets in Poland. Continuous investment in stores in Germany (6 new stores)

INCREASED TRADING DENSITIES IN GERMANY Improved brand recognition due to enlarged footprint

GOOD GROWTH IN SWITZERLAND THROUGH CONVERSION OF FLY STORES TO THE LIPO BRAND

EASTERN EUROPEAN RETAIL ENVIRONMENT IMPROVES Smaller concept stores in Poland prove to be successful

* BVDB

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2 RETAIL BRANDS

419 RETAIL OUTLETS

± 2 000 EMPLOYEES

± 278 000 m2 RETAIL SPACE

30 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 PERFORMANCE The UK group delivered a credible performance, FOR THE YEAR ENDED 30 JUNE 2015 led by market share gains in the bedding retail division and a refurbished store network. The integrated mattress and bedding supply chain enables the group to beneft from the entire supply chain margins, from raw material to end consumer, in our group-supplied product REVENUE 17% ranges. Performance was further supported by Harveys MARGIN achieving good results despite a defationary 8.6% environment and strong competition.

The group’s retail division in the United Kingdom operates through Steinhoff UK and Revenue, as measured in pound focuses on the retailing of beds, furniture and sterling, increased by 7% homeware. Steinhoff UK currently has two retail chains in the United Kingdom: Bensons for Beds and Harveys, both of which operate through a Bedding market continues to grow network of retail outlets and an online platform. Steinhoff UK is the ninth-largest furniture retailer in the United Kingdom.1 Bensons remains the #1 bedding retailer in the UK2 Bensons for Beds is the United Kingdom’s largest bed retailer (according to management’s Improved performance by furniture estimates), offering customers a wide range of brand despite defationary market mattresses, divans, bed frames, children’s beds environment and strong competition and bedroom furniture. As at 30 June 2015, Bensons for Beds operated 262 retail outlets in Improved trading densities resulting the United Kingdom. from store refurbishments Harveys is a speciality furniture retailer in the United Kingdom, with a focus on lounge and 63% of UK estate refurbished dining furniture in the value segment of the market. As at 30 June 2015, Harveys operated 157 retail outlets in the United Kingdom.

1 According to Euromonitor 2 Management estimate

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3 RETAIL BRANDS

2 COUNTRIES

138 RETAIL OUTLETS

± 1 500 EMPLOYEES

± 200 000 m2 RETAIL SPACE

32 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 PERFORMANCE The retail operations in Australia FOR THE YEAR ENDED 30 JUNE 2015 and New Zealand performed well during the year under review, increasing margin on a relatively stable turnover compared to that of the previous year. The acquisition of the Australian bedding manufacturer Select-O-Pedic was completed during the REVENUE year, with good initial results being 1% achieved by the combined group. MARGIN 6.2% Australian furniture market remains challenging The group trades from three retail chains in Australia and New Zealand: Freedom, Snooze and Poco Australia, all of which operate through More regular promotional events drive a network of retail outlets and an online increased trading densities platform. With 138 retail outlets, the group is the third-largest furniture retailer in Australia and New Zealand.1 Sales from new store format exceed expectations Freedom retails an extensive collection of leather and fabric sofas, dining furniture, bedroom furniture and homeware. As at Supply chain and logistics restructure 30 June 2015, Freedom operated 61 retail improves effciencies and margins outlets in Australia and New Zealand.

Snooze is predominantly a franchise mattress Improved sales mix supports gross 76 and bedding specialist with retail outlets. margin Poco Australia is a one-stop home solution superstore offering a wide range of consumer Good progress on integration goods at low prices. The brand and concept of Select-O-Pedic acquisition originated in Germany, however, the product (mattress manufacturer) offering at Poco Australia is tailored to the Australian consumer. As at 30 June 2015, Poco Australia operated one store in Australia.

1 According to Euromonitor

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t33 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 INTEGRATED RETAIL

15 RETAIL BRANDS

6 COUNTRIES

1 153 RETAIL OUTLETS

± 17 500 EMPLOYEES

± 700 000 m2 RETAIL SPACE

34 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 PERFORMANCE Major strides have been made in the FOR THE YEAR ENDED 30 JUNE 2015 restructuring of the household goods retail brands in South Africa during the year under review. The focus to drive more sustainable cash sales compared to a credit sales mix has proved successful. In support of this sales strategy, the brand and cost rationalisation REVENUE programmes are progressing well and will 2% result in a more sustainable business model going forward. MARGIN 4.2% The DIY and building material business has performed well, assisted by its investment in its store network during the past few years. JD Group is one of the largest furniture and The business is well positioned for continued household goods retailers in southern Africa. growth in the large building materials market. JD offers a diversifed mix of products, including furniture, household appliances, consumer electronics and technology goods, building CHALLENGING ECONOMIC ENVIRONMENT materials and DIY products and accessories.

JD Group operates through a multi-branded FURNITURE BUSINESS RESTRUCTURING IS nine retail network representing furniture GAINING TRACTION brands, two consumer electronics and appliances brands and four building materials and DIY brands. As at 30 June 2015, the group More sustainable cash versus credit mix operated 1 153 retail outlets in southern Africa. Credit sales mix reduced to 55% in FY15 (FY14: 63%)

Focus on lower risk credit consumers

Good growth in lay-by category

Successful introduction of Sleepmasters brand enhances trading densities Good progress made with brand and cost rationalisation programmes

STEINBUILD (DIY) DELIVERS STRONG PERFORMANCE

Proposed Iliad acquisition expected to provide scale benefts

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t35 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 INTEGRATED RETAIL

8 SOURCING OFFICES

SOURCING FROM 44 COUNTRIES MANUFACTURING IN 5 COUNTRIES

21 MANUFACTURING FACILITIES

88 000 CONTAINERS

36 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 PERFORMANCE The fexibility and effciencies inherent in the FOR THE YEAR ENDED 30 JUNE 2015 group’s supply chain continue to underpin the group’s ability to deliver product to its internal and external customer base. During the year under review, dollar strength had a positive impact on the competitiveness of the group’s European manufacturing operations. Increased volumes and an improved product The group’s integrated supply chain division mix improved effciencies and margins. focuses on the sourcing and manufacturing of raw materials and household goods, which The Asian sourcing operations performed it sells to other group-owned companies and well, reducing quality-related returns to record third-party retailers. The group’s integrated low levels and improving on-time deliveries, supply chain division’s proximity to the large resulting in reduced costs across the business. European household goods market; its ability to assemble furniture sourced from Asia and The specialist central logistics department Europe, and its ability to replace and/or repair supports group operations by managing the products subject to stringent European warranty logistics performance and reducing associated requirements are key competitive advantages. costs during the year in many territories. In particular, optimisation of warehousing facilities The sourcing and logistics division operates has supported margin improvement in the through eight sourcing offces across eastern group. Europe and Asia, with a primary objective of creating competitive advantages for the group The group secured double digit savings in by providing speed-to-market of exclusive ocean freight costs by aggregating container quality products at competitive prices. volume of 88 000 containers. The group operates 50 distribution centres across Europe and the United Kingdom. The group’s own manufacturing operations include integrated furniture and household goods manufacturing operations in Europe, the United Kingdom and Australia. As at 30 June 2015, manufacturing operations were carried out in 21 facilities across fve countries.

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t37 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 INTEGRATED RETAIL

€3.1 billion EUROPEAN PROPERTY PORTFOLIO (AT COST)

4.1 million m2 TOTAL EUROPEAN PROPERTY PORTFOLIO

38 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 The group continued its investment in its PERFORMANCE property portfolio during the year under review. FOR THE YEAR ENDED 30 JUNE 2015 These investments remain a key strategic component in securing a relevant infrastructure and store network for its household goods retail business, while protecting the long-term cost base of the business. In support of the rapid growth experienced in Spain and Portugal, the During the economic downturn in Europe group acquired two large stores in Portugal and the resultant pressure this placed on from a key competitor. retailers and proprietors, various retail properties became available at affordable prices. The group used this opportunity to acquire a number of the retail properties it RETAIL* 82% operates from.

Given the restricted planning permission MANUFACTURING 10% requirements and the trading licences attached to some retail properties, the value 8% and competitive advantage of owning these WAREHOUSE properties remains a key strategic focus for the group. The group’s property investments comprise an extensive footprint of retail properties situated in Europe and Africa, as well as manufacturing facilities located in Germany, eastern Europe, the United Kingdom and Australia. Centralised property teams provide a wide range of SQUARE METRES DISTRIBUTION specialised services to the group, including: Management of the internally and externally leased property portfolio Development of existing and new properties Centralised management of sustainable energy, water and waste Management of risk, security * and insurance costs Warehouse space attached to stores are included in retail Management of maintenance costs

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t39 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 INTEGRATED RETAIL

EUROPE AND UNITED KINGDOM

AFRICA

SOUTH AFRICA, BOTSWANA, LESOTHO NAMIBIA, SWAZILAND

AUSTRALASIA

40 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 FOUNDED IN 1965

61% OF REVENUE IN DISCOUNT SEGMENT

35% OF REVENUE IN VALUE SEGMENT

4% OF REVENUE IN SPECIALITY SEGMENT

The group’s general merchandise segment comprises the operations of the Pepkor Group, a leading retailer selling a range of everyday necessities, including clothing, footwear, household goods, personal accessories and cellular products to its price-sensitive and value- conscious customer base. Pepkor also provides selected fnancial services to its customers, such as utility bill payments and money transfer services. Founded in 1965 and headquartered in Cape Town, Pepkor serves discount and value-oriented customers through its conveniently located and extensive store footprint. Operating in 20 countries across three continents, Pepkor retails from nearly 2 million m2 of retail space in more than 4 000 retail outlets, employing approximately 37 000 full-time employees as at 30 June 2015. Pepkor operates through well-known retail brands, with approximately 61% of revenue being generated within the discount segment of the market, 35% in the value segment and 4% in the speciality market segment.

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DISCOUNT VALUE South Africa and rest of Africa South Africa Trading through more than 2 000 retail outlets, Founded in 1916, Ackermans is the group’s Pepkor sells a discount range of merchandise, oldest African retail brand. Ackermans primarily including clothing, footwear, homeware and sells clothing, footwear, homeware, clothing cellular products. Today, Pep is one of South accessories and cellular products at competitive Africa’s top three retail names in terms of prices. At 30 June 2015, Ackermans operated brand recognition among consumers of all more than 480 urban retail outlets across income groups. In addition to this, through southern Africa. its involvement with Flash, more than 66 000 SPECIALITY Flash traders selling airtime and electricity and South Africa providing bill payment facilities were operative Pepkor’s speciality retail division comprises in the informal discount sector. three well-known retailers focused on a Pepkor expanded its footprint into Africa diverse customer base, including John Craig, following its success in South Africa by opening a premium-branded menswear retailer; Dunns, its frst store in Zambia in 1990. Staying close to a mid-market fashion retailer; and Shoe City, a its solid foundation in South Africa and keeping value-oriented footwear retailer. The division its brand positioning consistent, Pepkor’s provides customers with clothing, footwear, African expansion accelerated and extends accessories and cellular products and trades across nearly 100 000 m2 of retail space through approximately 450 retail outlets through more than 250 retail outlets situated in located in South Africa, Namibia, Botswana, Zambia, Mozambique, Malawi, Angola, Nigeria Lesotho and Swaziland. and Zimbabwe. Australasia Eastern Europe Pepkor’s retail division operates through more Pepco, one of the group’s fastest growing than 300 retail outlets in Australasia and retailers, was founded in 2000. Pepco is a comprise a collection of speciality retailers leading non-food retailer in Poland, serving located across Australia and New Zealand, customers with a diverse product range including Best & Less, Harris Scarfe, Mozi, comprising clothing, footwear, homeware and Store & Order and Postie. Best & Less, which is a core range of basic household consumables. typically located in shopping malls, and Harris Pepco operates nearly 700 stores, mainly Scarfe, which operates from larger, stand-alone located in small to medium-sized cities in retail outlets, are Pepkor’s largest speciality Poland. Pepco recently expanded its concept to retailers in Australasia and focus on the value- the Czech Republic, Hungary and Slovakia. conscious clothing, footwear and houseware markets.

42 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 PERFORMANCE The trading environment in Africa remained FOR THE YEAR ENDED 30 JUNE 2015 challenging during the year under review. Despite this, the group performed well, increasing market share in the clothing, footwear and home product segment and through the introduction of a broader and well- supported product range. 20 COUNTRIES Strong sales growth and improved margins were realised in the eastern European retail cluster. RETAIL BRANDS During the year the eastern European division 17 expanded its operations outside of Poland, with more than 10% of sales now being contributed 4 111 RETAIL OUTLETS by territories other than Poland. New store performance was very strong in all territories, particularly in Romania and Hungary. EMPLOYEES ± 37 000 The group experienced good turnover growth 2 in Australia, supported by like-for-like sales ± 1.9 million m growth, particularly in the two main retail brands. Margins remained under pressure, RETAIL SPACE impacted by the newly acquired New Zealand business.

SUPPORT SERVICES Pepkor’s central group services division offers credit, IT, property management, Resilience in value discount segment treasury, logistics and quality control support. In addition, Pepkor’s retail operations are Store network increased supported by sourcing offces, located in China, by ± 400 stores that focus on supply chain optimisation to help protect and enhance Pepkor’s discount market positioning. Pepkor also operates a Acquisition of MacDan in France 13 22 000 m2 production facility in Cape Town that ( stores) manufactures approximately nine million school uniforms each year. Acquisition of Postie in New Zealand (64 stores) PEPKOR PRODUCT SOLUTIONS The Pepkor Product Solutions (PPS) division supports the Pepkor Group’s retail brands, offering specialised services aimed at connecting suppliers with buyers. With offces in Shanghai and Shenzhen, China, and dedicated employees in Hong Kong, Taiwan, Bangladesh and India, the PPS division oversees all functions in the Pepkor Group’s sourcing supply chain.

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t43 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 INTEGRATED RETAIL

SOUTH AFRICA AND NAMIBIA

44 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 The group’s automotive segment comprises Unitrans Automotive and Hertz car rental. Unitrans Automotive represents a number of international automotive brands, and services its customers from its dealership network located throughout southern Africa. Hertz car rental conducts its business in Namibia and South Africa.

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t45 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 INTEGRATED RETAIL

46 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 PERFORMANCE The pre-owned vehicle division performed FOR THE YEAR ENDED 30 JUNE 2015 relatively well, with a strong contribution from parts and services. In contrast, the new vehicle market was under pressure during the year under review, adversely impacting margins. Hertz achieved good volume growth, and the focus on customer service, effciencies and cost 2 COUNTRIES control resulted in much improved proftability in this division. 87 DEALERSHIPS

46 RENTAL OUTLETS Revenue 6%

± 5 000 EMPLOYEES Margins maintained at 3%

Good performance in pre-owned vehicles

Hertz improved proftability

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48 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 FINANCIAL PERFORMANCE

Finance report page 50

BEN LA GRANGE Chief ﬁnancial ofﬁcer FRIKKIE NEL Financial director

Summarised ﬁnancial statements page 58

Ten-year performance review page 66

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THE YEAR UNDER REVIEW has been transformational for Steinhoff

YEAR ENDED 30 JUNE 2015

continuinG operations 2015 2014 Change Rm Rm

Revenue 134 868 117 364 15% Operating proft before capital items 15 315 12 622 21% Operating proft margin (%) 11.4 10.8 Headline earnings 12 418 9 128 36% Weighted average number of shares (m) 2 737 1 977 38% Headline earnings per share (cents) 453.7 461.7 (2%) Diluted weighted average number of shares (m) 3 235 2 488 30% Diluted headline earnings per share (cents) 420.1 416.7 1% Dividend per share (cents) 165.0 150.0 10% Cash generated from continuing operations 26 247 19 042 38% Cash generated/EBITDA (%) 150 130 Net asset value per share (cents)1 4 825 3 946 22%

1 From continuing and discontinued operations

50 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 The year under review has been transformational for CONTINUING OPERATIONS Steinhoff. During July and August 2014, Steinhoff Operating performance raised R18.2 billion (before expenses), with a rights Revenue offer and accelerated bookbuild, and in March 2015 The group’s revenue increased by 15% to R135 billion. Steinhoff acquired the general merchandise group Pepkor Holdings Proprietary Limited (Pepkor). These Integrated retail: Household goods events should be taken into account when analysing Revenue for this segment, as measured in euro, the statement of fnancial position and returns. increased by 7% to €7.6 billion (2014: €7.1 billion), IMPACT OF PEPKOR ACQUISITION led by a strong performance in continental Europe On 25 November 2014 it was announced that and the United Kingdom. Steinhoff would acquire 92.34% of the issued share Europe capital of Pepkor. The purchase consideration was In France, the group’s omni-channel strategy and settled through the issue of 839 million Steinhoff investment in a customer-centric convenient store shares and a cash payment of R15.1 billion. All network to optimise its click-and-collect capabilities conditions precedent were fulflled on 31 March 2015. continue to prove successful. Online sales increased Consequently, Pepkor was consolidated for three by 22% and now represent 7% of total revenue in months from 31 March 2015, resulting in revenue of this country. R12.2 billion and operating proft of R1.6 billion being included in the results for the three months. The German household goods market remained strong and continues to grow year on year, benefting The fair values of assets and liabilities acquired were the group’s growing footprint in that region. Another as follows: six large format stores were opened during the year. Rm pepKor acquisition The eastern European region performed strongly Intangible assets 18 434 during the year under review. Other assets 7 028 United Kingdom and Australasia Liabilities (8 126) The United Kingdom operations delivered a Working capital 1 835 credible performance, led by market share gains in the bedding retail division and a refurbished store (9) Existing non-controlling interest’s portion network. Revenue, as measured in pound sterling, total assets and liabilities acquired 19,162 increased by 7%. (1 468) Less: non-controlling interest’s portion The Australian and New Zealand retail operations Group’s share of assets delivered stable turnover in a challenging market. and liabilities acquired 17 694 African operations total consideration paid 71 808 Revenue in African operations increased by 2%. total goodwill 54 114 Major strides have been made in the restructuring of the household goods retail brands in South Africa. Attributable to acquisition at offer price 45 235 The focus to drive a more sustainable cash sales Attributable to increase in share price 8 879 compared to credit sales mix has proved successful. The do-it-yourself (DIY) and building material business The increase in the Steinhoff share price from the has performed well, assisted by its investment in its conclusion of the purchase agreement (R57.00 per store network during the past few years. share) to 31 March 2015 (R67.58 per share), gave rise to additional goodwill recognised for accounting External supply chain purposes of R8 879 million. The group’s external supply chain increased revenues by 5%, due to additional volumes sourced for third- On 20 April 2015, the remaining 7.66% of Pepkor party customers. ordinary shares were acquired and the purchase consideration was settled through the issue of Integrated retail: General merchandise 87 million Steinhoff shares. This buyout resulted in The revenue for the Pepkor group for the three- a premium paid on acquisition of a non-controlling month period was R12.2 billion. interest of R4.7 billion accounted for in the premiums Year on year, Pepkor increased revenue by 18% from or discounts on changes in non-controlling interests R38.2 billion to R45.1 billion. This was driven by reserve. This buyout did not impact goodwill. market share gains across most territories.

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Integrated retail: Automotive The group’s future serviceability of debt remains Automotive achieved revenue growth of 6%. The healthy, as evidenced by the EBITDA interest cover pre-owned vehicle division performed relatively well, ratio of 9.5 times (2014: 7.3 times). with a strong contribution from parts and services. In Taxation contrast, the new vehicle market was under pressure The effective taxation rate of the group, calculated during the year under review. before taking into account capital items and Operating proﬁt and operating margin the group’s share of proft of equity accounted Operating proft increased by 21% to R15.3 billion companies, is 10.2% (2014: 13.1%). The decrease in (2014: R12.6 billion) translating to an operating margin the taxation rate is primarily due to deferred taxation assets raised on assessed losses that were not of 11.4% (2014: 10.8%). This was achieved through a recognised in 2014. 40 basis point margin improvement in the household goods segment, which demonstrates the beneft of Diluted earnings per share (DEPS) and diluted the integrated supply chain. The general merchandise headline earnings per share (DHEPS) segment, which has higher margins than the rest of DEPS increased 9% to 498.3 cps and DHEPS the group, also contributed to the increase in the increased 1% to 420.1 cps. These increases were group’s operating margin. achieved despite a 30% increase in the diluted weighted average number of shares in issue to operatinG MarGin 2015 2014 3.2 billion (2014: 2.5 billion), as a result of the before capital iteMs % % accelerated bookbuild, the Pepkor acquisition and the conversion of convertible bonds. Integrated retail: Household goods 12.5 12.1 Steinhoff’s policy is to treat all underlying shares Integrated retail: General merchandise 13.5 – of convertible bonds as dilutionary, even in circumstances where, at the relevant reporting date, Integrated retail: Automotive 3.0 3.0 the relevant market price triggers for conversion have not been met, and a reasonable investor would not Currency impact be likely to convert into shares. The group’s diverse geographical footprint exposes it DISCONTINUED OPERATIONS to currency fuctuations that impact on rand reported During the 2014 year, JD Group Limited (JD Group) results. The group’s revenue achieved outside South accepted an offer from RCS Cards Proprietary Limited Africa is primarily denominated in Australian dollar, to dispose of JD Group’s Financial Services division euro, Polish zloty, Swiss franc and pound sterling. subject to conditions precedent. The sale had not yet been implemented on 30 June 2015 and accordingly The average translation rate used for converting JD Group’s Financial Services division is shown as euro income and expenses to rand was R13.73:€1 discontinued operations and assets held for sale in (2014: R14.11:€1), effectively a 3% stronger rand. The the results for both years presented. majority of the group’s assets and liabilities are situated At the end of October 2015, subsequent to issuing in Europe and were translated into rand, using the the annual fnancial statements, the JD Group closing rate of R13.56:€1 (2014: R14.57:€1), effectively has, after much consideration and extensive a 7% stronger rand. The group does not hedge the discussions with RCS, decided not to proceed with currency translation risk pertaining to translating its the transaction. A number of factors infuenced foreign subsidiaries into its reporting currency. the decision not to proceed with the proposed transaction. This included the substantial change in excHanGe rates the economic environment in which the business to (rand:euro) 2015 2014 2013 be disposed operates, from the time that discussions started between the parties to the present, and the 13.73 14.11 11.46 Average fnancial and commercial aspects of the transaction, Closing 13.56 14.57 12.92 which included the Competition Commission conditions. Net ﬁnance charges The JD Group has made substantial progress with the Net fnance charges decreased from R2.0 billion disposal of the business to an international investor to R1.8 billion. The impact of the rights offer and with worldwide interests in providing credit to the accelerated bookbuild undertaken in July and lower LSM customers. It is expected that defnitive August 2014 was partially offset by the R15.1 billion agreements will be concluded prior to cash consideration paid for Pepkor on 31 March 2015. end December 2015.

52 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 CAPITAL MANAGEMENT Long-term capital expansion projects are fnanced The objective of the group’s capital management by a combination of foating and fxed-rate long- strategy is to maintain an optimal level of capital, term debt. Debt is normally fnanced in the same taking into account the cost of capital. Gearing is currency and with the same repayment profles as monitored on a group-wide basis, in line with external the expected cash fows of the underlying operation covenants. At the Steinhoff Europe AG (Steinhoff or project. Europe) level these limits include maintaining the net- debt-to-annualised-EBITDA ratio below 2.5 times and Given the prevailing uncertainty in the international maintaining the EBITDA interest cover ratio above and domestic fnancial markets, availability of funding 5 times. At the Steinhoff Africa Holdings Proprietary and liquidity remained a primary focus for the year. Limited (Steinhoff Africa) level (measured at Steinhoff The group is in a position to settle maturities falling International level) these limits include maintaining due within the next eighteen months and to cover its the net-debt-to-annualised-EBITDA ratio below ongoing liquidity requirements. The group focused 3.2 times and maintaining the EBITDA interest cover on its refnancing activities and successfully addressed ratio above 4.5 times. It is also important to note that all its short and medium term refnancing needs. It the net-debt-to-annualised-EBITDA-ratio is infuenced extended the tenure of existing long-term funding. by the difference between the closing exchange rate For further details refer to the “share issues and debt (net debt impact) and the average exchange rate management” section of this report. (EBITDA impact) on converting the euro numbers into The statements of fnancial position of Steinhoff Africa rand. Covenants on Steinhoff Africa have therefore and Steinhoff Europe are managed separately. The been aligned to also allow the group to translate the group’s foreign debt is mainly denominated in euro net debt number by using the average exchange rate and was converted at a closing rate of R13.56:€1, as opposed to the closing rate. a 7% decrease from the conversion rate used at The group continues to support all group operations 30 June 2014. while ensuring the overall capital strength of the In May 2015 the group was upgraded by Moody’s group, after taking into account all planned projects to investment grade and the group’s international and providing for unexpected events. corporate rating from Moody’s is Baa3 (stable The group fnances its operations through cash outlook). Steinhoff Europe maintained an investment generated from operations, and a mix of short, grade rating of NAIC 2 from the US National medium and long term credit facilities, bank loans, Association of Insurance Commissioners. corporate and convertible bonds and commercial As at 30 June 2015, the group had net debt of paper. These sources of fnancing provide the group R26.1 billion (2014 pro forma: R30.2 billion) resulting with a balanced and diversifed range of funding in a net-debt-to-equity ratio of 14% (2014 pro forma: sources. 29%). The group had unutilised borrowing facilities of R29.3 billion (2014: R19.3 billion). Net debt is calculated as follows: net debt – MoveMent reconciliation net debt Pro forma 2015 2014 48 086 (2 231) (19 713) Rm Rm Long-term interest-bearing loans and borrowings 56 344 55 580 Short-term interest-bearing 26 142 loans and borrowings 5 847 6 411 Bank overdrafts and short-term facilities 1 856 2 436 Gross debt 64 047 64 427 Cash and cash equivalents (37 905) (34 200) Net debt 26 142 30 227 Net debt movement (Rm)

Equity 182 170 105 635 Jun 2014 Currency Group Jun 2015 impact operations Net debt:equity 14% 29%

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Share issues and debt management As discussed under the “impact of Pepkor acquisition” On 2 July 2014, Steinhoff announced a rights offer section of this report, Steinhoff issued 926 million including an accelerated bookbuild of cum rights shares between 23 February 2015 and 20 April 2015 shares to institutional investors. The accelerated and paid R15.1 billion cash to acquire 100% of the bookbuild was fully subscribed and 150 million Pepkor group. The shares issued on 23 February were Steinhoff ordinary shares were issued at R52.00 per treated as a prepayment for accounting purposes, and share, amounting to R7.8 billion of capital raised, only impacted the weighted average number of shares which was paid to Steinhoff in a combination of euro from 31 March 2015. No earnings were recognised and US dollar. A further approximately 200 million from Pepkor for the period 23 February 2015 to rights were taken up by investors, bringing the total 31 March 2015. capital raised to R18.2 billion (before expenses). On 30 June 2015, in order to obtain long-term During the period from November 2014 to April 2015, exposure to the underlying investments held in the PSG conversion notices were received from holders of the Group Limited (PSG), Steinhoff increased its investment convertible bond due 2016. On 3 March 2015, it was in PSG to an associate investment by increasing its resolved to call on the redemption of the remainder shareholding to 27%. Steinhoff acquired the shares of the convertible bonds due 2016. A total of in PSG in return for the issue of 45 million Steinhoff 145 million ordinary shares of Steinhoff were issued ordinary shares. A one-off capital proft of R3.5 billion to bondholders and R7.0 million was paid in cash. was recognised as a result of this transaction. During June 2015, conversion notices were received During June 2015 the group successfully diversifed from holders of the convertible bond due 2017. its funding profle with an inaugural German bond In total, 75.4 million ordinary shares of Steinhoff transaction (Schuldschein). The transaction attracted were issued to bondholders. At 30 June 2015, more than 80 investors, raising €632 million with €181.1 million remained outstanding, representing maturities between fve and ten years. Subsequent 58 million underlying ordinary shares. to year-end, further notes were issued, increasing the amount raised to €730 million. Strong geographic The hurdles in respect of the 2011 grant under the investor diversifcation was achieved across European share incentive scheme were met and, as a result, and Australasian investors. 11.1 million shares were issued in December 2014 and February 2015 to share scheme participants Steinhoff Services Limited, a subsidiary of Steinhoff who achieved their individual and divisional Africa, concluded the private placement of notes to performance targets. the amount of R1.5 billion under its Steinhoff Services

equitY – sHare issued durinG 2015

45 4 000 926 3 652

3 500

3000 11 350 220 2 500 2 100

2 000

1 500 number of shares (m) number of shares

1 000

500

0 June 2014 abb & rights convertible share pepkor psG vendor June 2015 issue bonds incentive vendor consideration scheme consideration Wanos – 2 737 million shares increased by 38% (fY14: 1 977 million shares)

54 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 domestic medium-term note programme. These INTANGIBLE ASSETS AND GOODWILL notes were issued as fxed and foating rate notes Intangible assets and goodwill increased to R135 billion with maturities between three and fve years. (2014: R66 billion), mainly as a result of the IFRS 3 purchase price allocation in respect of the Pepkor CASH FLOW ANALYSIS acquisition. Please refer to the “impact of Pepkor Cash fow remains a key performance indicator for the acquisition” section in this report for further details. group and forms part of all divisional management’s performance and incentive criteria. All short-term All intangible assets and goodwill were assessed incentive bonuses are structured to focus on cash for impairment. Intangible assets and goodwill are management and optimisation of working capital. primarily tested using the relief-from-royalty method or discounting the future cash fows expected to be Operating activities generated by these assets. The relevant cash fows Management’s focus on cash generation has resulted are then discounted using the weighted average in an improvement of 38% in cash generated cost of capital (WACC) and the net present value of from continuing operations to R26.2 billion (2014: these cash fows is compared to the current net asset 19.0 billion). Cash generated from continuing value and, if lower, the assets are impaired to the net operations represents 150% of EBITDA from present value. Management uses its best estimates continuing operations. Since the introduction of when forecasting market conditions and expected specifc cash generation hurdles as part of the annual useful lives of assets that drive these calculations, incentive bonus scheme six years ago, the group has however, these estimates can also be infuenced by a consistently generated cash from operations in excess number of different factors in various countries. of its operating proft. The WACC rate is a signifcant input in the calculation The group managed to release R7.8 billion from of the group’s fair valuation estimates. The WACC working capital despite higher activity levels. rate differs from country to country and for different This was mainly as a result of benefcial changes in operational segments. The resulting net present value supplier terms throughout the group, the improved for similar cash fows year on year will be infuenced negotiating power due to the size of the sourcing by changes in the WACC rate. External uncontrollable division and the seasonality in the Pepkor business variables, such as interest rates, infuence the WACC that released R1.0 billion of working capital in the rate, and could result in impairments or reversal of three months from acquisition to year end. previous impairments. The principal assumptions The group’s cash fow from operating activities at used in justifying the carrying values of intangible R20.3 billion refects management’s commitment to assets are highlighted in notes 8 and 9 to the delivering sustainable earnings. consolidated annual fnancial statements. Investing activities Due to the trading environment remaining The group’s net investment of R21.1 billion includes: challenging in Africa, the group decided to impair the JD Group goodwill and one of the JD Group brands Cash paid for the acquisition of Pepkor (net of cash totalling R849 million. The impairment tests did not on hand at Pepkor) of R13.2 billion result in other material impairment charges during the Asset expansion and replacement capex current year. Impairment testing was done on a basis of R4.7 billion consistent with the prior year. Other investments and loans of R3.2 billion An independent expert assessed the inputs used by management over the last fve years to calculate the Dividend value-in-use of the intangible assets and goodwill. The board has declared a cash dividend of 165 cps It was found that management was consistent in the (2014: 150 cps). Shareholders will, however, be entitled way they calculated inputs and that the inputs used, to decline the cash dividend or any part thereof especially growth rates and budgeted revenues, were and instead elect to receive a capitalisation issue found to be reasonably prudent compared to actual alternative. This dividend translates to a dividend results achieved. cover of 2.4 times, based on the HEPS from continuing RISK MANAGEMENT and discontinued operations. In relation to future The group’s success in its overall strategy is largely years, the group intends to target a dividend per share attributable to its business philosophy, which supports cover ratio in line with listed international retailers, decentralised, autonomous business units with an provided the group’s business remains stable. entrepreneurial culture.

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t55 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 FINANCE REPORT CONTINUED

The board recognises that some elements of risk The responsibility for monitoring and managing management can only be achieved on an integrated these risks is that of management, in conjunction with basis. Financial risks such as exchange rate risk, the central treasury and foreign exchange support interest rate risk, liquidity risk and commodity price functions. risk are largely centrally controlled. Interest rate risk management The group draws attention to some pertinent risks The group continues to manage its interest rate within the businesses. exposure by maintaining a mix of fxed and foating interest rates. This is done either directly by fxed or Financial risk management foating-rate debt issues, or by use of interest and The group’s fnancial instruments are listed in note cross-currency swaps. The use of derivative fnancial 28 to the consolidated annual fnancial statements. instruments relates directly to underlying existing Derivative instruments are used by the group for indebtedness and exposure. hedging purposes. All treasury transactions are undertaken to manage Such instruments include forward exchange and the risks arising from underlying activities, and no currency option contracts and interest rate swap speculative trading is undertaken. agreements. The group does not speculate in trading derivative or other fnancial instruments. As part of the process of managing the group’s borrowing mix, the interest rate characteristics of new A fnance forum, consisting of senior fnancial group borrowings and the refnancing of existing borrowings executives, meets regularly to analyse currency and are positioned according to expected movements in interest rate exposure, and to re-evaluate treasury interest rates. management strategies in the context of prevailing economic conditions and forecasts. The fnance Credit risk management forum also reviews the hedging policy of the group Trade accounts receivable and short-term cash on an annual basis. investments pose a potential credit risk to the group. The role of the group’s credit function is to Liquidity risk management set consistent standards for assessing, quantifying The group’s policy remains to spread debt maturities (scoring), monitoring, mitigating and controlling the over a wide range of periods to manage excessive credit risk introduced by contractual obligations of refnancing risk in any one-year period. The group trading partners and commercial clients. The granting further manages liquidity risk by monitoring of credit is controlled by application procedures forecasted cash fows and maintaining adequate and setting account limits. Provision is made for unused borrowing facilities. In addition, the group both specifc and general bad debt. In the current uses a variety of sources and instruments to fund its economic climate, a high level of attention is paid activities in order to reduce any concentration risk to analysing the creditworthiness of existing and and to mitigate liquidity risk. potential customers. Currency risk management The group controls its cash surpluses and short- The principal objective of our currency risk term fnancing through its African, European and management and hedging strategy remains to Australasian central offces, which invest net cash mitigate exposure to movements in foreign exchange reserves on the fnancial markets, mainly in short-term rates for the currencies the group is exposed to, instruments indexed to variable rates. taking into account the potential effect on our net Risk of downturn in the global economy debt and related credit metrics. It is group policy to Steinhoff International maintains geographically and hedge exposure to operational cash transactions in operationally diverse businesses to help protect the foreign currencies other than the reporting currency group against an economic downturn in specifc of the underlying operation for a range of forward regions or industries. The geographical spread of periods, but not to hedge exposure for the translation the supply chain, retailing and warehousing functions of reported profts in the different jurisdictions and allows units to adjust operations quickly to counter ultimately for reporting purposes, to rand. In addition, market diffculties. currency assets are hedged by way of currency borrowing where practicable, or alternatively, to Acquisition risk effectively hedge all borrowings in currencies other A formal due diligence process and procedure is in than where such borrowings are used. place that sets out the approach and framework to

56 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 be used when acquisitions are made. This includes continue to present growth opportunities to the continuous strategic analysis of intended targets, group’s integrated household goods and general development of acquisition criteria, both in terms of merchandise retail operations. In Africa, the current the group’s strategic direction and potential value low economic environment and the high levels of creation for the respective business units of the group. consumer indebtedness are expected to continue. A dedicated merger and acquisition team manages This has led to a continued focus on containment of and reviews the entire process relating to mergers costs and improved effciencies, with additional focus and the application and implementation of business on collection and recovery strategies (JD Group) to combinations. All viable merger and acquisition maintain margins in a more competitive low-volume opportunities are reviewed by the executive environment. The automotive pre-owned vehicle committee. market is expected to grow, but this will be offset by the new vehicle market remaining under pressure. With its entrepreneurial and decentralised The general merchandise retail operations will management structure the group mitigates continue with their store roll-out programme in Africa, acquisitions risk. and with the expansion of their product range. Insurance risk management Management continues to evaluate and assess the Where cost-effective, the group globally maintains a wide-ranging insurance programme, providing strength of the group’s statement of fnancial position fnancial protection against unforeseeable events that and that of Steinhoff Africa and Steinhoff Europe could cause fnancial loss. respectively. Where required, our main holding and operating subsidiaries will be supported with such All risks are considered to be adequately covered, capital and/or subordinated loans as may be required except for political risks. Self-insurance programmes to effciently fund the group’s growth. are in operation, covering primary levels of risk at a cost more advantageous than open-market This process includes the evaluation of pricing models premiums. Regular risk management audits are and sources of funds to ensure that the operating conducted by the group’s risk management and subsidiaries are provided with suffcient liquidity. insurance consultants, whereby improvement areas are identifed and resultant action plans implemented Management reassesses the debt maturity profle accordingly within the group’s risk framework. continuously. The serviceability of the group’s debt and the diverse mix of debt instruments provide Pension and provident fund risk comfort as to the sustainability of the group’s capital A suitably qualifed board of trustees exists for structure. each fund, where statutorily required. The board of trustees, with assistance of professional investment CONCLUSION advisors and internal investment suBComittees, The group remains committed to growing the is responsible for evaluating the effectiveness household and general merchandise retail business of investment decisions. Steinhoff and, where by continuing to focus on organic growth and applicable, relevant group subsidiaries, remain expansion in its existing retail business, and by committed to their retirement obligations to current expanding proven retail concepts in new territories. and former employees, and retirement benefts in general as a key part of their remuneration packages. The planned Frankfurt listing is expected to enhance the group’s access to a wider pool of global capital FINANCIAL STRATEGY AND TARGETS markets, on terms which are better refective of its The group continues to beneft from the growth spread of activities and revenues. experienced within the value and discount market segments, despite the challenging and volatile We are strategically well positioned to continue to global consumer environment. Management is gain market share. Our experienced management confdent that the diversity inherent in the group’s team remains optimistic about the future. earnings and the price advantages provided by the well established supply chain, will continue to protect the group against any prolonged downturn in any one market where it operates. Management remains confdent that the investments in the ben la GranGe f riKKie nel fragmented household goods market in Europe will Chief fnancial offcer Financial director

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t57 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 SUMMARISED FINANCIAL STATEMENTS

INCOME STATEMENT 2015 2014 for the year ended 30 June 2015 Rm Rm continuing operations Revenue 134 868 117 364 Cost of sales (86 541) (75 446) Gross proft 48 327 41 918 Other operating income 3 623 1 404 Distribution expenses (7 429) (7 060) Other operating expenses (29 206) (23 640) Capital items 2 513 1 500 Operating proft 17 828 14 122 Finance costs (3 830) (3 486) Income from investments 2 071 1 491 Share of proft of equity accounted companies 569 290 Proft before taxation 16 638 12 417 Taxation (1 343) (1 954) Proft from continuing operations 15 295 10 463 discontinued operations Loss from discontinued operations (2 140) (600) Proft for the year 13 155 9 863

Proft attributable to: Owners of the parent 13 383 10 090 Non-controlling interests (228) (227) Proft for the year 13 155 9 863

Earnings per share (cents) Basic earnings per share From continuing and discontinued operations 479.7 496.8 From continuing operations 546.3 510.2 Diluted earnings per share From continuing and discontinued operations 442.0 444.3 From continuing operations 498.3 455.2

Headline earnings per share (cents) Basic headline earnings per share From continuing and discontinued operations 393.8 443.5 From continuing operations 453.7 461.7 Diluted headline earnings per share From continuing and discontinued operations 369.4 402.0 From continuing operations 420.1 416.7

58 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STATEMENT OF COMPREHENSIVE INCOME 2015 2014 for the year ended 30 June 2015 Rm Rm Proft for the year 13 155 9 863 other comprehensive (loss)/income Items that will not be reclassifed subsequently to proft or loss: Actuarial losses on defned beneft plans (174) (145) Deferred taxation 39 43 (135) (102)

Items that may be reclassifed subsequently to proft or loss: Exchange differences on translation of foreign operations (4 647) 5 959 Net fair value gain/(loss) on cash fow hedges and other fair value reserves 228 (124) Deferred taxation (61) 32 Other comprehensive income of equity accounted companies, net of deferred taxation 12 1 (4 468) 5 868 total other comprehensive (loss)/income for the year (4 603) 5 766 total comprehensive income for the year 8 552 15 629 total comprehensive income attributable to: Owners of the parent 8 781 15 844 Non-controlling interests (229) (215) total comprehensive income for the year 8 552 15 629

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t59 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 SUMMARISED FINANCIAL STATEMENTS CONTINUED

Premiums or Total ordinary discounts on equity Total equity Convertible and Foreign currency Share-based changes in attributable to Preference attributable to Non- STATEMENT OF CHANGES IN EQUITY Ordinary stated Distributable redeemable translation payment non-controlling Other owners of the stated share owners of the controlling for the year ended 30 June 2015 share capital reserves bonds reserve reserve reserve interests reserves parent capital parent interests Total Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm balance at 1 July 2013 9 801 36 786 1 079 7 865 636 617 (168) 56 616 3 497 60 113 6 655 66 768 Net shares issued 10 685 – – – – – – 10 685 – 10 685 – 10 685 Proceeds on sale of shares net of capital gains taxation 21 – – – – – – 21 380 401 – 401 Redemption of preference shares – – – – – – – – (496) (496) – (496) Total comprehensive income/(loss) for the year – 10 090 – 5 947 – – (193) 15 844 – 15 844 (215) 15 629 Proft/(loss) for the year – 10 090 – – – – – 10 090 – 10 090 (227) 9 863 Other comprehensive income/(loss) for the year – – – 5 947 – – (193) 5 754 – 5 754 12 5 766 Preference dividends – (152) – – – – (152) – (152) – (152) Dividends paid – (1 516) – – – – – (1 516) – (1 516) (208) (1 724) Released on derecognition of subsidiary – – – – – – – – – – (2 814) (2 814) Introduced and acquired on acquisition of subsidiaries – – – – – – – – – – 132 132 Net shares bought from/sold to non-controlling interests – – – – – 228 – 228 – 228 (2 019) (1 791) Share-based payments – – – – 431 – – 431 – 431 – 431 Convertible bonds issued and redeemed – equity portion net of deferred taxation – – 351 – – – – 351 – 351 – 351 Transfers and other reserve movements – 1 429 – (28) (56) (1 107) 108 346 – 346 10 356 balance at 30 June 2014 20 507 46 637 1 430 13 784 1 011 (262) (253) 82 854 3 381 86 235 1 541 87 776 Net shares issued 92 844 – – – – – – 92 844 2 000 94 844 – 94 844 Proceeds on sale of shares net of capital gains taxation (6) – – – – – – (6) – (6) – (6) Redemption of preference shares – – – – – – – – (499) (499) – (499) Total comprehensive income/(loss) for the year – 13 383 – (4 646) – – 44 8 781 – 8 781 (229) 8 552 Proft/(loss) for the year – 13 383 – – – – – 13 383 – 13 383 (228) 13 155 Other comprehensive loss for the year – – – (4 646) – – 44 (4 602) – (4 602) (1) (4 603) Preference dividends – (332) – – – – (332) – (332) – (332) Dividends paid – (3 749) – – – – – (3 749) – (3 749) (48) (3 797) Introduced and acquired on acquisition of subsidiaries – – – – – – – – – – 1 477 1 477 Net shares bought from/sold to non-controlling interests – – – – – (4 580) – (4 580) – (4 580) (1 590) (6 170) Share-based payments – – – – 558 – – 558 – 558 – 558 Convertible bonds redeemed – equity portion net of deferred taxation – – (369) – – – – (369) – (369) – (369) Transfers and other reserve movements – 167 – – – – 33 200 – 200 (64) 136 balance at 30 June 2015 113 345 56 106 1 061 9 138 1 569 (4 842) (176) 176 201 4 882 181 083 1 087 182 170

Discount on introduction and premium on acquisition of non-controlling interests has been aggregated with net shares bought from/sold to non-controlling interests.

60 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 Premiums or Total ordinary discounts on equity Total equity Convertible and Foreign currency Share-based changes in attributable to Preference attributable to Non- STATEMENT OF CHANGES IN EQUITY Ordinary stated Distributable redeemable translation payment non-controlling Other owners of the stated share owners of the controlling for the year ended 30 June 2015 share capital reserves bonds reserve reserve reserve interests reserves parent capital parent interests Total Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm balance at 1 July 2013 9 801 36 786 1 079 7 865 636 617 (168) 56 616 3 497 60 113 6 655 66 768 Net shares issued 10 685 – – – – – – 10 685 – 10 685 – 10 685 Proceeds on sale of shares net of capital gains taxation 21 – – – – – – 21 380 401 – 401 Redemption of preference shares – – – – – – – – (496) (496) – (496) Total comprehensive income/(loss) for the year – 10 090 – 5 947 – – (193) 15 844 – 15 844 (215) 15 629 Proft/(loss) for the year – 10 090 – – – – – 10 090 – 10 090 (227) 9 863 Other comprehensive income/(loss) for the year – – – 5 947 – – (193) 5 754 – 5 754 12 5 766 Preference dividends – (152) – – – – (152) – (152) – (152) Dividends paid – (1 516) – – – – – (1 516) – (1 516) (208) (1 724) Released on derecognition of subsidiary – – – – – – – – – – (2 814) (2 814) Introduced and acquired on acquisition of subsidiaries – – – – – – – – – – 132 132 Net shares bought from/sold to non-controlling interests – – – – – 228 – 228 – 228 (2 019) (1 791) Share-based payments – – – – 431 – – 431 – 431 – 431 Convertible bonds issued and redeemed – equity portion net of deferred taxation – – 351 – – – – 351 – 351 – 351 Transfers and other reserve movements – 1 429 – (28) (56) (1 107) 108 346 – 346 10 356 balance at 30 June 2014 20 507 46 637 1 430 13 784 1 011 (262) (253) 82 854 3 381 86 235 1 541 87 776 Net shares issued 92 844 – – – – – – 92 844 2 000 94 844 – 94 844 Proceeds on sale of shares net of capital gains taxation (6) – – – – – – (6) – (6) – (6) Redemption of preference shares – – – – – – – – (499) (499) – (499) Total comprehensive income/(loss) for the year – 13 383 – (4 646) – – 44 8 781 – 8 781 (229) 8 552 Proft/(loss) for the year – 13 383 – – – – – 13 383 – 13 383 (228) 13 155 Other comprehensive loss for the year – – – (4 646) – – 44 (4 602) – (4 602) (1) (4 603) Preference dividends – (332) – – – – (332) – (332) – (332) Dividends paid – (3 749) – – – – – (3 749) – (3 749) (48) (3 797) Introduced and acquired on acquisition of subsidiaries – – – – – – – – – – 1 477 1 477 Net shares bought from/sold to non-controlling interests – – – – – (4 580) – (4 580) – (4 580) (1 590) (6 170) Share-based payments – – – – 558 – – 558 – 558 – 558 Convertible bonds redeemed – equity portion net of deferred taxation – – (369) – – – – (369) – (369) – (369) Transfers and other reserve movements – 167 – – – – 33 200 – 200 (64) 136 balance at 30 June 2015 113 345 56 106 1 061 9 138 1 569 (4 842) (176) 176 201 4 882 181 083 1 087 182 170

Discount on introduction and premium on acquisition of non-controlling interests has been aggregated with net shares bought from/sold to non-controlling interests.

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t61 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 SUMMARISED FINANCIAL STATEMENTS CONTINUED

STATEMENT OF FINANCIAL POSITION 2015 2014 as at 30 June 2015 Rm Rm assets non-current assets Goodwill 80 502 27 810 Intangible assets 54 570 38 306 Property, plant and equipment 58 294 54 422 Investments in equity accounted companies 15 869 4 223 Investments and loans 6 697 10 399 Deferred taxation assets 2 682 1 390 Trade and other receivables 150 70 218 764 136 620 current assets Inventories and vehicle rental feet 26 394 18 455 Trade and other receivables 18 208 18 112 Investments and loans 8 905 5 928 Cash and cash equivalents 37 905 16 341 91 412 58 836 Assets and disposal groups classifed as held for sale 3 364 6 865 94 776 65 701 total assets 313 540 202 321 equitY and liabilities capital and reserves Ordinary stated share capital 113 345 20 507 Reserves 62 856 62 347 Preference stated share capital 4 882 3 381 Total equity attributable to equity holders of the parent 181 083 86 235 Non-controlling interests 1 087 1 541 total equity 182 170 87 776 non-current liabilities Interest-bearing loans and borrowings 56 344 55 580 Employee benefts 1 061 868 Deferred taxation liabilities 13 578 10 878 Provisions 2 927 1 603 Trade and other payables 920 388 74 830 69 317 current liabilities Trade and other payables 46 378 34 222 Employee benefts 1 166 750 Provisions 1 287 1 213 Interest-bearing loans and borrowings 5 847 6 411 Bank overdrafts and short-term facilities 1 856 2 436 56 534 45 032 Liabilities and disposal groups classifed as held for sale 6 196 56 540 45 228 total equity and liabilities 313 540 202 321 Net asset value per ordinary share (cents) 4 825 3 946

Investment property and vehicle rental feet have been aggregated with property, plant and equipment and inventories respectively.

62 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STATEMENT OF CASH FLOWS 2015 2014 for the year ended 30 June 2015 Rm Rm casH floWs froM operatinG activities Cash generated from operations 26 706 23 146 Net movement in instalment sale and loan receivables (218) (1 753) Net dividends paid (3 931) (1 818) Net fnance charges (1 232) (1 842) Taxation paid (1 039) (1 592) Net cash infow from operating activities 20 286 16 141 casH floWs froM investinG activities Additions to property, plant and equipment (4 679) (4 948) Additions to intangible assets (258) (381) Proceeds on disposal of property, plant and equipment and intangible assets 213 451 Acquisition of subsidiaries and businesses, net of cash on hand at acquisition (13 366) (6 473) Disposal of subsidiaries and businesses, net of cash on hand at disposal – 1 955 Decrease/(increase) in long-term investments and loans 22 (5 078) Increase in short-term investments and loans (2 892) (2 211) Net (increase)/decrease in investments in equity accounted companies (164) 1 Net cash outfow from investing activities (21 124) (16 684) casH floWs froM financinG activities Proceeds of ordinary shares issued 18 200 – Proceeds of preference shares issued 2 000 – Preference shares redeemed (499) (378) Share issue expenses (386) (2) (Increase)/decrease in treasury shares (6) 284 Transactions with non-controlling interests (103) 29 Decrease in bank overdrafts and short-term facilities (1 106) (443) Increase in long-term interest-bearing loans and borrowings 12 052 11 206 Decrease in short-term interest-bearing loans and borrowings (6 522) (4 183) Net cash infow from fnancing activities 23 630 6 513 net increase in casH and casH equivalents 22 792 5 970 Effects of exchange rate translations on cash and cash equivalents (1 228) 1 122 Cash and cash equivalents at beginning of the year 16 341 9 249 casH and casH equivalents at end of Year 37 905 16 341

The prior year cash fow has been re-presented. Refer to the consolidated annual fnancial statements.

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t63 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 SUMMARISED FINANCIAL STATEMENTS CONTINUED

SEGMENTAL REPORTING 2015 2014 for the year ended 30 June 2015 Rm Rm revenue – continuinG operations Integrated retail: Household goods 104 696 100 449 Integrated retail: General merchandise 12 199 – Integrated retail: Automotive 17 973 16 915 134 868 117 364 operatinG profit before capital iteMs – continuinG operations Integrated retail: Household goods 13 134 12 110 Integrated retail: General merchandise 1 645 – Integrated retail: Automotive 536 512 15 315 12 622 reconciliation betWeen operatinG profit per incoMe stateMent and operatinG profit before capital iteMs per seGMental analYsis Operating proft per income statement 17 828 14 122 Capital items (2 513) (1 500) Operating proft before capital items per segmental analysis 15 315 12 622 seGMental assets Integrated retail: Household goods 139 338 146 411 Integrated retail: General merchandise 88 609 – Integrated retail: Automotive 12 853 12 154 240 800 158 565 reconciliation betWeen total assets per stateMent of financial position and seGMental assets Total assets per statement of fnancial position 313 540 202 321 Less: Cash and cash equivalents (37 905) (16 341) Less: Investments in equity accounted companies (15 869) (4 223) Less: Long-term investments and loans (6 697) (10 399) Less: Short-term investments and loans (8 905) (5 928) Less: Assets of discontinued operations and assets held for sale (3 364) (6 865) Segmental assets 240 800 158 565

GeoGrapHical analYsis revenue – continuing operations Continental Europe 78 581 73 850 Africa 39 899 30 572 Other 16 388 12 942 134 868 117 364 non-current assets Continental Europe 118 828 106 627 Africa 83 463 17 730 Other 16 473 12 263 218 764 136 620

The segments have been re-presented in order to refect the new group structure.

64 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 selected explanatorY notes on the group’s website. Full details of the group’s business Statement of compliance combinations for the year, additions and disposals of property, plant and equipment as well as commitments and The consolidated annual fnancial statements have been contingent liabilities are included in the group’s consolidated prepared in accordance with International Financial annual fnancial statements. Reporting Standards (IFRS), the interpretations adopted by the International Accounting Standards Board (IASB), Accounting policies the IFRS Interpretations Committee of the IASB (IFRIC), the The accounting policies of the group have been applied requirements of the South African Companies Act No. 71 consistently to the years presented in the consolidated of 2008, as amended (the Act) and have been audited in fnancial statements, except for the adoption of: compliance with all the requirements of section 29(1) of the Act, as required. IAS 36 Impairment of Assets: Recoverable amount disclosures for non-fnancial assets Basis of preparation The annual fnancial statements are prepared in millions of IAS 39 Financial Instruments: Recognition and South African rands (Rm) on the historical-cost basis, except Measurement: Novation of derivatives and for certain assets and liabilities which are carried at amortised continuation of hedge accounting cost, and certain derivative fnancial instruments which are IFRIC 21 Levies stated at their fair value. Financial statements During the year under review, the group adopted all of the The consolidated annual fnancial statements for the IFRS and interpretations that were effective and deemed year have been audited by Deloitte & Touche and applicable to the group. their unmodifed audit report is available in the group’s The implementation and adoption of the various IFRSs consolidated annual fnancial statements which are available and IFRICs did not result in any material changes to the accounting policies.

ADDITIONAL INFORMATION continuing discontinued operations operations total Rm Rm Rm 2015 Earnings/(loss) attributable to owners of the parent 15 204 (1 821) 13 383 Dividend entitlement on cumulative preference shares (254) – (254) earnings/(loss) attributable to ordinary shareholders 14 950 (1 821) 13 129 capital items Impairments/(reversal of impairments) 910 (80) 830 Loss on disposal of intangible assets and property, plant and equipment 104 – 104 (Proft)/loss on disposal and dilution of investments (3 527) 313 (3 214) total capital items (2 513) 233 (2 280) Taxation effects of capital items (41) (24) (65) Non-controlling interests' portion of capital items (9) (28) (37) Capital items of equity accounted companies (net of taxation) 31 – 31 Headline earnings 12 418 (1 640) 10 778 2014 Earnings/(loss) attributable to owners of the parent 10 355 (265) 10 090 Dividend entitlement on cumulative preference shares (269) – (269) earnings/(loss) attributable to ordinary shareholders 10 086 (265) 9 821 capital items Impairments 76 78 154 Loss on disposal of intangible assets 45 – 45 (Proft)/loss on disposal and dilution of investments (1 651) 135 (1 516) Other 30 10 40 total capital items (1 500) 223 (1 277) Taxation effects of capital items 561 (251) 310 Non-controlling interests' portion of capital items (11) (65) (76) Capital items of equity accounted companies (net of taxation) (8) – (8) Headline earnings 9 128 (358) 8 770

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t65 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 TEN-YEAR PERFORMANCE REVIEW

2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm INCOME STATEMENT

Revenue 134 868 117 364 97 938 68 874 43 040 35 512 50 869 45 046 34 229 30 159 Operating proft before capital items 15 315 12 622 9 782 6 863 5 424 4 864 5 153 4 662 3 059 2 715 Capital items 2 513 1 500 (323) (185) (64) (55) 49 (193) (57) (88) Operating proft 17 828 14 122 9 459 6 678 5 360 4 809 5 202 4 469 3 002 2 627 Net fnance cost (1 759) (1 995) (1 626) (1 208) (1 162) (986) (1 000) (704) (454) (292) Share of proft of equity accounted companies 569 290 240 334 55 36 6 37 67 61 Proft before taxation 16 638 12 417 8 073 5 804 4 253 3 859 4 208 3 802 2 615 2 396 Taxation (1 343) (1 954) (983) (641) (435) (369) (581) (366) (325) (383) (Loss)/proft from discontinued operations (2 140) (600) 859 880 1 526 263 – – 684 – Proft for the year 13 155 9 863 7 949 6 043 5 344 3 753 3 627 3 436 2 974 2 013

Attributable to: Owners of the parent 13 383 10 090 7 296 5 655 5 136 3 541 3 379 3 310 2 970 1 949 Non-controlling interests (228) (227) 653 388 208 212 248 126 4 64 Proft for the year 13 155 9 863 7 949 6 043 5 344 3 753 3 627 3 436 2 974 2 013

STATEMENT OF CASH FLOWS1

Cash generated before working capital changes 18 890 19 039 15 428 9 748 6 943 6 074 5 871 5 387 3 929 3 352 Net changes in working capital 7 816 4 107 (1 242) 620 259 (376) (1 937) 98 (475) 134 Cash generated from operations 26 706 23 146 14 186 10 368 7 202 5 698 3 934 5 485 3 454 3 486

PERFORMANCE INDICATORS

Proftability Return on total assets2 5.9% 6.9% 6.6% 5.9% 6.9% 8.7% 9.2% 9.9% 8.8% 9.6% Gross margin 35.8% 35.7% 35.1% 37.1% 38.9% 40.8% 34.8% 32.9% 31.2% 31.5% Operating margin 11.4% 10.8% 10.0% 10.0% 12.6% 13.7% 10.1% 10.3% 8.9% 9.0% employee statistics Number of employees 91 114 55 876 57 672 56 415 48 840 35 010 41 400 43 300 43 400 50 000 Paid to employees (Rm) 21 298 17 929 15 230 11 348 8 176 6 867 8 533 7 224 6 148 5 558

1 The 2014 and 2013 statements of cash fows have been re-presented, for further details please refer to the consolidated annual fnancial statements. 2 Operating proft before capital items ÷ average total assets

HEADLINE EARNINGS PER SHARE FROM CONTINUING NET ASSET VALUE PER SHARE OPERATIONS Cents per share 2006 to 2015 Cents per share 2006 to 2015

2006 173 2006 965

2007 200 2007 1 292

2008 264 2008 1 637

2009 252 2009 1 642

2010 233 2010 1 657

2011 240 2011 2 056

2012 315 2012 2 463

2013 359 2013 3 102

2014 462 2014 3 946 2015 454 2015 4 825

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Goodwill and intangible assets 135 072 66 116 60 435 49 406 35 930 17 675 18 875 21 227 10 247 7 893 Property, plant and equipment 58 294 54 422 47 138 37 070 29 696 14 853 11 277 11 288 7 999 5 652 Other non-current assets 25 398 16 082 7 662 6 525 9 123 5 264 5 942 5 127 3 923 3 872 Current assets 94 776 65 701 49 782 40 310 26 170 19 389 18 661 19 274 15 365 14 535 Total assets 313 540 202 321 165 017 133 311 100 919 57 181 54 755 56 916 37 534 31 952

Total equity 182 170 87 776 66 768 53 763 40 830 27 061 24 924 24 784 17 358 12 767 Interest-bearing debt 64 047 64 427 53 320 41 140 30 499 18 348 17 882 16 686 11 053 10 716 Interest-free liabilities 67 323 50 118 44 929 38 408 29 590 11 772 11 949 15 446 9 123 8 469 Total equity and liabilities 313 540 202 321 165 017 133 311 100 919 57 181 54 755 56 916 37 534 31 952

PERFORMANCE INDICATORS debt leverage Gearing ratio1 14% 34% 49% 45% 46% 34% 35% 38% 24% 30%

Borrowing cost cover (times)2 8.7 6.3 6.0 5.7 4.7 4.8 5.2 6.6 6.7 9.3 shareholders’ returns Earnings per share (cents) 479.7 496.8 385.7 309.3 341.3 249.5 254.7 249.8 241.9 165.6

Headline earnings per share (cents) 393.8 443.5 390.6 312.4 257.7 252.7 251.5 263.5 200.1 172.5

Distribution per share (cents) 165.0 150.0 80.0 80.0 65.0 63.0 60.0 60.0 50.0 37.5

Distribution cover (times)3 2.4 3.0 4.9 3.9 4.0 4.0 4.2 4.4 4.0 4.6 Net asset value per share (cents) 4 825 3 946 3 102 2 463 2 056 1 657 1 642 1 637 1 292 965 Annual increase/(decrease) in revenue 15% 20% 42% 60% 21% (30%) 13% 32% 13% 59% EBITDA to revenue 13% 12% 12% 12% 15% 16% 12% 12% 11% 11% Employee cost to revenue 16% 15% 16% 16% 19% 19% 17% 16% 18% 18% Depreciation and amortisation to revenue 2% 2% 2% 2% 3% 3% 2% 2% 2% 2% Effective tax rate 8% 16% 12% 11% 10% 10% 14% 10% 12% 16% share statistics

Shares in issue (net of treasury shares) (million) 3 652 2 100 1 825 1 756 1 641 1 408 1 280 1 269 1 256 1 141

Weighted average shares in issue (million) 2 737 1 977 1 820 1 728 1 461 1 387 1 283 1 281 1 188 1 133

1 Net interest-bearing debt ÷ closing equity 2 Operating proft before capital items ÷ net fnance cost 3 Headline earnings per share ÷ distribution per share

REVENUE DISTRIBUTION TO SHAREHOLDERS Rm 2006 to 2015 Cents per share 2006 to 2015

2006 30 159 2006 38

2007 34 229 2007 50

2008 45 046 2008 60

2009 50 869 2009 60

2010 35 512 2010 63

2011 43 040 2011 65

2012 68 874 2012 80

2013 97 938 2013 80

2014 117 364 2014 150 2015 134 868 2015 165

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t67 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 IN REFERENCE

68 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 IN REFERENCE

Retail markets Remuneration report page 70 page 72

Share performance About this report and exchange rates page 80 page 82

Analysis of shareholding Shareholders’ diary page 83 page 84

Corporate information page 84

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t69 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 RETAIL MARKETS

number of retail area stores m2

inteGrated retail: HouseHold Goods

france* 205 740 971

Germany 107 619 207

switzerland 44 149 165

22 77 842

22 71 323

iberica 30 116 071

italy 15 123 610

netherlands 1 6 403

poland 98 71 141

97 65 763

1 5 378

croatia 7 90 984

serbia 1 11 057

united Kingdom 419 277 916

262 139 482

157 138 434

australia and new Zealand 138 206 223

76 81 320

61 117 412

1 7 491

south africa 1153 690 230

1 152 683 359

1 6 871

total 2 218 3 102 978

* Including Luxembourg, excluding ConfoDeco stores

70 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 number of retail area stores m2

inteGrated retail: General MercHandise

south africa# 2 804 1 171 275

1 867 702 399

485 344 306

452 124 570

poland, slovakia, czech republic, romania, Hungary 696 235 629

france 13 23 450

australasia 333 351 385

rest of africa 265 105 115

total 4 111 1 886 854

number of retail area stores m2

inteGrated retail: autoMotive

south africa 133 378 854

87 361 277

46 17 577

TOTAL 133 378 854

GRAND TOTAL 6 462 5 368 686

# Including BLNS countries

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t71 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 REMUNERATION REPORT

STEINHOFF’S remuneration philosophy

Steinhoff’s remuneration policy dictates that all attend meetings by invitation. This committee met employees are fairly rewarded for their individual twice during the fnancial year. The remuneration and joint contributions in the execution of the committee has the following responsibilities: Steinhoff business strategy and delivery of the group’s operating and fnancial performance. Determine and approve the group’s general Steinhoff’s remuneration philosophy is to remunerate remuneration policy, as presented at each annual all employees in a competitive manner in order general meeting for a non-binding advisory vote to attract, motivate and retain individuals of the by shareholders in the South African regulatory necessary calibre. environment. Steinhoff is an international business with revenue Review and approve the remuneration packages earned in many countries, as summarised in the of the most senior executives annually, including geographical segmental analysis of the annual incentive schemes and increases or adjustments, fnancial statements. Steinhoff expects its executives ensuring they are appropriate and in line with the to be internationally mobile and to have knowledge remuneration policy. and experience across borders. As a result, Steinhoff Appraise the performance of the chief executive competes for skills and talent in a global marketplace, offcer annually. and its approach to remuneration needs to be fexible Approve the appointments and promotions and competitive in all of the countries where Steinhoff of key executives. operates. Review incidents (if any) of unethical behaviour by To facilitate this, the board has established the human senior managers and the chief executive offcer. resources and remuneration committee (remuneration Review the remuneration committee’s charter committee), which operates within defned terms of annually and recommend amendments thereto reference and authority delegated by the board. as required. The Steinhoff remuneration committee comprises Approve amendments to the Steinhoff share-based only independent non-executive directors. Executive incentive plans, after consultation with shareholders, directors and certain members of management the JSE Limited and SARS, where applicable.

72 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 Fulfl delegated responsibilities on Steinhoff’s share Measurement of the total direct payroll cost based incentive plans, e.g. appointing trustees and and development year on year. This information compliance offcers, if required. would also enable per employee or per full time equivalent comparison in respect of operations Undertake an annual assessment of the (retail vs manufacturing), country dynamics, and effectiveness of the committee, and report these employee grade comparison. fndings to the board and the committee. Performance management and the effectiveness Review annually the charters of the group’s of variable incentivisation schemes. signifcant subsidiaries’ remuneration committees, and their assessment of compliance with these Talent management and succession planning charters to establish if the Steinhoff remuneration across the group that are now prioritised and committee can rely on the work of the subsidiary reported on annually. companies’ remuneration committees. An annual review/benchmark exercise of Prepare an annual remuneration report for inclusion remuneration policy, strategy and disclosure in the company’s integrated report. of peer group companies is also undertaken. The peer group includes companies comparable Due to the diversity of the group and the to the group’s international retail operations decentralised management structures in the predominantly located in western Europe and operating divisions, the remuneration committee has the United Kingdom. established divisional subcomittees with standard terms of reference that are in line with the overseeing ALIGNMENT WITH STRATEGY committee’s terms of reference. These committees Steinhoff’s remuneration structures remain are responsible for all employee remuneration appropriate and aligned with the group’s long-term matters at divisional level. strategic priorities, namely: The remuneration committee and divisional Integrated retail: To create a balanced and subcomittees are supported by established human solid footprint of household goods and general resource departments, at group and divisional level, merchandise businesses; to develop strong responsible for implementation and management of and relevant local retail brands that outperform human resource and remuneration strategies, policies competitive local businesses; sustainably raise the and practices. operating margins; leverage from the group’s global Key considerations undertaken during the year: scale and knowledge and to exert suffcient infuence over the entire supply chain; having due regard for the long-term sustainability of the business, its A review of the pay structures for managerial environmental and social impact and governance employees. matters. A review of the effectiveness of the share incentive scheme as a long-term incentive plan. During the year under review, margins from Annual cash bonus and incentive scheme awards continuing operations increased to 11.4% (FY14: and the approval of performance targets. 10.8%), largely as a result of the group’s drive to capitalise on the scale of operations and efforts The range of base salary increases. to consolidate the group’s enlarged purchasing Investigations into an appropriate country/division- power, increasing intra-group supply through the specifc long-term incentive scheme for key combined manufacturing and sourcing of product, management who may be excluded from the share supplier consolidation and capitalising on central incentive scheme. shipping and logistics knowledge to reduce global The standardised template and agenda introduced distribution charges. during the prior year enabled the group to analyse Other investments: To exert infuence on the consolidated data across the group’s operations group’s associates and other investments to manage dealing with: appropriate returns on investment and long-term Global diversity, staff turnover ratios, average age sustainability, having due regard for the core and tenure of services of the workforce. environmental and social impact of these businesses, including governance matters.

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PSG Group Limited (PSG) is an investment holding targets and budgets are presented to the board and company listed on the JSE, consisting of underlying approved annually. investments that operate across a diverse range Remuneration for junior and middle management of industries which includes fnancial services, is governed and controlled by country-specifc banking, private equity, agriculture and education. benchmarks for similar positions and responsibility PSG’s market capitalisation (net of treasury shares) levels. A robust remuneration review process is in is approximately R36 billion. The 2015 fnancial place that is aligned with business strategy. Employee year marked the frst time that PSG achieved development is encouraged through processes such consolidated recurring headline earnings in excess as performance appraisals, counselling and career of R1 billion, following strong results from all of its development programmes. key investments. Steinhoff increased its investment in PSG to an Remuneration and other benefts in respect of associate investment by increasing its shareholding employees who are subject to bargaining council or to 27%, thereby obtaining long-term exposure to other authorities’ determination are set through a the underlying investments held in the PSG Group. process of collective bargaining with the major labour unions active in the various countries in which the (Refer to www.psggroup.co.za) group operates. KAP Industrial Holdings Limited, a diversifed industrial group listed on the JSE, predominantly REMUNERATION POLICY located in and focused on businesses operating in The remuneration policy aims to follow various emerging African markets, continued to invest in corporate governance recommendations, including strategically aligned and established businesses the South African Code of Corporate Practices and with high barriers to entry. This enhances Conduct as set out in the King III Report, and is based the group’s quality of earnings in respect of on the following principles: sustainability, solid margins and cash generation. Strategic initiatives implemented during the Remuneration practices are aligned with year include the establishment of an integrated corporate strategy. bedding division with a national manufacturing Total rewards are set at levels that are competitive and distribution footprint; disposal of the non- and relative within the specifc market and industry. core businesses; rationalisation of the group’s integrated timber and manufacturing divisions into Incentive-based awards are earned through a single diversifed industrial segment, and the achieving demanding performance measures consolidation of the Fuel, Agriculture & Mining and and targets with due regard for the sustainable the Freight & Logistics divisions of Unitrans into a wellbeing of all stakeholders over the short, single Unitrans Logistics division. This has resulted medium and long term. in streamlined management structures, improved Incentive plans, performance measures and targets systems and controls, and greater market focus. are structured to operate effectively throughout the (Refer to www.kap.co.za) business cycle. The design of long-term incentives is prudent and A signifcant element of executives’ remuneration does not expose stakeholders to a position where is performance-related. A substantial portion of the sustainability of the group is placed at risk. short-term performance incentives of the executive directors and senior management is directly linked Elements of remuneration to challenging annual group performance targets. The four elements of managerial remuneration consist The balance of these incentives is specifcally of a base salary, benefts, annual incentive bonus measured against individual performance objectives and long-term incentives. The committee seeks to that are aligned with the group’s strategic priorities. ensure an appropriate balance between the fxed The targets for long-term incentives are guided and performance-related elements of managerial by reference to industry and market benchmarked remuneration, and between those aspects of the performance targets as outlined below. package linked to short-term fnancial performance and those aspects linked to longer-term sustainable Such benchmarks are determined annually by stakeholder value creation. measuring operational performance against those of peer group companies (in comparable industries A further consideration is the need to attract and and markets) in local currencies. These growth retain critical skills in the group. The remuneration

74 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 committee considers each element of remuneration performance criteria are supplemented by personal relative to the market, and takes into account the performance objectives, representing, on average, performance of the company and the individual less than 20% of the potential bonus that can be executive in determining its quantum. achieved. For further detail refer to notes 2.3 and 2.4 in The international group services team is responsible the annual fnancial statements, available at for the development of the group’s strategic assets www.steinhoffnternational.com. and liabilities centrally. Under the leadership of the international group services team, located in Base salary various regions, support is provided to divisional The fxed element of remuneration is referred to as management in the form of corporate services. a base salary. Its purpose is to provide a competitive level of remuneration for each managerial level. The This enables local management to devote their full base salary is subject to annual review. It is set to be attention to operational issues. These teams ensure competitive at the median level with reference to that the corporate assets and fnancial risks are market practice in companies comparable in size, prudently managed and that activities comprising market sector, business complexity and international brand management, properties, treasury, corporate scope. Company performance, individual activities (including mergers and acquisitions) and performance and changes in responsibilities are also other functions are aligned and conducted in the best taken into consideration when determining annual interest of the group. base salaries. In determining the salaries of the executive management, the committee takes into In terms of strategic implementation targets, consideration infation, agreed union and bargaining individuals in Steinhoff’s group services division council increases, and the increased scale of are incentivised on individual strategic targets and businesses given corporate activity undertaken during implementation of various corporate transactions (as the year. determined by the board of Steinhoff). All targets and incentives are agreed by the remuneration and The average annual increase in base salary for the divisional committees. group approximated the rate of consumer price infation in the respective geographic territories. Annual incentive potentials are set by the remuneration and divisional committees on an Beneﬁts individual basis each year, based on a percentage of Benefts provide security for managerial employees annual base salary. The bonus plan is not contractual and their families, and include membership of and is self-funded, and is therefore dependent on retirement funds and medical aid schemes to which the availability of profts in excess of annual targets contributions are made by employees and the generated every year. The remuneration committee employer company. retains the discretion to make adjustments to bonuses earned at the end of the fnancial year, taking into Annual bonus account both company performance and the overall An annual short-term incentive plan provides and specifc contribution of individuals to meeting management throughout the group with incentives the group’s objectives. Incentives are determined and to achieve short and medium-term goals as set and recorded in the fnancial year following that to which approved by the applicable board of directors. The the performance relates. annual cash incentive is based on the achievement of group and, where applicable, divisional operational and business growth targets. Targets are set at each operational level and include fnancial, operational and transformation targets, representing in excess of 80% of the potential incentive. In some cases the

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t75 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 REMUNERATION REPORT CONTINUED

Measurement of performance Approval by shareholders of the scheme of For the period under review, the following arrangement which will see Steinhoff securing performance criteria were achieved against targets: a primary listing on the Prime Standard of the Frankfurt Stock Exchange, and an inward 1. Steinhoff reported growth of 15% in revenue to secondary listing on the Johannesburg Stock R134.9 billion (FY14: R117.4 billion). Operating Exchange (JSE). This will more accurately refect proft before capital items increased to the geographic location of Steinhoff’s revenues, R15.3 billion, representing a 21% increase on customers and store locations, and enhance the prior year’s R12.6 billion. Earnings attributable Steinhoff’s ability to access global capital markets to ordinary shareholders increased by 33% to to further support the expansion of its European R13.4 billion (FY14: R10.0 billion) while basic operations and growth opportunities available earnings per share increased by 7% to 546 cents to the group. per share. Successful acquisition of the remaining issued 2. The acquisition of the Pepkor group expanded share capital of JD Group, not already owned by the group’s retail exposure to the growing Steinhoff, from minority shareholders, followed discount market in Africa, Europe and Australasia. by the delisting of JD Group from the JSE. This acquisition was successfully completed during the year under review, and consequently Increasing the group’s investment in PSG Group Pepkor’s results for three months are included to 27%, resulting in PSG becoming an associate in the 2015 results. The weighted average investment. number of ordinary shares in issue increased to Securing and maintaining an appropriate 2.7 billion, mainly as a result of the foreign share and fexible capital and debt structure in order placement announced on 2 July 2014 and the to minimise the risk of stressed debt or equity Pepkor acquisition. Despite this 38% increase, issuance in volatile economic environments to diluted headline earnings per ordinary share enable the group to optimise its future corporate from continuing operations increased by 1% to structure, including the listing on a major 420.1 cps (FY14: 416.7 cps). Net asset value per European stock exchange. share increased by 22% to R48.25 (FY14: R39.46). Successfully extending the group’s debt maturity 3. During the year, cash generated from continuing through execution of the following initiatives: operations in relation to earnings before interest, Capital raise of R18.2 billion in July 2014 in tax, depreciation and amortisation (EBITDA) of preparation for the European listing of Steinhoff. 150% was achieved, compared to 130% in the prior year. Successful diversifcation of the group’s funding profle with an inaugural Schuldschein 4. Return on equity targets were exceeded during transaction in Europe. The Schuldschein the year. The targeted returns are determined transaction attracted more than 80 investors, using comparable return on equity targets for raising €730 million with maturities of 5 to European and African peer groups. 10 years at favourable interest rates. 5. Implementation of key strategic initiatives related The successful conversion, redemption and to the strategic development and competitive issue of convertible bonds at competitive rates positioning of both the integrated household during the year, which included the issue of the goods and integrated general merchandise convertible bond of €1.1 billion in July 2015 business have been achieved and include: priced at a coupon of 1.25% per annum, which Successful expansion of the group’s operations is due in 2022. as an integrated retailer of both household goods Completion of new syndicated facilities in and general merchandise through the acquisition South Africa on improved terms with eight of a 100% ownership of Pepkor with operations in banks. Africa, Europe and Australasia. The issue of four-year redeemable preference shares of R6 billion and 3 and 5-year fxed and foating notes of R1.5 billion.

76 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 The committee reviews these measures and targets Benchmark performance criteria are aligned with the annually to ensure that performance measures and group’s long-term strategic priorities, namely: targets set are appropriate, given the economic context and the performance expectations for the Integrated retail: To create a balanced and company or relevant division. In line with the group’s solid footprint of household goods, and general annual short-term incentive plan, which rewards merchandise businesses; to develop strong executive teams for the achievement of operational and relevant local retail brands that outperform and fnancial growth objectives, including the competitive local businesses; sustainably raise the translation of its growth into cash fow (as measured operating margins; leverage from the group’s global by cash generated by operations), the committee scale and knowledge; exert suffcient infuence approved annual incentives based on group and over the entire supply chain; having due regard divisional performances. for the long-term sustainability of the business, its environmental and social impact and governance DEFERRED BONUS PLAN matters. The committee retains the discretion to defer all or Other investments: To exert infuence on the part of the annual and strategic bonus payments. The group’s associates and other investments to manage terms of such deferral is agreed on an annual basis, appropriate returns on investment and long-term and depends on the performance criteria applicable sustainability, having due regard for the core to such bonuses and the longer-term measurement environmental and social impact of these businesses, that could be implied by such performance criteria. including governance matters. PEPKOR SHORT-TERM ANNUAL BONUS Criteria and the quantum of allocations are The short-term bonus is self-funded and is based benchmarked annually against market practices. on the achievement of growth targets. On a rolling Furthermore, scheme rules and the application basis, the current year’s actual achievement becomes thereof are evaluated annually to ensure compliance the base to be used for the following year’s target. with legislative and regulatory requirements. The The short-term bonus is calculated as a percentage targets for long-term incentives are set with reference of base salary (cost to company), given the actual to industry and market benchmark performance. growth achieved, and ranges between 25% and 80% of base salary. For more details on the group’s share-based payment scheme refer to note 17.6 of the annual fnancial LONG-TERM SHARE-BASED INCENTIVES (LTIs) statements published on the company’s website. LTIs are awarded with the primary aim of retaining SHARE INCENTIVE SCHEME: key staff members and aligning performance with the SHARE RIGHTS 2012 interests of investors and stakeholders. Under the 2010 share rights scheme, 67 participants The target criteria and allocation of LTIs are at the were granted 9 996 526 rights in respect of Steinhoff discretion of the committee which comprises only International Holdings Limited (Steinhoff) shares independent non-executive directors. and, pursuant to committee approval, these grants were confrmed with letters issued to participants in Allocation December 2012. The allocation of LTIs is based on the following key eligibility criteria: VESTING CONDITIONS Rights to Steinhoff shares are subject to certain Involving individuals who are key to driving the performance conditions (vesting conditions) group’s business strategy being met. Retention of key talent/scarce skills At 30 June 2015, there were 9 894 830 outstanding Talent management strategy and succession plans rights under the 2012 grant in respect of 66 executives. The committee concluded that these The targets for LTIs are set with reference to shares will become eligible for vesting following the industry and market benchmark performance. Such completion and the implementation of the listing benchmarks are determined annually by measuring by introduction of the group on the Frankfurt Stock operational performance against those of peer group Exchange. This vesting is the third vesting under companies (in comparable industries and markets) in the new incentive scheme, which was approved by local currencies. shareholders at the annual general meeting held on 6 December 2010.

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t77 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 In terms of the committee’s discretion on vesting MINIMUM SHAREHOLDING CRITERIA criteria, the targets listed below were taken into To encourage participants in the company’s share account in determining the vesting of the grant. incentive schemes to maintain and/or invest in Vesting can occur at 0% or 100%, subject to the the share capital of the company and to align the participant maintaining a minimum shareholding in interests of the participants with the interests of the company, as determined by the committee. the shareholders in the company, the committee introduced a minimum shareholding criterion. 1. GROWTH The committee has concluded that growth in headline At the discretion of the committee, the participation earnings per share (HEPS) is an appropriate measure in any grant and/or the vesting of rights (and/or the of growth. The calculation of HEPS is determined in delivery of shares in the company) will be subject to terms of the JSE Listings Requirements, and is subject the participant maintaining a minimum shareholding to external assurance by way of the annual external in the company, as determined by the committee. audit of the company’s fnancial statements. It was EMPLOYEE SHARE OWNERSHIP PLAN determined that Steinhoff’s growth in HEPS should In accordance with its strategic transformation outperform, cumulatively over the relevant three- objectives, Steinhoff has recognised the importance year measurement criteria, those of peer group of of affording all of its South African employees an companies in comparable industries and markets and opportunity to participate in the success of its in local currencies. business. 2. CASH GENERATION Accordingly, in December 2008, Steinhoff In line with Steinhoff’s global incentive schemes in this implemented its employee share participation regard, at least 80% of operating proft, cumulatively scheme which effectively empowered all South over the relevant three-year measurement criteria, African employees, the majority of whom are black should be generated in cash, as measured by cash (as defned in the Broad-Based Black Economic generated from operations as a percentage of Empowerment Act, 2003 (Act 53 of 2003), as operating proft. amended). The scheme is structured in such a way that employees will own Steinhoff shares after a nine- 3. RETURNS year participation period. Through a special purpose An appropriate returns-based criterion remains vehicle, Steinhoff S’khulasonke Investments (RF) challenging for Steinhoff as a result of the geographic Proprietary Limited, there are currently approximately diversity of operations and the inherent currency 12 000 employees (of which the majority are and other volatilities. In response to this, a blended previously disadvantaged individuals) holding more and weighted targeted return on equity has been than 40 million shares. Each benefciary receives an adopted by the remuneration committee. The return annual dividend. on equity is calculated as headline earnings based on average shareholders’ equity and is adjusted for During the fnancial year, a dividend of R13 million currency fuctuations. was paid to participants in the ownership plan. As at the date of this report, the value created in this 4. QUALIFICATION FOR ANNUAL BONUS structure was approximately R1.7 billion. In addition to the above-mentioned group measurement criteria, share scheme participants PEPKOR LONG-TERM BONUS (LTI) must have qualifed for participation in their The scheme operates on a cash pay-out basis and is respective divisions’ annual incentive bonus schemes, not equity-based. which would include meeting their respective key Mechanics of the LTI scheme performance indicators. This requirement is evaluated An employee participating in the LTI is allocated a and applied on an individual basis. notional participation amount based on factors such As a result of the group satisfying vesting conditions as seniority, position, responsibility and ability to 1 to 3 above, the 2012 share allocation will vest, infuence performance and operating results. subject to the 4th vesting condition and the implementation of the Frankfurt listing.

78 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 Key performance indicators (KPIs) are determined to NON-EXECUTIVE DIRECTORS’ REMUNERATION incentivise and drive performance in specifc areas, The board, in reviewing non-executive directors’ fees, for example percentage growth in operating proft. has made recommendations to shareholders in light of, frstly, fees payable to non-executive directors The growth percentage is applied to the notional of comparable companies and, secondly, the participation amount and the result is the LTI importance attached to the retention and attraction allocation for the year. Of this LTI allocation, 25% is of high-calibre individuals as non-executive directors. paid out as a cash bonus, with the remaining 75% Remuneration is reviewed annually, with reference carried forward to the following year. to competitors and peer companies. Independent In year two the KPI (growth percentage) is again advice is also acquired from specialist human applied to the notional participation amount to resources consultants. This remuneration is not linked calculate the LTI allocation for the second year. This is to the company’s share price or performance. Levels added to the previous year’s LTI allocation, being the of fees are also set by reference to the responsibilities 75% which was not paid out. The cash bonus for year assumed by the non-executive directors in chairing two will then be 25% of the combined LTI allocation the board and in chairing or participation in its balance. committees. This is repeated every year and results in an effective To avoid a confict of interest, the committee, which mechanism to achieve long-term incentivisation, consists entirely of independent non-executive retention and to drive the correct performance. directors, takes no part in the determination of non- executive directors’ fees or in the recommendation to SERVICE CONTRACTS the board and shareholders. Non-executive directors Executives’ contracts are generally subject to do not qualify for shares in terms of the group’s share terms and conditions of employment in the local incentive schemes. The board annually recommends jurisdiction. Top executive and non-executive remuneration of non-executive directors for approval directors’ contracts do not contain ‘golden parachute’ by shareholders in advance. clauses. Refer to note 31 of the annual fnancial statements for Non-executive directors are subject to regulations on details on the fees earned by non-executive directors appointment and rotation in terms of the company’s for the year ended 30 June 2015. memorandum of incorporation and the South African Companies Act No. 71 of 2008, as amended. EXECUTIVE DIRECTORS’ REMUNERATION Refer to note 31.1 of the annual fnancial statements EXECUTIVE DIRECTORS’ CONTRACTS for details on the remuneration earned by executive There are no executive directors with a notice directors for the year ended 30 June 2015. period of more than one year. There are no executive director’s service contracts that include predetermined compensation as a result of termination exceeding 18 months’ salary and benefts. The executive directors and senior management have indefnite employment contracts.

Read more: For more information on the composition and election process of the board of directors of Steinhoff International Holdings NV, refer to the Frankfurt Stock Exchange prospectus available on www.steinhoffnternational.com.

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t79 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 ABOUT THIS REPORT

PROVIDING AN UNDERSTANDING of the group’s business

This integrated report aims to provide stakeholders As the concepts and practices of integrated with insight into the group’s performance and the reporting develop, management will aim to way in which it manages its business. This report enhance disclosures and application as deemed focuses on the group’s strategy and its ability to appropriate. In preparing this report, management create long-term sustainable value. has considered and applied the principles of: The integrated report should provide an understanding of the group’s business model, its The South African Code of Corporate Practice strategy, how the strategy is implemented and how and Conduct as set out in the King III Report the group is managed. The International Financial Reporting To comprehensively review the group, this report Standards (IFRS) should be read together with the audited fnancial The JSE Limited (JSE) Listings Requirements statements, the corporate governance report and the corporate responsibility information, all of which The Companies Act No. 71 of 2008, are available on the group’s website: as amended www.steinhoffnternational.com. The International Integrated Reporting Framework as issued by the International Integrated Reporting Council (IIRC) Materiality, which determines the context and extent of disclosure of any material issues relating the businesses or the group.

80 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 The group’s strategy is infuenced by material FORWARD-LOOKING INFORMATION issues, as explained in the strategy section of this This integrated report contains certain forward report. A responsible approach towards social, looking statements which relate to the fnancial environmental and governance, or sustainability, has position and results of the operations of the group. been part of the group’s strategy for many years, These statements are solely based on the view and and still underpins the fundamental approach to considerations of the directors. These statements, by business practices. Due to the diversity of the group nature, involve risk and uncertainty, relate to events in operational functions and geographic spread, and depend on circumstances that may occur in aspects of sustainability are managed within the the future. Factors that could cause actual results to businesses, on a decentralised basis, based on differ materially from those in the forward-looking materiality. statements include, but are not limited to, global and national economic and market conditions, In determining the material issues, management has including interest and foreign exchange rates, considered all matters that could have a signifcant gross and operating margins achieved, competitive impact on the ability of the business to create conditions and regulatory factors. These forward- sustainable value for stakeholders. looking statements have not been reviewed or REPORTING reported on by the group’s external auditors. The group will continue to provide information and EXTERNAL ASSURANCE report on material issues relevant to its strategy, Assurance of the contents of the integrated report and in a way that aligns with global best practice. was considered throughout the process. The board, SCOPE AND BOUNDARY assisted by the audit committee, is ultimately The scope of the report includes all operating responsible for overseeing the integrity of the subsidiaries and covers the reporting period integrated report. This was achieved through setting 1 July 2014 to 30 June 2015. The audited up appropriate teams and structures to undertake annual fnancial statements were approved on the reporting process and the review and approval 8 September 2015. There were no restatements from of the integrated report by the board. prior periods. This integrated report was approved A combined assurance approach is being for distribution on 16 November 2015 and includes considered to ensure the appropriate application reference to signifcant events subsequent to year- of integrated reporting principles including the end, up to the approval date. integrity of data contained in the report. External The annual fnancial statements have been prepared assurance obtained in the current year was limited in accordance with International Financial Reporting to the audit opinion on the group annual fnancial Standards (IFRS). Financial information contained in statements. the integrated report was extracted from the audited APPROVAL OF THE INTEGRATED REPORT annual fnancial statements. The board acknowledges its responsibility to ensure All references to Steinhoff, the group, the company, the integrity of the integrated report. the business, our and we refer to Steinhoff The directors confrm they have reviewed the International Holdings Limited and its underlying content of the integrated report and believe subsidiaries. These subsidiaries include all it addresses the material issues and is a fair businesses in the group. presentation of the integrated performance of With the group’s longstanding history and scale the group, presented in accordance with the of operations in Europe, it has taken due regard international reporting framework and best practice. of legislation and corporate regulations in the GOING CONCERN European countries of operation. Being listed on The directors report that, after making enquiries, the JSE and as a guiding principle, the group also they have a reasonable expectation that the group reviews its business practices against the South has adequate resources to continue its operational African Code of Corporate Practice and Conduct as existence for the foreseeable future. For this reason, set out in the King III report. they continue adopting the going concern basis in preparing the annual fnancial statements.

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t81 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 SHARE PERFORMANCE AND EXCHANGE RATES

JSE TRADING HISTORY for the year ended 30 June 2015

2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm

$MPTJOHQSJDF DFOUT 7 699 5 868 2 452 2 465 2 299 1 781 1 340 1 592 2 421 2 135

)JHIFTUQSJDF DFOUT 7 909 5 871 3 080 2 875 2 583 2 194 1 889 2 455 2 745 2 474

-PXFTUQSJDF DFOUT 4 611 2 407 2 212 2 072 1 738 1 312 885 1 490 2 011 1 500

/VNCFSPGTIBSFTUSBEFE NJMMJPO 2 616 1 590 1 177 1 293 1 165 1 347 1 384 1 334 1 167 899

7BMVFPGTIBSFUSBEFE 162 190 70 522 30 425 31 724 26 230 25 086 17 502 25 824 27 776 17 909

"WFSBHFXFJHIUFEUSBEFEQSJDF DFOUT 6 201 4 435 2 586 2 454 2 251 1 862 1 265 1 936 2 380 1 992

%JWJEFOEZJFME 2.14 2.56 3.26 3.251 2.831 3.541 4.481 3.771 2.071 1.761

&BSOJOHTZJFME 6.23 8.47 15.90 14.12 12.92 13.79 18.87 15.70 8.88 7.92

1SJDFFBSOJOHTSBUJP 16.05 11.81 6.29 7.08 7.74 7.25 5.30 6.37 11.26 12.63

.BSLFUDBQJUBMJTBUJPO 281 172 123 229 44 749 43 285 37 727 25 076 17 152 20 202 30 408 24 360

Calculation includes the declared cash contribution Source: Thomson One

EXCHANGE RATES SHARES TRADED The following table sets forth, for the periods Number of shares traded (million) indicated, the average and period-end exchange rates in rand expressed in R per €1.00, used to 2006 899 convert the results and the statements of fnancial position of the subsidiaries outside Africa into 2007 1 167 South African rands. 2008 1 334

2009 1 384 :FBSFOEFE+VOF Average1 Closing2 7.8196 9.1600 2010 1 347 9.4103 9.5735 2011 1 165 10.7631 12.3341 2012 1 293 12.3503 10.8265 2013 1 177 10.5954 9.3781 2014 1 590 9.5644 9.8654 2015 2 616 10.4141 10.3447 11.4635 12.9209 14.1106 14.5721 2015 13.7347 13.5628

Note The average exchange rate was used to translate income and expenditure. The closing exchange rate was used to translate assets and liabilities.

82 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 ANALYSIS OF SHAREHOLDING FOR THE YEAR ENDED 30 JUNE 2015

Public % Directors % Other % and key management Shareholders in South Africa /VNCFSPGTIBSFIPMEFST 48 095 99.91 41 0.09 1 – /VNCFSPGTIBSFT 1 445 579 814 62.14 873 671 612 37.56 6 941 250 0.30

Shareholders other than in South Africa /VNCFSPGTIBSFIPMEFST 1 270 99.45 6 0.47 1 0.08 /VNCFSPGTIBSFT 1 139 742 525 85.31 196 214 114 14.69 120 281 –

Total /VNCFSPGTIBSFIPMEFST 49 365 99.90 47 0.10 2 – /VNCFSPGTIBSFT 2 585 322 339 70.59 1 069 885 726 29.21 7 061 531 0.20

30 June 2015 30 June 2014 Number % Number % According to the share register of the company, the following shareholders are registered as holding in excess of 5% of the issued share capital of the company: 4UBOEBSE#BOL/PNJOFFT5SBOTWBBM1SPQSJFUBSZ-JNJUFE 1 202 464 112 32.83 440 426 957 20.87 'FSCSPT/PNJOFFT1SPQSJFUBSZ-JNJUFE 801 035 914 21.87 120 617 493 5.72 'JSTU/BUJPOBM/PNJOFFT1SPQSJFUBSZ-JNJUFE 401 716 499 10.97 279 129 149 13.23 4"4UPDLCSPLFST/PNJOFFT1SPQSJFUBSZ-JNJUFE 202 070 094 5.52 847 287 – $.#/PNJOFFT1SPQSJFUBSZ-JNJUFE 177 130 707 4.84 108 145 738 5.13 /FEDPS#BOL/PNJOFFT-JNJUFE 127 245 642 3.47 441 170 684 20.91 2 911 662 968 79.50 1 390 337 308 65.86 Save for the above, according to the disclosure in terms of section 56 of the Companies Act, the following shareholders are registered as holding in excess of 5% of the issued share capital of the company, as compiled from the nominee disclosures: #4#FUFJMJHVOHTVOE7FSXBMUVOHT(NC) 191 850 000 5.24 190 616 554 9.03 #SBJU4& 190 000 000 5.19 – – $PSPOBUJPO'VOE.BOBHFST 194 011 890 5.30 20 569 975 0.01 1VCMJD*OWFTUNFOU$PNNJTTJPOFST 345 776 460 9.44 297 777 975 14.11 5IJCBVMU4RVBSF'JOBODJBM4FSWJDFT 654 874 971 17.88 – –

CH Wiese's shares were held in another entity in 2014.

45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t83 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 SHAREHOLDERS’ DIARY

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

CORPORATE INFORMATION

REGISTRATION NUMBER SPONSOR 14($BQJUBM1SPQSJFUBSZ-JNJUFE 3FHJTUSBUJPOOVNCFS REGISTERED OFFICE #VJMEJOH 4JYUI4USFFU (SPVOE'MPPS %.,JTDI)PVTF 8ZOCFSH *OBOEB(SFFO#VTJOFTT1BSL 4BOEUPO 8JFSEB3PBE8FTU 10#PY #SBNMFZ 8JFSEB7BMMFZ 4BOEUPO WEBSITE 10#PY 1BSLMBOET XXXTUFJOIPGmOUFSOBUJPOBMDPN TRANSFER SECRETARIES AUDITORS $PNQVUFSTIBSF*OWFTUPS4FSWJDFT1SPQSJFUBSZ-JNJUFE %FMPJUUF5PVDIF $IBSUFSFE"DDPVOUBOUT 4" 3FHJTUSBUJPOOVNCFS 3JWFSXBML0GmDF1BSL #MPDL# (SPVOE'MPPS .BSTIBMM4USFFU .BUSPPTCFSH3PBE +PIBOOFTCVSH "TIMFB(BSEFOT9 10#PY .BSTIBMMUPXO 1SFUPSJB 10#PY )BUmFME COMMERCIAL BANK 4UBOEBSE$PSQPSBUFBOE.FSDIBOU#BOL COMPANY SECRETARY "EJWJTJPOPG5IF4UBOEBSE#BOLPG4PVUI"GSJDB-JNJUFE 4UFJOIPGG"GSJDB4FDSFUBSJBM4FSWJDFT1SPQSJFUBSZ-JNJUFE 3FHJTUSBUJPOOVNCFS 4JYUI4USFFU (SPVOE'MPPS 4JNNPOET4USFFU 8ZOCFSH +PIBOOFTCVSH 4BOEUPO 10#PY .BSTIBMMUPXO 10#PY #SBNMFZ *OBEEJUJPO UIFHSPVQIBTDPNNFSDJBMGBDJMJUJFTXJUIWBSJPVT PUIFSCBOLJOHBOEmOBODJBMJOTUJUVUJPOTXPSMEXJEF

84 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035t85 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 www.steinhoffinternational.com

86 t45&*/)0''*/5&3/"5*0/"-t*/5&(3"5&%3&1035 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 Audited Group Annual Financial Statements 30 June 2015 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 30 JUNE 2015 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 30 JUNE 2015

CONTENTS PAGES

Auditor's report 2

Directors' report 3

Audit committee report 8

Income statement 10

Statement of comprehensive income 11

Statement of changes in equity 12

Statement of financial position 14

Statement of cash flows 15

Segmental reporting 16

Summary of accounting policies 19

Judgements and estimates 29

Notes to the annual financial statements 31

Analysis of shareholding 99

Special resolutions passed 100

Corporate information 101

Preparation supervised by: Frikkie (FJ) Nel CA(SA), Financial director WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF STEINHOFF INTERNATIONAL HOLDINGS LIMITED

We have audited the consolidated financial statements of Steinhoff International Holdings Limited, set out on pages 10 to 98, which comprise the statement of financial position as at 30 June 2015, and the income statement, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

Directors' responsibility for the consolidated financial statements The company’s directors are responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Steinhoff International Holdings Limited as at 30 June 2015, and its consolidated financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa.

Other reports required by the Companies Act As part of our audit of the consolidated financial statements for the year ended 30 June 2015, we have read the directors’ report, the audit committee’s report and the secretary’s certification for the purpose of identifying whether there are material inconsistencies between these reports and the audited financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports we have not identified material inconsistencies between these reports and the audited financial statements. However, we have not audited these reports and accordingly do not express an opinion on these reports.

Deloitte & Touche Registered Auditors Per X Botha Partner 8 September 2015

Riverwalk Office Park, Block B Buildings 1 and 2 41 Matroosberg Road Deloitte Place Ashlea Gardens X6 The Woodlands Pretoria Woodmead Drive 0081 Woodmead, Sandton

National executive: *LL Bam Chief Executive *AE Swiegers Chief Operating Officer *GM Pinnock Audit DL Kennedy Risk Advisory *NB Kader Tax TP Pillay Consulting S Gwala BPaaS *K Black Clients & Industries *JK Mazzocco Talent & Transformation *MJ Jarvis Finance *M Jordan Strategy *TJ Brown Chairman of the Board MJ Comber Deputy Chairman of the Board A full list of partners and directors is available on request. *Partner and Registered Auditor

2 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED DIRECTORS' REPORT for the year ended 30 June 2015

The directors have pleasure in presenting the consolidated annual financial statements of Steinhoff International Holdings Limited (Steinhoff or group) for the year ended 30 June 2015.

Steinhoff is a holding company invested predominantly in household goods, general merchandise, automotive and diversified related industries with interests in continental Europe, Africa, the Pacific Rim and the United Kingdom. With revenue from continuing operations of R135 billion (2014: R117 billion), Steinhoff employs a vertically integrated and geographically diverse business model, covering the full spectrum from raw material to retail outlet across an extensive product offering.

The results for the year under review are fully set out in the attached consolidated annual financial statements.

The board has approved and declared a cash dividend from retained earnings of 165 cents per share (the Dividend). Shareholders will, however, be entitled to decline the Dividend or any part thereof and instead elect to receive a capitalisation issue alternative (the Capitalisation Issue Alternative). The Dividend and Capitalisation Issue Alternative for the year ended 30 June 2015 will be paid or issued to shareholders registered as such in Steinhoff's share register at the close of business on Friday, 13 November 2015 (the Record Date).

MAJOR TRANSACTIONS Accelerated bookbuild and rights offer On 2 July 2014, Steinhoff announced a rights offer including an accelerated bookbuild of cum rights shares to institutional investors. The accelerated bookbuild was fully subscribed and 150 million Steinhoff ordinary shares were issued at R52.00 per share, amounting to R7.8 billion of capital raised, which was paid to Steinhoff in a combination of euro and US dollars. A further approximately 200 million rights were taken up by investors, bringing the total capital raised to R18.2 billion.

Pepkor Holdings Proprietary Limited (Pepkor) On 25 November 2014, it was announced that Steinhoff would acquire 92.34% of the issued share capital of Pepkor. The purchase consideration was settled through the issue of 839 million Steinhoff shares and a cash payment of R15 billion. Steinhoff shareholders approved the acquisition at a general meeting held on 26 January 2015. All conditions precedent were fulfilled on 31 March 2015. Pepkor was consolidated from 31 March 2015.

On 20 April 2015, the remaining 7.66% of Pepkor ordinary shares were acquired and the purchase consideration was settled through the issue of 87 million Steinhoff shares.

Convertible bond due 2016 During the year, conversion notices were received from holders of the convertible bond due 2016. On 3 March 2015, it was resolved to call on the redemption of the remainder of the convertible bonds due 2016. A total of 145 million ordinary shares of Steinhoff were issued to bondholders and R7.0 million was paid in cash.

Convertible bond due 2017 During the year, conversion notices were received from holders of the convertible bond due 2017. In total, 75.4 million ordinary shares of Steinhoff were issued to bondholders. At 30 June 2015, €181.1 million remained outstanding, representing 58 million underlying ordinary shares. Subsequent to year- end and up to the date of this report, conversion notices relating to a further €114.0 million bonds were received and 36.4 million shares issued.

PSG Limited (PSG) On 30 June 2015, Steinhoff acquired 17.1 million shares in PSG in return for the issue of 45.4 million Steinhoff ordinary shares. This resulted in Steinhoff holding 27% of PSG (net of treasury shares). Subsequent to this transaction, Steinhoff has concluded that it has significant influence over PSG and therefore PSG has been recognised as an associate. A one-off capital profit of R3.5 billion was recognised as a result of this transaction.

3 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED DIRECTORS' REPORT for the year ended 30 June 2015

FINANCIAL INFORMATION OF LISTED ASSOCIATE COMPANIES Detailed disclosure of listed associate companies is available on their websites: www.kap.co.za www.psggroup.co.za

SHARE CAPITAL The company's authorised share capital comprises 6 000 000 000 ordinary shares of no par value and 1 000 000 000 non-redeemable, cumulative, non- participating preference shares of no par value. The authorised share capital was amended at the company's annual general meeting on 2 December 2014.

Number of Date shares Rm

The following ordinary shares were issued during the year: Bookbuild1 3 July 2014 150 100 412 7 805 Rights offer1 4 August 2014 199 899 588 10 395 Conversion and redemption of convertible bond due 20162 14 November 2014 to 7 April 2015 144 859 021 5 584 2011 Share incentive scheme3 8 December 2014 and 25 February 2015 11 067 184 - Vendor consideration4 (Pepkor transaction) 23 February 2015 and 30 March 2015 839 011 935 56 703 Vendor consideration5 (Pepkor transaction) 20 April 2015 86 589 139 6 124 Conversion of convertible bond due 20176 8 June 2015 to 26 June 2015 75 424 179 3 245 Vendor consideration5 (PSG transaction) 30 June 2015 45 437 446 3 374

1 Issued under general authority granted at annual general meeting on 3 December 2013. 2 Issued under general authority: convertible instruments annual general meeting on 7 December 2009, and due to adjustments, general authority granted at annual general meetings on 6 December 2010 and 3 December 2013. 3 Issued under specific authority granted on 6 December 2010. 4 Issued under specific authority granted at general meeting on 26 January 2015. 5 Issued under general authority granted at annual general meeting on 2 December 2014. 6 Issued under general authority: convertible instruments annual general meeting on 5 December 2011, and due to adjustments, general authority granted at annual general meetings on 3 December 2013.

At year-end, subsidiaries and special-purpose vehicles of the group held 10 212 211 (2014: 9 963 800) shares in the company, which have been netted off against issued ordinary share capital as treasury shares. In addition, the company has reserved for the allocation and potential issue on conversion 320 666 847 (2014: 529 416 368) ordinary shares under its obligations to the holders of convertible bonds.

CONTRACTS No contracts, other than those disclosed in note 30.6, in which directors and officers of the company had an interest and that significantly affected the affairs or business of the company or any of its subsidiaries, or which could have resulted in a conflict of interest, were entered into during the year.

4 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED DIRECTORS' REPORT for the year ended 30 June 2015

EVENTS AFTER THE REPORTING DATE The directors are not aware of any significant events after the reporting date that will have a material effect on the group's results or financial position as presented in these financial statements, except as discussed in this report.

Firm intention by Steinhoff to make an offer to acquire the remaining issued share capital of JD Group Limited (JD Group) and delisting of JD Group On 12 June 2015, JD Group shareholders approved the scheme of arrangement and the delisting of JD ordinary shares from the main board of the JSE. As a result of the scheme of arrangement, Steinhoff increased its ownership in JD Group from 87% to 100%. JD Group was delisted from the JSE on 7 July 2015.

Firm intention by Steinhoff to make an offer to acquire Iliad Africa Limited (Iliad) On 23 July 2015, Iliad announced Steinhoff's firm intention to extend an offer, through JD Group, to the shareholders of Iliad in terms of a Scheme of Arrangement for the acquisition of the entire issued share capital of Iliad for cash at R10 per Iliad share (scheme). The circular, including the notice of the meeting relating to the scheme, was despatched to Iliad shareholders on 28 August 2015, and the meeting at which Iliad shareholders will vote on the scheme, is scheduled to be held on 29 September 2015.

Convertible bond due 2022 On 30 July 2015, Steinhoff Finance Holding GmbH issued a seven-year, euro-denominated, convertible bond (the bond) to raise €1 116 million (before expenses). The bond pays interest semi-annually in arrears at a fixed rate of 1.25% per annum (pa) and is convertible into 150 million Steinhoff ordinary shares at an initial conversion price of R103.47 per share (representing an initial conversion premium of 35% to the prevailing underlying volume-weighted average (VWAP) share price at the date of pricing). The issue and redemption price of the bond is 100%. The bond is convertible into shares at the election of the bondholders. The company holds, subject to conditions, rights on early redemption. The bond is listed on the Open Market (Freiverkehr) of the Frankfurt Stock Exchange.

Scheme of arrangement On 7 August 2015, Steinhoff announced that it had received a firm intention from Genesis International Holdings N.V. (Genesis) to make an offer to acquire the entire issued share capital of Steinhoff by way of a scheme of arrangement, at a consideration of one Genesis share for each Steinhoff share. A circular was posted to shareholders on 7 August 2015 and can be viewed on the company's website. At a shareholder meeting on 7 September 2015, shareholders approved the scheme of arrangement.

DIRECTORATE The executive directors in office during the financial year and date of this report were: Markus Johannes Jooste - Chief executive officer Hendrik Johan Karel Ferreira Stephanus Johannes Grobler Andries Benjamin la Grange - Chief financial officer Fredrik Johannes Nel - Financial director Daniël Maree van der Merwe - Chief operating officer

The non-executive directors in office during the financial year and date of this report were: Dr Deenadayalen Konar1 - Chairman Dr Stefanes Francois Booysen1 Dr David Charles Brink1 Claas Edmund Daun1 (German) Thierry Louis Joseph Guibert (French) (resigned as executive director on 5 December 2014) Dr Marthinus Theunis Lategan1 Johannes Fredericus Mouton1 Heather Joan Sonn1 Bruno Ewald Steinhoff (German) Paul Denis Julia van den Bosch (Belgian) Dr Christoffel Hendrik Wiese 1 Independent non-executive director

5 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED DIRECTORS' REPORT for the year ended 30 June 2015

The alternate directors in office during the financial year and date of this report were: Johannes Nicolaas Stephanus du Plessis Karel Johan Grové Angela Krüger-Steinhoff 2 (German) Mariza Nel 2 Non-executive director

DIRECTORS' SHAREHOLDING At 30 June 2015, the present directors and key management (including top executive management members) of the company held direct and indirect interests in 1 069 885 726 (2014: 332 594 878) or 29.2% (2014: 15.8%) of the company's issued ordinary shares.

At the general meeting held on 26 January 2015, Steinhoff shareholders approved the acquisition of Pepkor on the basis of a condition precedent that a disinterested majority of shareholders waives the related mandatory offer by the Voting Pool (as that term is defined in the circular to Steinhoff shareholders dated 15 December 2014) (Voting Pool), to the remaining Steinhoff shareholders. At the date of this general meeting the Voting Pool held more than 35% of the issued share capital of Steinhoff (excluding treasury shares). Accordingly, Steinhoff shareholders approved the Pepkor acquisition on the basis that the Voting Pool comprises an integral part of its key terms and conditions. As a result of subsequent issuances of Steinhoff shares relating, inter alia, to the optional conversion of certain of the convertible bonds issued by Steinhoff Finance Holding GmbH, the Voting Pool currently holds approximately 33% of Steinhoff's issued shares (net of treasury shares).

There have been no changes to directors' shareholding between year-end and the date of this report. Details of the individual holdings are disclosed in note 31.

CORPORATE GOVERNANCE The group complies with the Listings Requirements of the JSE Limited (JSE) and in all material respects with the Code of Corporate Practice and Conduct published in the King III Report on Corporate Governance.

SECRETARY Steinhoff Africa Secretarial Services Proprietary Limited acts as secretary to the company. The board of directors has assessed the shareholders, directors and employees of Steinhoff Africa Secretarial Services Proprietary Limited, who performs the company secretary function and has concluded that an arm's length relationship has been maintained between themselves and Steinhoff.

BUSINESS ADDRESS POSTAL ADDRESS 28 Sixth Street PO Box 1955 Wynberg Bramley South Africa South Africa 2090 2018

6 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED DIRECTORS' REPORT for the year ended 30 June 2015

APPROVAL OF THE ANNUAL FINANCIAL STATEMENTS It is the directors' responsibility to ensure that the consolidated annual financial statements fairly present the state of affairs of the group. The external auditors are responsible for independently auditing and reporting on the financial statements.

The directors are also responsible for the systems of internal control. These are designed to provide reasonable, but not absolute, assurance on the reliability of the consolidated annual financial statements, to adequately safeguard, verify and maintain accountability of assets, and to prevent and detect material misstatement and loss. The systems are implemented and monitored by suitably trained personnel with an appropriate segregation of authority and duties. Nothing has come to the attention of the directors to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the year under review.

The consolidated annual financial statements set out in this report have been prepared by management on the basis of appropriate accounting policies, which have been consistently applied except where stated otherwise. The consolidated annual financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the South African Companies Act, 71 of 2008, as amended.

The directors reasonably believe that the group has adequate resources to continue in operation for the foreseeable future, and the consolidated annual financial statements have therefore been prepared on the going-concern basis.

The annual financial statements for the year ended 30 June 2015, which appear on pages 3 to 98, were approved by the board and signed on its behalf on 8 September 2015.

Dr Deenadayalen Konar Markus Johannes Jooste Independent non-executive chairman Chief executive officer

SECRETARY CERTIFICATION We certify, in accordance with section 88(2)(e) of the South African Companies Act, 71 of 2008, as amended (the Act) that the company has lodged with the Companies and Intellectual Properties Commission all such returns as are required for a public company in terms of the Act and that all such returns are true, correct and up to date.

Steinhoff Africa Secretarial Services Proprietary Limited Company secretary

7 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED AUDIT COMMITTEE REPORT for the year ended 30 June 2015

BACKGROUND The Steinhoff audit committee is pleased to present our report for the financial year ended 30 June 2015 as recommended by the King III Report on Corporate Governance and in line with the South African Companies Act, 71 of 2008, as amended (the Act).

The committee's operation is guided by a formal detailed charter that is in line with the Act and is approved by the board as and when it is amended. The committee has discharged all its responsibilities as contained in the charter. This process is supported by the audit subcommittees that are in place for all significant operating divisions and subsidiaries. These subcommittees meet in terms of formal mandates and deal with all issues arising at the operational division or subsidiary level. These subcommittees then elevate any unresolved issues of concern to the committee.

OBJECTIVE AND SCOPE The overall objectives of the committee are as follows: • To review the principles, policies and practices adopted in the preparation of the accounts of companies in the group and to ensure that the consolidated annual financial statements of the group and any other formal announcements relating to the financial performance comply with all statutory, regulatory and Steinhoff requirements as may be required. • To ensure that the consolidated interim financial statements of the group, in respect of the first six-month period, comply with all statutory, regulatory and Steinhoff requirements. • To ensure that all financial information contained in any consolidated submissions to Steinhoff is suitable for inclusion in its consolidated financial statements in respect of any reporting period. • To annually assess the appointment of the auditors and confirm their independence, recommend their appointment to the annual general meeting and approve their fees. • To review the work of the group's external and internal auditors to ensure the adequacy and effectiveness of the group's financial, operating, compliance and risk management controls. • To review the management of risk and the monitoring of compliance effectiveness within the group. • To perform duties that are attributed to it by the Act, the JSE and the King III Report.

The committee performed the following activities: • Received and reviewed reports from both internal and external auditors concerning the effectiveness of the internal control environment, systems and processes. • Reviewed the reports of both internal and external auditors detailing their concerns arising out of their audits and requested appropriate responses from management resulting in their concerns being addressed. • Made appropriate recommendations to the board of directors regarding the corrective actions to be taken as a consequence of audit findings. • Considered the independence and objectivity of the external auditors and ensured that the scope of their additional services provided was not such that they could be seen to have impaired their independence. • Reviewed and recommended for adoption by the board of directors such financial information that is publicly disclosed, which for the year included: º the integrated report for the year ended 30 June 2015, º the consolidated results for the year ended 30 June 2015, and º the consolidated interim results for the six months ended 31 December 2014. • Considered the effectiveness of internal audit, approved the one-year operational strategic internal audit plan and monitored adherence of internal audit to its annual plan. • Meetings were held with the internal and external auditors, where management was not present, and no matters of concern were raised. • Considered the appropriateness of the experience and expertise of the group financial director and concluded that these were appropriate. • Considered the expertise, resources and experience of the finance function and concluded that these were appropriate.

The audit committee is of the opinion that the objectives of the committee were met during the year under review.

Where weaknesses in specific controls had been identified, management undertook to implement appropriate corrective actions to mitigate the weaknesses identified.

8 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED AUDIT COMMITTEE REPORT for the year ended 30 June 2015

MEMBERSHIP During the course of the year, the membership of the committee comprised solely independent non-executive directors. They are: • Dr Stefanes Francois Booysen - Chairman • Dr David Charles Brink • Dr Marthinus Theunis Lategan

For the members' qualifications refer to the integrated report and the company's website.

EXTERNAL AUDIT The committee has satisfied itself through enquiry that the auditors of Steinhoff are independent as defined by the Act.

The committee, in consultation with executive management, agreed to the audit fee for the 2015 financial year. The fee is considered appropriate for the work that could reasonably have been foreseen at that time. Audit fees are disclosed in note 2.2 to the financial statements.

There is a formal procedure that governs the process whereby the external auditor is considered for the provision of non-audit services, and each request for additional services is considered in accordance with our set policy and procedure.

Meetings were held with the auditor, where management was not present, and no matters of concern were raised.

The audit committee appointed a subcommittee consisting of Stefanes Francois Booysen (audit committee chairman), Andries Benjamin la Grange (chief financial officer) and Hein Odendaal (audit executive) to investigate and recommend the approval process in respect of the appointment of the external auditors for the 2016 financial year.

ANNUAL FINANCIAL STATEMENTS The committee has evaluated the consolidated annual financial statements for the year ended 30 June 2015, and considers that they comply, in all material aspects, with the requirements of the Act and International Financial Reporting Standards. The committee has therefore recommended the consolidated annual financial statements, for approval to the board. The board has subsequently approved the financial statements which will be open for discussion at the forthcoming annual general meeting.

Dr Stefanes Francois Booysen Audit committee chairman 8 September 2015

9 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED INCOME STATEMENT for the year ended 30 June 2015

Notes 2015 2014 Rm Rm

Continuing operations Revenue 134 868 117 364 Cost of sales (86 541) (75 446) Gross profit 48 327 41 918 Other operating income 3 623 1 404 Distribution expenses (7 429) (7 060) Other operating expenses (29 206) (23 640) Capital items 1 2 513 1 500 Operating profit 2 17 828 14 122 Finance costs 3 (3 830) (3 486) Income from investments 3 2 071 1 491 Share of profit of equity accounted companies 11 569 290 Profit before taxation 16 638 12 417 Taxation 4 (1 343) (1 954) Profit from continuing operations 15 295 10 463 Discontinued operations Loss from discontinued operations 5 (2 140) (600) Profit for the year 13 155 9 863

Profit attributable to: Owners of the parent 13 383 10 090 Non-controlling interests 19 (228) (227) Profit for the year 13 155 9 863

Earnings per share (cents) Basic earnings per share From continuing and discontinued operations 6 479.7 496.8 From continuing operations 6 546.3 510.2 Diluted earnings per share From continuing and discontinued operations 6 442.0 444.3 From continuing operations 6 498.3 455.2

Headline earnings per share (cents) (refer to note 6 for definition) Basic headline earnings per share From continuing and discontinued operations 6 393.8 443.5 From continuing operations 6 453.7 461.7 Diluted headline earnings per share From continuing and discontinued operations 6 369.4 402.0 From continuing operations 6 420.1 416.7

10 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED STATEMENT OF COMPREHENSIVE INCOME for the year ended 30 June 2015

2015 2014 Rm Rm

Profit for the year 13 155 9 863

Other comprehensive (loss)/income Items that will not be reclassified subsequently to profit or loss: Actuarial losses on defined benefit plans (174) (145) Deferred taxation 39 43 (135) (102) Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign operations (4 647) 5 959 Net fair value gain/(loss) on cash flow hedges and other fair value reserves 228 (124) Deferred taxation (61) 32 Other comprehensive income of equity accounted companies, net of deferred taxation 12 1 (4 468) 5 868 Total other comprehensive (loss)/income for the year (4 603) 5 766 Total comprehensive income for the year 8 552 15 629

Total comprehensive income attributable to: Owners of the parent 8 781 15 844 Non-controlling interests (229) (215) Total comprehensive income for the year 8 552 15 629

11 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2015

Convertible Ordinary and stated share Distributable redeemable capital reserves bonds reserve Rm Rm Rm Balance at 1 July 2013 9 801 36 786 1 079 Net shares issued 10 685 - - Proceeds on sale of shares net of capital gains taxation 21 - - Redemption of preference shares - - - Total comprehensive income/(loss) for the year - 10 090 - Profit/(loss) for the year - 10 090 - Other comprehensive income/(loss) for the year - - - Preference dividends - (152) - Dividends paid - (1 516) - Released on derecognition of subsidiary - - - Introduced and acquired on acquisition of subsidiaries - - - Net shares bought from/sold to non-controlling interests - - - Share-based payments - - - Convertible bonds issued and redeemed - equity portion net of deferred taxation - - 351 Transfers and other reserve movements - 1 429 - Balance at 30 June 2014 20 507 46 637 1 430 Net shares issued 92 844 - - Proceeds on sale of shares net of capital gains taxation (6) - - Redemption of preference shares - - - Total comprehensive income/(loss) for the year - 13 383 - Profit/(loss) for the year - 13 383 - Other comprehensive loss for the year - - - Preference dividends - (332) - Dividends paid - (3 749) - Introduced and acquired on acquisition of subsidiaries - - - Net shares bought from/sold to non-controlling interests - - - Share-based payments - - - Convertible bonds redeemed - equity portion net of deferred taxation - - (369) Transfers and other reserve movements - 167 - Balance at 30 June 2015 113 345 56 106 1 061

Discount on introduction and premium on acquisition of non-controlling interests has been aggregated with net shares bought from/sold to non-controlling interests.

12 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 Premiums or discounts on Total ordinary Foreign changes in equity Total equity currency Share-based non- attributable to Preference attributable to Non- translation payment controlling owners of the stated share owners of the controlling reserve reserve interests Other reserves parent capital parent interests Total Rm Rm Rm Rm Rm Rm Rm Rm Rm 7 865 636 617 (168) 56 616 3 497 60 113 6 655 66 768 - - - - 10 685 - 10 685 - 10 685 - - - - 21 380 401 - 401 - - - - - (496) (496) - (496) 5 947 - - (193) 15 844 - 15 844 (215) 15 629 - - - - 10 090 - 10 090 (227) 9 863 5 947 - - (193) 5 754 - 5 754 12 5 766 - - - (152) - (152) - (152) - - - - (1 516) - (1 516) (208) (1 724) ------(2 814) (2 814) ------132 132 - - 228 - 228 - 228 (2 019) (1 791) - 431 - - 431 - 431 - 431 - - - - 351 - 351 - 351 (28) (56) (1 107) 108 346 - 346 10 356 13 784 1 011 (262) (253) 82 854 3 381 86 235 1 541 87 776 - - - - 92 844 2 000 94 844 - 94 844 - - - - (6) - (6) - (6) - - - - - (499) (499) - (499) (4 646) - - 44 8 781 - 8 781 (229) 8 552 - - - - 13 383 - 13 383 (228) 13 155 (4 646) - - 44 (4 602) - (4 602) (1) (4 603) - - - (332) - (332) - (332) - - - - (3 749) - (3 749) (48) (3 797) ------1 477 1 477 - - (4 580) - (4 580) - (4 580) (1 590) (6 170) - 558 - - 558 - 558 - 558 - - - - (369) - (369) - (369) - - - 33 200 - 200 (64) 136 9 138 1 569 (4 842) (176) 176 201 4 882 181 083 1 087 182 170

Discount on introduction and premium on acquisition of non-controlling interests has been aggregated with net shares bought from/sold to non-controlling interests.

13 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED STATEMENT OF FINANCIAL POSITION as at 30 June 2015

Notes 2015 2014 Rm Rm ASSETS Non-current assets Goodwill 8 80 502 27 810 Intangible assets 9 54 570 38 306 Property, plant and equipment 10 58 294 54 422 Investments in equity accounted companies 11 15 869 4 223 Investments and loans 12 6 697 10 399 Deferred taxation assets 13 2 682 1 390 Trade and other receivables 14 150 70 218 764 136 620 Current assets Inventories and vehicle rental fleet 15 26 394 18 455 Trade and other receivables 14 18 208 18 112 Investments and loans 12 8 905 5 928 Cash and cash equivalents 37 905 16 341 91 412 58 836 Assets and disposal groups classified as held for sale 16 3 364 6 865 94 776 65 701 Total assets 313 540 202 321

EQUITY AND LIABILITIES Capital and reserves Ordinary stated share capital 17 113 345 20 507 Reserves 62 856 62 347 Preference stated share capital 18 4 882 3 381 Total equity attributable to equity holders of the parent 181 083 86 235 Non-controlling interests 19 1 087 1 541 Total equity 182 170 87 776

Non-current liabilities Interest-bearing loans and borrowings 20 56 344 55 580 Employee benefits 21 1 061 868 Deferred taxation liabilities 13 13 578 10 878 Provisions 22 2 927 1 603 Trade and other payables 23 920 388 74 830 69 317

Current liabilities Trade and other payables 23 46 378 34 222 Employee benefits 21 1 166 750 Provisions 22 1 287 1 213 Interest-bearing loans and borrowings 20 5 847 6 411 Bank overdrafts and short-term facilities 1 856 2 436 56 534 45 032 Liabilities and disposal groups classified as held for sale 16 6 196 56 540 45 228 Total equity and liabilities 313 540 202 321

Net asset value per ordinary share (cents) 6 4 825 3 946

Investment property and vehicle rental fleet have been aggregated with property, plant and equipment and inventories, respectively.

14 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED STATEMENT OF CASH FLOWS for the year ended 30 June 2015

Notes 2015 20141 Rm Rm

CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations 24 26 706 23 146 Net movement in instalment sale and loan receivables (218) (1 753) Net dividends paid (3 931) (1 818) Net finance charges (1 232) (1 842) Taxation paid (1 039) (1 592) Net cash inflow from operating activities 20 286 16 141

CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (4 679) (4 948) Additions to intangible assets (258) (381) Proceeds on disposal of property, plant and equipment and intangible assets 213 451 Acquisition of subsidiaries and businesses, net of cash on hand at acquisition 25 (13 366) (6 473) Disposal of subsidiaries and businesses, net of cash on hand at disposal 26 - 1 955 Decrease/(increase) in long-term investments and loans 22 (5 078) Increase in short-term investments and loans (2 892) (2 211) Net (increase)/decrease in investments in equity accounted companies (164) 1 Net cash outflow from investing activities (21 124) (16 684)

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds of ordinary shares issued 18 200 - Proceeds of preference shares issued 2 000 - Preference shares redeemed (499) (378) Share issue expenses (386) (2) (Increase)/decrease in treasury shares (6) 284 Transactions with non-controlling interests (103) 29 Decrease in bank overdrafts and short-term facilities (1 106) (443) Increase in long-term interest-bearing loans and borrowings 12 052 11 206 Decrease in short-term interest-bearing loans and borrowings (6 522) (4 183) Net cash inflow from financing activities 23 630 6 513

NET INCREASE IN CASH AND CASH EQUIVALENTS 22 792 5 970 Effects of exchange rate translations on cash and cash equivalents (1 228) 1 122 Cash and cash equivalents at beginning of the year 16 341 9 249 CASH AND CASH EQUIVALENTS AT END OF YEAR 37 905 16 341

1 The cash flow has been re-presented to combine the secured and unsecured instalment sales receivables movement, previously disclosed separately under working capital and cash flows from operating activities. Additions to vehicle rental fleet, which are financed through finance leases, are now excluded from working capital as non-cash items. Cash flows relating to treasury shares and transactions with non-controlling interests have been reclassified from investing activities to financing activities.

15 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED SEGMENTAL REPORTING for the year ended 30 June 2015

2015 2014 Rm Rm

REVENUE - CONTINUING OPERATIONS Integrated retail: Household goods 104 696 100 449 Integrated retail: General merchandise 12 199 - Integrated retail: Automotive 17 973 16 915 134 868 117 364

OPERATING PROFIT BEFORE CAPITAL ITEMS - CONTINUING OPERATIONS Integrated retail: Household goods 13 134 12 110 Integrated retail: General merchandise 1 645 - Integrated retail: Automotive 536 512 15 315 12 622

RECONCILIATION BETWEEN OPERATING PROFIT PER INCOME STATEMENT AND OPERATING PROFIT BEFORE CAPITAL ITEMS PER SEGMENTAL ANALYSIS Operating profit per income statement 17 828 14 122 Capital items (note 1) (2 513) (1 500) Operating profit before capital items per segmental analysis 15 315 12 622

SEGMENTAL ASSETS Integrated retail: Household goods 139 338 146 411 Integrated retail: General merchandise 88 609 - Integrated retail: Automotive 12 853 12 154 240 800 158 565

RECONCILIATION BETWEEN TOTAL ASSETS PER STATEMENT OF FINANCIAL POSITION AND SEGMENTAL ASSETS Total assets per statement of financial position 313 540 202 321 Less: Cash and cash equivalents (37 905) (16 341) Less: Investments in equity accounted companies (15 869) (4 223) Less: Long-term investments and loans (6 697) (10 399) Less: Short-term investments and loans (8 905) (5 928) Less: Assets of discontinued operations and assets held for sale (3 364) (6 865) Segmental assets 240 800 158 565

GEOGRAPHICAL ANALYSIS Revenue - continuing operations Continental Europe 78 581 73 850 Africa 39 899 30 572 Other 16 388 12 942 134 868 117 364

Non-current assets Continental Europe 118 828 106 627 Africa 83 463 17 730 Other 16 473 12 263 218 764 136 620

The segments have been re-presented in order to reflect the new group structure.

16 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED SEGMENTAL REPORTING for the year ended 30 June 2015

Basis of segmental presentation The segmental information has been prepared in accordance with IFRS 8 - Operating Segments (IFRS 8), which defines requirements for the disclosure of financial information of an entity's operating segments. The standard requires segmentation based on the group's internal organisation and reporting of revenue and operating income based upon internal accounting methods.

Identification of segments The group discloses its operating segments according to the entity components regularly reviewed by the chief operating decision-makers. The components comprise various operating segments located globally. The revenue and non-current assets are further disclosed within the geographical areas in which the group operates. Segmental information is prepared in conformity with the measure that is reported to the chief operating decision-makers. These values have been reconciled to the consolidated financial statements. The measures reported by the group are in accordance with the accounting policies adopted for preparing and presenting the consolidated financial statements.

Segment revenue excludes value added taxation. Intersegment revenue is eliminated in the segment from which it was sold. Sales between segments are made on a commercial basis. Segment operating profit before capital items represents segment revenue less segment expenses, excluding capital items included in note 1. Segment expenses include distribution expenses and other operating expenses. Depreciation and amortisation have been allocated to the segments to which they relate.

The segment assets comprise all assets of the different segments that are employed by the segment and that are either directly attributable to the segment or can be allocated to the segment on a reasonable basis.

Operational segments Integrated retail: Household goods Household goods Revenue in this segment is derived through retailing furniture, beds, related homeware and household products in continental Europe, the United Kingdom, Africa and the Pacific Rim. This segment incorporates all the retail operations of Steinhoff Retail and Conforama in the European Union, Steinhoff UK Holdings in the United Kingdom, Steinhoff Asia Pacific and JD Group in Africa.

Integrated supply chain In continental Europe, revenue is generated from manufactured and imported/sourced household goods and related homeware. Revenue also includes the importing operations in the Netherlands, the manufacturing and sourcing operations in Germany, the low-cost manufacturing operations in Hungary and Poland, and the manufacturing of household goods and automotive products in the United Kingdom, while in the Pacific Rim revenue is derived from the manufacturing operations in Australia and sourcing from the East.

This segment includes the specialised distribution and warehousing services delivered to the group and external parties through our distribution and warehouse companies situated in continental Europe, the United Kingdom and the Pacific Rim.

Steinhoff's various global corporate offices provide strategic direction and services to the decentralised operations globally, adding value through identifying and implementing our various strategies across the globe. Activities include managing of our own brands and trademarks, all group treasury-related income in various currencies, volume rebates, trade commissions, fee income, discounts and similar activities.

Properties Revenue is derived from property rental income from internal and external customers through properties held by Steinhoff Properties and Hemisphere.

Integrated retail: General merchandise Revenue in Pepkor is derived from a portfolio of retail chains focused on the discount and value segments and selling predominantly clothing, footwear, textiles, cell phones and airtime.

17 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED SEGMENTAL REPORTING for the year ended 30 June 2015

Integrated retail: Automotive Unitrans Automotive offers a broad range of new and pre-owned vehicles, parts, insurance, accessories and servicing, complemented by the Hertz car rental division.

Geographical segments The group's operations are principally located in continental Europe, Africa, the Pacific Rim and the United Kingdom.

Major customers No single customer contributes 10% or more of the group's revenue.

18 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED SUMMARY OF ACCOUNTING POLICIES for the year ended 30 June 2015

Steinhoff is a South African registered company. The consolidated annual financial statements of Steinhoff for the year ended 30 June 2015 comprise Steinhoff and its subsidiaries (together referred to as the Steinhoff Group) and the group's interest in associate companies and joint-venture companies.

Statement of compliance The consolidated annual financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), the interpretations adopted by the International Accounting Standards Board (IASB), the IFRS Interpretations Committee of the IASB (IFRIC), the requirements of the South African Companies Act, 71 of 2008, as amended (the Act) and have been audited in compliance with all the requirements of section 29(1) of the Act, as required.

Adoption of revised standards During the current year, the group has adopted all the revised standards and interpretations issued by the IASB and the IFRIC that are relevant to its operations and effective for annual reporting periods beginning on 1 July 2014. The adoption of these revised standards and interpretations has not resulted in material changes to the group's accounting policies.

The group adopted the following amended standards and interpretations during the year: IAS 36 Impairment of Assets: Recoverable amount disclosures for non-financial assets IAS 39 Financial Instruments: Recognition and Measurement: Novation of derivatives and continuation of hedge accounting IFRIC 21 Levies

Basis of preparation The consolidated annual financial statements are prepared in millions of rand (Rm) on the historical-cost basis, except for certain assets and liabilities which are carried at amortised cost, and certain financial instruments and consumable biological assets, which are stated at their fair value.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that may affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision only affects that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of IFRS that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next financial year are discussed under 'Judgements and estimates'.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these annual financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2 - Share-based Payments, leasing transactions that are within the scope of IAS 17 - Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 - Inventories or value in use in IAS 36 - Impairment of Assets.

In addition, for financial reporting purposes, fair value measurements are categorised into level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are defined as follows: • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can assess at the measurement date. • Level 2 inputs are inputs, other than quoted prices included in level 1, that are observable for the asset or liability, either directly or indirectly. • Level 3 inputs are unobservable inputs for the asset or liability.

19 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED SUMMARY OF ACCOUNTING POLICIES for the year ended 30 June 2015

The material accounting policies applied by the group, as well as accounting policies where IFRS allows choice, are set out below and have been applied consistently to the periods presented in these consolidated annual financial statements, except where stated otherwise.

The accounting policies have been applied consistently by all group entities.

Basis of consolidation Subsidiaries Subsidiaries are entities controlled by the group (including structured entities). An investor controls an investee when the investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. In assessing control, substantive rights relating to an investee are taken into account. For a right to be substantive, the holder must have the practical ability to exercise that right.

On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair value at the date of acquisition. Any difference between the cost of acquisition and the group's share of the net identifiable assets, liabilities and contingent liabilities, fairly valued, is recognised and treated in terms of the group's accounting policy for goodwill.

Non-controlling interests in the net assets (excluding goodwill) of consolidated subsidiaries are identified separately from the group's equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling interests' share of changes in equity since the date of the combination.

Subsequently, any losses applicable to the non-controlling interests are allocated to the non-controlling interests even if this results in the non- controlling interests having deficit balances.

Associate companies An associate company is an entity over which the group is in a position to exercise significant influence, through participation in the financial and operating policy decisions of the entity, but which it does not control or jointly control. The group applies equity accounting to its associates.

Dilution gains and losses arising on the investment in associate companies are recognised in other comprehensive income.

The profit or loss on transactions with associate companies is not eliminated.

Joint arrangements A joint arrangement is defined as an arrangement of which two or more parties have joint control. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. There are two types of joint arrangements, namely joint operation and joint venture.

Joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint operators recognise and measure the assets and liabilities (and recognise the related revenues and expenses) in relation to its interest in the arrangement in accordance with the relevant IFRSs applicable to the particular assets, liabilities, revenues and expenses.

A joint venture is a joint arrangement whereby the parties that have control of the arrangement have rights to the net assets of the arrangement. A joint venturer recognises an investment and accounts for that investment using the equity method.

Contingent consideration Where a structured business combination contains a puttable instrument on the interest of an apparent non-controlling shareholder, the acquirer will classify the obligation to pay contingent consideration that meets the definition of a financial instrument as a financial liability or as equity on the basis of the definitions of an equity instrument and financial liability in IAS 32 - Financial Instruments: Presentation.

Contingent consideration is measured at fair value at each reporting date, and changes in fair value are recognised in profit or loss.

20 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED SUMMARY OF ACCOUNTING POLICIES for the year ended 30 June 2015

Common control transactions and premiums and discounts arising on subsequent purchases from, or sales to non-controlling interests in subsidiaries When a purchase price allocation has been performed for separate financial statements it is reversed for group consolidated accounts. Any increases or decreases in ownership interest in subsidiaries without a change in control are recognised as equity transactions. The carrying amounts of the group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any differences between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received are recognised directly in equity and attributed to owners of the company.

Goodwill All business combinations are accounted for by applying the purchase method. Goodwill arising on the acquisition of a subsidiary, associate company or joint-venture company represents the excess of the aggregate consideration transferred, non-controlling interest in the acquiree and in business combinations achieved in stages, the acquisition-date fair value of the acquirer's previously held equity interest in the acquiree, over the group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary, associate company or joint-venture company recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. An impairment loss in respect of goodwill is not reversed.

Goodwill is allocated to cash-generating units (CGUs) and is tested annually for impairment, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit.

On disposal of a subsidiary, associate company or joint-venture company, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Gains on bargain purchases arising on acquisition are recognised directly as capital items in profit or loss.

Intangible assets Intangible assets that are acquired by the group are stated at cost less accumulated amortisation and impairment losses. If an intangible asset is acquired in a business combination, the cost of that intangible asset is measured at its fair value at the acquisition date.

Expenditure on internally generated goodwill and brands is recognised in profit or loss as an expense as incurred.

Subsequent expenditure Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

Amortisation Amortisation of intangible assets is recognised in profit or loss on a straight-line basis over the assets' estimated useful lives, unless such lives are indefinite. An intangible asset is regarded as having an indefinite useful life when, based on analysis of all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows. Intangible assets with indefinite useful lives and intangible assets not yet available for use are not amortised but are tested for impairment annually, or more often when there is an indication that the asset may be impaired. Other intangible assets are amortised from the date they are available for use.

The amortisation methods, estimated useful lives and residual values are reassessed annually, with the effect of any changes in estimate being accounted for on a prospective basis.

Property, plant and equipment Owned assets Property, plant and equipment are stated at cost to the group, less accumulated depreciation and impairment losses. The cost of self-constructed assets includes the costs of materials, direct labour, the initial estimate, where relevant, of the cost of dismantling and removing the items and restoring the site on which they are located, borrowing costs capitalised and an appropriate proportion of production overheads.

21 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED SUMMARY OF ACCOUNTING POLICIES for the year ended 30 June 2015

Leased assets Leases that transfer substantially all the risks and rewards of ownership of the underlying asset to the group are classified as finance leases. Assets acquired in terms of finance leases are capitalised at the lower of fair value and the present value of the minimum lease payments at inception of the lease.

The capital element of future obligations under the leases is included as a liability in the statement of financial position. Lease payments are allocated using the effective-interest method to determine the lease finance costs, which are charged against income over the lease period, and the capital repayment, which reduces the liability to the lessor.

Subsequent costs The group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when the cost is incurred, if it is probable that additional future economic benefits embodied within the item will flow to the group and the cost of such item can be measured reliably. Costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as an expense when incurred.

Depreciation Depreciation is recognised in profit or loss on a straight-line basis at rates that will reduce the book values to estimated residual values over the estimated useful lives of the assets.

Land is not depreciated. Leasehold improvements on premises occupied under operating leases are written off over their expected useful lives or, where shorter, the term of the relevant lease.

The depreciation methods, estimated useful lives and residual values are reassessed annually, with the effect of any changes in estimate being accounted for on a prospective basis.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease.

Investment property Investment property is land and buildings that are held to earn rental income or for capital appreciation, or both.

Investment property is initially recognised at cost, including transaction costs, when it is probable that future economic benefits associated with the investment property will flow to the group and the cost of the investment property can be measured reliably. The cost of a purchased investment property comprises its purchase price and any directly attributable expenditure. The cost of a self-constructed investment property is its cost at the date when the construction development is complete.

Investment property is accounted for under the cost model and the accounting treatment after initial recognition follows that applied to property, plant and equipment.

Taxation Current taxation Income taxation on the profit or loss for the year comprises current and deferred taxation. Income taxation is recognised in profit or loss except to the extent that it relates to items recognised directly in other comprehensive income or equity, in which case it is recognised directly in other comprehensive income or equity.

Current taxation is the expected taxation payable on the taxable income for the year, using taxation rates enacted or substantially enacted at the reporting date, and any adjustment to taxation payable in respect of previous years.

22 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED SUMMARY OF ACCOUNTING POLICIES for the year ended 30 June 2015

Deferred taxation Deferred taxation is provided for using the statement of financial position liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used in the computation of taxable income. The following temporary differences are not provided for: goodwill not deductible for taxation purposes; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit; and differences relating to investments in subsidiaries to the extent that they will not reverse in the foreseeable future.

Deferred taxation liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associate companies and interest in joint-venture companies, except where the group is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred taxation assets and liabilities are offset when there is a legally enforceable right to set off current taxation assets against current taxation liabilities and when they relate to income taxes levied by the same taxation authority and the group intends to settle its current taxation assets and liabilities on a net basis.

Deferred taxation assets and liabilities are measured at the taxation rates that are expected to apply in the period in which the liability is settled or the asset realised, based on the taxation rates (and taxation laws) that have been enacted or substantively enacted by the reporting date. The measurement of deferred taxation liabilities and assets reflects the taxation consequences that would follow from the manner in which the group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

A deferred taxation asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset will be utilised. Deferred taxation assets are reduced to the extent that it is no longer probable that the related taxation benefit will be realised.

Inventories Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling and distribution expenses.

The cost of inventories includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of manufactured inventories and work-in-progress, cost includes an appropriate share of overheads based on normal operating capacity.

Development properties comprise land valued at cost and development expenditure attributable to unsold properties.

Where necessary, the carrying amounts of inventory are adjusted for obsolete, slow-moving and defective inventories.

Non-current assets held for sale and discontinued operations Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. These assets may be a component of an entity, a disposal group or an individual non- current asset. Upon initial classification as held for sale, non-current assets and disposal groups are recognised at the lower of their carrying amount and fair value less costs to sell.

A discontinued operation is a component of the group's business that represents a separate major line of business or geographical area of operation or a subsidiary acquired exclusively with a view to resell. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale.

Share capital Preference shares Preference shares are classified as equity if they are non-redeemable and any dividends are discretionary, or are redeemable but only at the group's option. Dividends on preference share capital classified as equity are recognised as distributions within equity.

In order to calculate earnings attributable to ordinary shareholders, the amount of preference dividends for cumulative preference shares required for that period, whether or not declared, is deducted from profit attributable to equity holders in determining earnings per ordinary share.

23 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED SUMMARY OF ACCOUNTING POLICIES for the year ended 30 June 2015

The amount of preference dividends for the period used to calculate earnings per ordinary share does not include the amount of any preference dividends for cumulative preference shares paid or declared during the current period in respect of previous periods.

Preference share capital is classified as a liability if it is redeemable on a specific date or at the option of the shareholders or if dividend payments are not discretionary. Dividends thereon are recognised in accordance with the group's dividend policy.

Treasury shares When shares recognised as equity are purchased by group companies in their holding company and by the employee share trusts, the amount of the consideration paid, including directly attributable costs, is recognised as a change in equity. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to/from share premium.

Dividends Non-discretionary dividends on preference shares are recognised as a liability and recognised as an interest expense using the effective-interest method. Other dividends are recognised as a liability in the period in which they are declared.

Dividends received on treasury shares are eliminated on consolidation.

Share-based payment transactions Equity-settled The fair value of the deferred delivery shares and the share rights granted to employees is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and is expensed over the period during which the employees are required to provide services in order to become unconditionally entitled to the equity instruments. The fair value of the instruments granted is measured using generally accepted valuation techniques, taking into account the terms and conditions upon which the instruments are granted. The amount recognised as an expense is adjusted to reflect the actual number of deferred delivery shares and the share rights that vest, except where forfeiture is only due to share prices not achieving the threshold for vesting.

Group share-based payment transactions Transactions in which a parent grants rights to its equity instruments directly to the employees of its subsidiaries are classified as equity-settled in the financial statements of the subsidiary, provided the share-based payment is classified as equity-settled in the consolidated financial statements of the parent.

The subsidiary recognises the services acquired with the share-based payment as an expense and recognises a corresponding increase in equity representing a capital contribution from the parent for those services acquired. The parent recognises in equity the equity-settled share-based payment and recognises a corresponding increase in the investment in subsidiary.

A recharge arrangement exists whereby the subsidiary is required to fund the difference between the exercise price on the share right and the market price of the share at the time of exercising the right. The recharge arrangement is accounted for separately from the underlying equity-settled share- based payment as follows upon initial recognition: • The subsidiary recognises a share scheme settlement provision at fair value, using cash-settled share-based payment principles, and a corresponding adjustment against equity for the capital contribution recognised in respect of the share-based payment. • The parent recognises a corresponding share scheme settlement asset at fair value and a corresponding adjustment to the carrying amount of the investment in the subsidiary.

Subsequent to initial recognition, the recharge arrangement is remeasured at fair value at each subsequent reporting date until settlement date to the extent vested. Where the settlement provision recognised is greater than the initial capital contribution recognised by the subsidiary in respect of the share-based payment, the excess is recognised as a net capital distribution to the parent. The amount of the settlement asset in excess of the capital contribution recognised as an increase in the investment in subsidiary is deferred and recognised as dividend income by the parent when settled by the subsidiary.

24 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED SUMMARY OF ACCOUNTING POLICIES for the year ended 30 June 2015

Convertible bonds Bonds which are convertible to share capital, where the number of shares to be issued does not vary with changes in their fair value, are accounted for as compound financial instruments. Transaction costs that relate to the issue of a compound financial instrument are allocated to the liability and equity components in proportion to the allocation of the proceeds. The equity component of the convertible bonds is calculated as the excess of the issue proceeds over the present value of the future interest and principal payments, discounted at the market rate of interest applicable to similar liabilities that do not have a conversion option. The interest expense recognised in profit or loss is calculated using the effective-interest method.

Provisions Provisions are recognised when the group has a present constructive or legal obligation as a result of a past event, and when it is probable that it will result in an outflow of economic benefits that can be reasonably estimated.

If the effect is material, provisions are determined by discounting the expected future cash flows that reflect current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Warranties A provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data and a weighting of all possible outcomes against their associated probabilities.

Restructuring A provision for restructuring is recognised when the group has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced publicly. Future operating costs are not provided for.

Dilapidation and onerous contracts A provision for dilapidation and onerous contracts is recognised when the expected benefits to be derived by the group from a contract are lower than the unavoidable cost of meeting the obligation under the contract.

Foreign currency Foreign currency transactions Transactions in currencies other than the functional currency of entities are initially recorded at the rates of exchange ruling on the dates of the transactions. Monetary assets and liabilities denominated in such currencies are translated at the rates ruling on the reporting date. Foreign exchange differences arising on translation are recognised in profit or loss. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated at rates ruling at the dates the fair value was determined.

Financial statements of foreign operations The assets and liabilities of all foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated at rates of exchange ruling at the reporting date. The revenues and expenses of foreign operations are translated at rates approximating the foreign exchange rates ruling at the date of the transactions.

Foreign exchange differences arising on translation are recognised in other comprehensive income and aggregated in the foreign currency translation reserve (FCTR). The FCTR applicable to a foreign operation is released to profit or loss as a capital item upon disposal of that foreign operation.

Net investment in foreign operations Exchange differences arising from the translation of the net investment in foreign operations, and of related hedges, are recognised in other comprehensive income and accumulated in the FCTR. They are released to profit or loss as a capital item upon disposal of that foreign operation.

Financial instruments Initial recognition Financial assets and financial liabilities are recognised on the group's statement of financial position when the group becomes a party to the contractual provisions of the instrument.

25 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED SUMMARY OF ACCOUNTING POLICIES for the year ended 30 June 2015

Initial measurement All financial instruments are initially recognised at fair value, including transaction costs that are incremental to the group and directly attributable to the acquisition or issue of the financial asset or financial liability, except for those classified as fair value through profit or loss where the transaction costs are recognised immediately in profit or loss.

Subsequent measurement Financial instruments at fair value through profit or loss consist of items classified as held for trading or where they have been designated as fair value through profit or loss.

All financial liabilities, other than those at fair value through profit or loss, are classified as financial liabilities at amortised cost.

Loans and receivables are carried at amortised cost, with interest recognised in profit or loss for the period, using the effective-interest method.

Available-for-sale financial assets are measured at fair value, with any gains and losses recognised directly in equity along with the associated deferred taxation. Any foreign currency gains or losses, dividend income or interest revenue, measured on an effective-yield basis, are recognised in profit or loss.

Embedded derivatives Certain derivatives embedded in financial host contracts are treated as separate derivatives and recognised on a standalone basis, when their risks and characteristics are not closely related to those of the host contract and the host contract is not carried at fair value, with gains and losses reported in profit or loss.

Derecognition The group derecognises a financial asset when the rights to receive cash flows from the asset have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership.

A financial liability is derecognised when, and only when, the liability is extinguished, i.e. when the obligation specified in the contract is discharged, cancelled or has expired.

Impairment of financial assets An impairment loss for loans and receivables is recognised in profit or loss when there is evidence that the group will not be able to collect all amounts due according to the original terms of the receivables.

When there is objective evidence that an available-for-sale financial asset is impaired, the cumulative unrealised gains and losses recognised in equity are reclassified to profit or loss, even though the financial asset has not been derecognised. Impairment losses are only reversed in a subsequent period if the fair value increases due to an objective event occurring since the loss was recognised. Impairment reversals other than available-for-sale debt securities are not reversed through profit or loss but through other comprehensive income.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets, with the exception of trade and other receivables, where the carrying amount is reduced through the use of an allowance account. When trade and other receivables are considered uncollectible, they are written off against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

Instalment sale and loan receivables, such as up-to-date and early-stage delinquent trade receivables, i.e. assets that are assessed not to be impaired individually, are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables includes the level of arrears of a customer, part payment of instalments or missed instalments, as well as observable changes in national or economic conditions that correlate with defaults on receivables.

26 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED SUMMARY OF ACCOUNTING POLICIES for the year ended 30 June 2015

Effective-interest method The effective-interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of a financial instrument, or, where appropriate, a shorter period.

Hedge accounting The group designates certain hedging instruments, which include derivatives, embedded derivatives and non-derivatives in respect of foreign currency risk, as either fair value hedges, cash flow hedges, or hedges of net investments in foreign operations. Hedges in foreign exchange risk on firm commitments are accounted for as cash flow hedges.

Fair value hedges Changes in fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit or loss immediately, together with any changes in fair value of the hedged item that are attributable to the hedged risk.

Cash flow hedges The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are deferred in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.

Amounts deferred in other comprehensive income are recycled to profit or loss in the periods when the hedged item is recognised in profit or loss, and it is included in the same line of the income statement as the recognised hedged item.

Hedges of net investments in foreign operations Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive income in the FCTR. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.

Gains and losses deferred in the FCTR are recognised in profit or loss on disposal of the foreign operation.

Insurance contracts Classification of contracts Contracts, under which the group accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder or other beneficiary, if a specified uncertain future event (the insured event) adversely affects the policyholder or other beneficiary, are classified as insurance contracts. Insurance risk is risk other than financial risk. Financial risk is the risk of a possible future change in one or more of a specified interest rate, security price, commodity price, foreign exchange rate, index of prices or rates, a credit rating or credit index or other variable, provided in the case of a non-financial variable it is not specific to a party to the contract. Insurance contracts may also transfer some financial risk.

Premiums Written premiums comprise the premiums on contracts (including inward reinsurance) entered into during the year, irrespective of whether they relate in whole or in part to a later accounting period. Premiums are disclosed gross of commission payable to intermediaries and exclude value added taxation.

The earned portion of premiums received is recognised as revenue. Premiums are earned from the date of attachment of risk, over the indemnity period, based on the pattern of risks underwritten.

Unearned premium provision The provision for unearned premiums comprises the proportion of gross premiums written, which is estimated to be earned in the following or subsequent financial years, computed separately for each insurance contract using the daily pro rata method.

Claims Claims incurred in respect of general business consist of claims and claims handling expenses paid during the financial year, together with the movement in the provision for outstanding claims.

27 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED SUMMARY OF ACCOUNTING POLICIES for the year ended 30 June 2015

The outstanding claims provision comprises provisions for the group’s estimate of the ultimate cost of settling all claims incurred but unpaid at the reporting date whether reported or not, and related internal and external claims handling expenses.

Deferred acquisition costs Acquisition costs comprise all direct and indirect costs arising from the conclusion of insurance contracts. Deferred acquisition costs represent the portion of acquisition costs incurred that correspond to the unearned premium provision.

Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

Goods sold and services rendered Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer. Revenue from services rendered is recognised in profit or loss in proportion to the stage of completion of the transaction at reporting date. The stage of completion is assessed by reference to surveys of the work performed.

Revenue is not recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods as well as continuing management involvement with goods to a degree usually associated with ownership. Where the group acts as agent and is remunerated on a commission basis, only the commission income, and not the value of the business transaction, is included in revenue.

The recovery of duties and taxes payable on imports and exports are not recognised in revenue but netted off against the expense paid on behalf of the customer.

Insurance premiums Insurance premiums are stated before deducting reinsurances and commissions and are accounted for when they become due.

Interest Interest is recognised on the time proportion basis, taking account of the principal debt outstanding and the effective rate over the period to maturity.

Rental income Rental income is recognised in profit or loss on a straight-line basis over the term of the lease.

Dividend income Dividend income from investments is recognised when the right to receive payment has been established.

Royalty income Royalty income is recognised on an accrual basis in accordance with the substance of the relevant agreement.

Operating leases Payments and receipts under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.

Segmental reporting A segment is a distinguishable component of the group that is engaged in providing products or services that are subject to risks and rewards that are different from those of other segments. The basis of segmental reporting is representative of the internal structure used for management reporting as well as the structure in which the chief operating decision-makers review the information.

The basis of segmental allocation is determined as follows: • Revenue that can be directly attributed to a segment and the relevant portion of the profit that can be allocated on a reasonable basis to a segment. • Segmental assets are those assets that are employed by a segment in its operating activities and that are either directly attributable to the segment or can be allocated to the segment on a reasonable basis. Segmental assets exclude investments in equity accounted companies, investments and loans, cash and cash equivalents, assets of discontinued operations and assets held for sale.

28 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED JUDGEMENTS AND ESTIMATES for the year ended 30 June 2015

Judgements and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities during the next financial year are discussed below.

Useful lives and residual values The estimated useful lives for intangible assets with a finite life, property, plant and equipment and vehicle rental fleet are:

Intangible assets Customer relationship and trade and brand names 10 - 20 years Contracts and licences Over the term of the contract or project Software 1 - 8 years

Patents, trademarks, trade names and brand names, which are considered to be well-established growing brands and product lines for which there is no foreseeable limit to the period in which these assets are expected to generate cash flows, are classified as indefinite useful life assets. The classification of such assets is reviewed annually.

Indefinite useful life intangible assets, excluding goodwill, recognised at fair value in business combinations, are expected to generate cash flows indefinitely and the carrying value would only be recovered in the event of disposal of such assets. Accordingly, deferred taxation is raised at the capital gains taxation rate on the fair value of such assets exceeding its taxation base.

Property, plant and equipment Buildings 5 - 80 years Computer equipment 2 - 4 years Motor vehicles 4 - 10 years Office equipment and furniture 3 - 16 years Plant and machinery 3 - 60 years Vehicle rental fleet Over the period of the buy-back agreement or estimated holding period

The estimated useful lives and residual values are reviewed annually, taking cognisance of the forecasted commercial and economic realities and through benchmarking of accounting treatments in the specific industries where these assets are used.

Impairment of assets Investments, goodwill, property, plant and equipment, investment property and intangible assets that have an indefinite useful life, and intangible assets that are not yet ready for use, are assessed annually for impairment.

Deferred taxation assets Deferred taxation assets are recognised to the extent that it is probable that taxable income will be available in the future against which these can be utilised. Future taxable profits are estimated based on business plans that include estimates and assumptions regarding economic growth, interest, inflation, taxation rates and competitive forces.

Contingent liabilities Management applies its judgement to the fact patterns and advice it receives from its attorneys, advocates and other advisors in assessing whether an obligation is probable, more likely than not, or remote. This judgement application is used to determine whether the obligation is recognised as a liability or disclosed as a contingent liability.

Valuation of equity compensation benefits Management classifies its share-based payment scheme as an equity-settled scheme, based on the assessment of its role and that of the employees in the transaction. In applying its judgement, management consulted with external expert advisors in the accounting and share-based payment advisory industry. The critical assumptions, as used in the valuation model, are detailed in note 17.6.

29 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED JUDGEMENTS AND ESTIMATES for the year ended 30 June 2015

Post-employment benefit obligations In applying its judgement to defined benefit plans, management consulted with external expert advisors in the accounting and post-employment benefit obligation industry. The critical estimates, as used in each benefit plan, are detailed in note 21.

Consolidation of special-purpose entities Certain special-purpose entities established as part of the B-BBEE transactions have been consolidated as part of the group results. The group does not have any significant direct or indirect shareholding in these entities, but the substance of the relationship between the group and these entities was assessed and judgement was made that these are controlled entities.

Buy-back lease commitments When a buy-back agreement is entered into, a provision is raised in respect of future reconditioning costs that may be incurred before the vehicle is made available for sale. Management based this provision on historical data and past experience.

Provision for bad debts The provision for bad debts was based on a combination of specifically identified doubtful debtors and providing for older debtors.

A provision for bad debts held against instalment sales receivables is raised when there is objective evidence that the assets are impaired. Factors taken into account to determine impairment of an asset are the level of arrears, part payment of instalments or missed instalments. Estimated future cash flows, that are discounted at the effective interest rate, are determined utilising past payment history and probability of default.

Fair values in business combinations Management uses valuation techniques to determine the fair value of assets, liabilities and contingent liabilities acquired in business combination. Fair value of property, plant and equipment is determined by using external valuations as well as rental return on property.

Although a comprehensive valuation exercise is performed for each business combination, the group applies initial accounting for its business combinations that will allow the group a period of one year after the acquisition date to adjust the provisional amounts recognised for a business combination.

Claims made under insurance contracts The operations’ estimates for reported and unreported losses and establishing resulting provisions are continually reviewed and updated, and adjustments resulting from this review are reflected in income. The process relies upon the basic assumption that past experience adjusted for the effect of current developments and likely trends is an appropriate basis for predicting future events.

The process used to determine the assumptions is intended to result in estimates of the most likely or expected outcome. The sources of data used as input for the assumptions are internal, using detailed studies that are carried out annually. The assumptions are checked to ensure that they are consistent with observable market prices or other published information.

The nature of the business makes it relatively easy to predict the likely outcome of claims and the ultimate cost of notified claims. Each notified claim is assessed on a separate, case-by-case basis with due regard to the claim circumstances, information available from loss adjusters and historical evidence of the size of similar claims. Case estimates are reviewed regularly and are updated as and when new information arises. The provisions are based on information currently available. However, the ultimate liabilities may vary as a result of subsequent developments.

30 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Gross of Gross of taxation and Net of taxation taxation and Net of taxation non- and non- non- and non- controlling controlling controlling controlling interests interests interests interests 2015 2015 2014 2014 Rm Rm Rm Rm

1. CAPITAL ITEMS

Continuing operations Capital items reflect and affect the resources committed in producing operating/trading performance and are not the performance itself. These items deal with the platform/capital base of the entity.

(Income)/expenses of a capital nature are included in the 'capital items' line in the income statement. These (income)/expense items are:

1.1 Foreign currency translation reserve released on disposal of subsidiary - - 6 6

1.2 Gain on bargain purchase - - (1) (1)

1.3 Impairment 910 891 76 71 Goodwill 823 823 14 14 Intangible assets 52 37 - - Property, plant and equipment 10 7 14 9 Other 25 24 48 48

1.4 Loss on disposal of intangible assets 15 11 45 31

1.5 Loss on scrapping of vehicle rental fleet 13 8 3 1

1.6 Loss on disposal of property, plant and equipment 76 54 22 10

1.7 Profit on sale and dilution of investments (3 527) (3 527) (1 651) (1 068) (2 513) (2 563) (1 500) (950)

31 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Rm Rm

2. OPERATING PROFIT

Continuing operations Operating profit is stated after taking account of the following items:

2.1 Amortisation and depreciation Amortisation 234 198 Depreciation 1 988 1 818 2 222 2 016 Recognised in: Cost of sales 94 75 Distribution expenses 1 087 1 066 Other operating expenses 1 041 875 2 222 2 016

2.2 Auditor's remuneration Audit fees 86 74 Expenses 15 11 Fees for other services 16 7 (Over)/underprovision in prior year (9) 1 108 93

2.3 Personnel expenses Retirement plans (note 2.4) 343 245 Salaries and wages 20 562 17 436 Share-based payments - equity-settled (note 17.6) 393 248 21 298 17 929

2.4 Post-retirement benefit expenses Contributions to defined benefit plans 189 91 Contributions to defined contribution plans 154 154 343 245

2.5 Net foreign exchange (gains)/losses Net (gain)/loss on forward exchange contracts (47) 57 Net gain on conversion of monetary assets - realised (1 058) (180) Net loss/(gain) on conversion of monetary assets - unrealised 88 (123) (1 017) (246)

2.6 Fair value (gains)/losses (excluding forward exchange contracts) Fair value adjustment on cross-currency and interest rate swaps (13) 58 Fair value adjustment on note purchase agreements (4) (136) Fair value adjustment on financial assets through profit or loss (487) (10) (504) (88)

2.7 Operating lease charges - properties Rental of properties 4 277 3 057 Rental recovered from third parties on long-term leases (96) (80) 4 181 2 977

2.8 Operating lease charges - other Leases of plant, equipment, vehicles and other 470 424

2.9 Number of employees 91 114 55 876

32 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Net (income)/ Expense Income expense Rm Rm Rm

3. FINANCE COSTS AND INCOME FROM INVESTMENTS

Continuing operations 2015 Dividends received - (79) (79) Interest Banks 376 (617) (241) Convertible bonds 1 558 - 1 558 Loans 1 328 (1 231) 97 Other 568 (144) 424 3 830 (2 071) 1 759 2014 Dividends received - (3) (3) Interest Banks 652 (477) 175 Convertible bonds 1 562 - 1 562 Loans 961 (811) 150 Other 311 (200) 111 3 486 (1 491) 1 995

2015 2014 Rm Rm

4. TAXATION

Continuing operations 4.1 Taxation charge Normal taxation South African normal taxation - current year 989 301 South African normal taxation - prior year adjustment (30) 72 Foreign normal taxation - current year 1 311 823 2 270 1 196

Deferred taxation South African deferred taxation - current year (684) 416 South African deferred taxation - prior year adjustment (7) (77) Foreign deferred taxation - current year (241) 419 Foreign deferred taxation - prior year adjustment 5 - (927) 758 1 343 1 954

For detail on deferred taxation assets/(liabilities) refer to note 13.

% %

4.2 Reconciliation of rate of taxation South African standard rate of taxation 28.0 28.0 Effect of different statutory taxation rates of subsidiaries in other jurisdictions (13.2) (12.2) Effect of profit of equity accounted companies (0.9) (0.7) Net creation of unrecognised taxation losses and deductible temporary differences 2.4 0.1 Permanent differences and other (8.2) 0.5 Effective rate of taxation 8.1 15.7

33 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

5. DISCONTINUED OPERATIONS

5.1 Disposal of KAP and JD Group's Financial Services division During the 2014 year, Steinhoff announced that it had disposed of 400 million shares in KAP, which resulted in Steinhoff's interest decreasing to 45%. As a result, KAP was no longer controlled by Steinhoff and was equity accounted effective 30 June 2014. For the 2014 year, KAP is disclosed as a discontinued operation. For the 2015 year, KAP is disclosed as an associate company.

During the 2014 year, JD Group accepted an offer from an international consumer finance provider to dispose, subject to conditions precedent, JD Group's Financial Services division.

On 20 May 2015, the Competition Tribunal approved the transaction after imposing employee-related conditions applicable to both the acquiring entity and JD Group. The conditions are being assessed, reviewed and considered by both the shareholders and management of both parties. This process, which is ongoing, has resulted in the transaction completion date being extended beyond one year from initial recognition of the business as a disposal group.

Accordingly, JD Group's Financial Services division is shown as a discontinued operation in the results for all years presented. The assets and the liabilities of JD Group's Financial Services division are disclosed as assets and liabilities held for sale in the statement of financial position. Details of the assets and liabilities classified as a disposal group are included in note 16.

5.2 Analysis of loss for the year from discontinued operations The results of the discontinued operations included in the income statement are set out below.

2015 2014 Rm Rm Revenue 2 099 18 501 Cost of sales - (12 503) Gross profit 2 099 5 998 Other operating income - 514 Distribution expenses - (511) Other operating expenses (4 236) (6 310) Capital items (note 5.3) 80 6 Operating loss (2 057) (303) Net finance costs (92) (596) Share of loss of equity accounted companies - (5) Loss before taxation (2 149) (904) Taxation 284 307 (1 865) (597) Loss on disposal of discontinued operations (313) (229) Attributable income taxation 38 226 Loss for the year from discontinued operations (2 140) (600)

Loss from discontinued operations attributable to: Owners of the parent (1 821) (265) Non-controlling interests (319) (335) (2 140) (600)

34 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

5.3 Capital items for the year from discontinued operations Profit on sale of investments - - (94) (53) (Reversal of impairment)/impairment (80) (56) 78 40 Loss on disposal of property, plant and equipment - - 10 (1) Capital items per income statement (80) (56) (6) (14) Loss on disposal of discontinued operations 313 237 229 (79) 233 181 223 (93)

2015 2014 Rm Rm

5.4 Cash flows from discontinued operations Net cash inflow from operating activities 406 1 218 Net cash outflow from investing activities (3) (864) Net cash outflow from financing activities (403) (794) Net cash outflow - (440)

35 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Cents Cents

6. EARNINGS PER SHARE

The calculation of per share numbers uses the exact unrounded numbers, which may result in differences when compared to calculating the numbers using the rounded number of shares and earnings as disclosed below.

Basic earnings per share Basic earnings per share is calculated by dividing the net earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year, excluding shares purchased by the group and held as treasury shares.

From continuing operations 546.3 510.2 From discontinued operations (66.6) (13.4) Basic earnings per share 479.7 496.8

Diluted earnings per share Diluted earnings per share is calculated by dividing the diluted earnings attributable to ordinary shareholders by the diluted weighted average number of ordinary shares in issue during the year. The calculation assumes conversion of all dilutive potential shares, regardless of whether the applicable market price triggers have been met. The calculation does not recognise any funds to be received from the exercise of allocated rights or any projected growth in attributable earnings arising from such additional funds, which could compensate for any dilution in earnings per share.

From continuing operations 498.3 455.2 From discontinued operations (56.3) (10.9) Diluted earnings per share 442.0 444.3

Headline earnings per share Headline earnings is an additional earnings number that is permitted by IAS 33 - Earnings per Share. The starting point is earnings as determined in IAS 33, excluding separately identifiable remeasurements, net of related taxation (both current and deferred) and related non-controlling interests other than remeasurements specifically included in headline earnings.

Separately identifiable remeasurements are those where the applicable IFRS explicitly requires separate disclosure of the operating and/or the platform remeasurement in the consolidated financial statements. No adjustments would be permitted on the basis of voluntary disclosure of gains or losses (or components of these).

Headline earnings per share is calculated by dividing the headline earnings by the weighted average number of ordinary shares in issue during the year.

From continuing operations 453.7 461.7 From discontinued operations (59.9) (18.2) Headline earnings per share 393.8 443.5

36 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Cents Cents

Diluted headline earnings per share Diluted headline earnings per share is calculated by dividing the diluted headline earnings by the diluted weighted average number of shares in issue during the year.

From continuing operations 420.1 416.7 From discontinued operations (50.7) (14.7) Diluted headline earnings per share 369.4 402.0

Net asset value per share Net asset value per ordinary share is calculated by dividing the ordinary shareholders' equity, adjusted by the cumulative preference shares, by the number of ordinary shares in issue at year-end.

Net asset value per share 4 825 3 946

Million Million

6.1 Weighted average number of ordinary shares Issued ordinary shares at beginning of the year 2 110 1 836 Effect of own shares held (10) (11) Effect of own shares held as prepayment (58) - Effect of rights issue and accelerated bookbuild 333 19 Effect of shares issued 362 133 Weighted average number of ordinary shares at end of the year for the purpose of basic earnings per share and headline earnings per share 2 737 1 977 Effect of dilutive potential ordinary shares - convertible bonds1 473 486 Effect of dilutive potential ordinary shares - other 25 25 Weighted average number of ordinary shares for the purpose of diluted earnings per share and diluted headline earnings per share 3 235 2 488

1 All the ordinary shares underlying the convertible bonds are treated as dilutive potential ordinary shares, without taking into account the probability of conversion.

Continuing Discontinued operations operations Total Rm Rm Rm

6.2 Earnings and headline earnings attributable to owners of the parent 2015 Earnings for the year attributable to owners of the parent 15 204 (1 821) 13 383 Dividend entitlement on cumulative preference shares (254) - (254) Earnings attributable to owners of the parent 14 950 (1 821) 13 129 Adjusted for capital items of equity accounted companies 31 - 31 Adjusted for capital items (note 1 and note 5.3) (2 563) 181 (2 382) Headline earnings attributable to owners of the parent 12 418 (1 640) 10 778 2014 Earnings for the year attributable to owners of the parent 10 355 (265) 10 090 Dividend entitlement on cumulative preference shares (269) - (269) Earnings attributable to owners of the parent 10 086 (265) 9 821 Adjusted for capital items of equity accounted companies (8) - (8) Adjusted for capital items (note 1 and note 5.3) (950) (93) (1 043) Headline earnings attributable to owners of the parent 9 128 (358) 8 770

37 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Continuing Discontinued operations operations Total Rm Rm Rm

6.3 Diluted earnings and diluted headline earnings attributable to owners of the parent 2015 Earnings attributable to owners of the parent 14 950 (1 821) 13 129 Dilutive adjustment on earnings - convertible bonds1 1 170 - 1 170 Diluted earnings attributable to owners of the parent 16 120 (1 821) 14 299 Adjusted for capital items of equity accounted companies 31 - 31 Adjusted for capital items (note 1 and note 5.3) (2 563) 181 (2 382) Diluted headline earnings attributable to owners of the parent 13 588 (1 640) 11 948 2014 Earnings attributable to owners of the parent 10 086 (265) 9 821 Dilutive adjustment on earnings - convertible bonds1 1 228 - 1 228 Dilutive adjustment on earnings - other 10 (5) 5 Diluted earnings attributable to owners of the parent 11 324 (270) 11 054 Adjusted for capital items of equity accounted companies (8) - (8) Adjusted for capital items (note 1 and note 5.3) (950) (93) (1 043) Diluted headline earnings attributable to owners of the parent 10 366 (363) 10 003

1 All the ordinary shares underlying the convertible bonds are treated as dilutive potential ordinary shares, without taking into account the probability of conversion.

2015 2014 Rm Rm

6.4 Net asset value Attributable to owners of the parent 181 083 86 235 Preference stated share capital (4 882) (3 381) Attributable to ordinary shareholders 176 201 82 854

38 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Cents Cents

7. DISTRIBUTION TO SHAREHOLDERS

7.1 Cash dividend to ordinary shareholders The board has approved and declared a cash dividend from retained earnings of 165 cents per share (the Dividend). Shareholders will, however, be entitled to decline the Dividend or any part thereof and instead elect to receive a capitalisation issue alternative (the Capitalisation Issue Alternative). The Dividend and Capitalisation Issue Alternative for the year ended 30 June 2015 will be paid or issued to shareholders registered as such in Steinhoff’s share register at the close of business on Friday, 13 November 2015 (the Record Date) (2014: The board declared a cash dividend from retained earnings of 150 cents). 165 150

7.2 Distribution to Steinhoff Investment preference shareholders A preference dividend in respect of the period 1 January 2014 to 30 June 2014 (2014: 1 January 2013 to 30 June 2013) was paid on 27 October 2014 (2014: 28 October 2013) to those Steinhoff Investment preference shareholders recorded in the books of the company at the close of business on 24 October 2014 (2014: 25 October 2013). 365 348

A preference dividend in respect of the period 1 July 2014 to 31 December 2014 (2014: 1 July 2013 to 31 December 2013) was paid on 20 April 2015 (2014: 22 April 2014) to those Steinhoff Investment preference shareholders recorded in the books of the company at the close of business on 17 April 2015 (2014: 17 April 2014). 384 354

The directors of Steinhoff Investment have resolved to declare and pay preference dividends on 19 October 2015 (2014: 27 October 2014) for the period 1 January 2015 to 30 June 2015 (2014: 1 January 2014 to 30 June 2014) to those Steinhoff Investment preference shareholders recorded in the books of the company at the close of business on 16 October 2015 (2014: 24 October 2014). 378 365

39 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Rm Rm

8. GOODWILL

Carrying amount at beginning of the year 27 810 18 850 Arising on business combinations (note 25) 54 474 7 295 Goodwill attributable to acquisition at offer price 45 595 7 295 Goodwill attributable to share price increase 8 879 - Additional goodwill raised and transferred on completion of IFRS 3 valuation 268 - Disposal of subsidiaries (note 26) - (209) Transfer to assets classified as held for sale - (767) Impairments (823) (15) Exchange differences on consolidation of foreign subsidiaries (1 227) 2 656 Carrying amount at end of the year 80 502 27 810

Cost 81 487 27 976 Accumulated impairment (985) (166) Carrying amount at end of the year 80 502 27 810

When the group acquires a business that qualifies as a business combination in respect of IFRS 3 - Business Combinations, the group allocates the purchase price paid to the assets acquired, including identifiable intangible assets, and the liabilities assumed. Any excess of the aggregate of the consideration transferred, non-controlling interest in the acquiree and for a business combination achieved in stages, the acquisition-date fair value of the acquirer's previously held equity interest in the acquiree, over the fair value of those net assets, is considered to be goodwill. The goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating unit (CGU) that is expected to benefit from that business. Goodwill is assessed for impairment annually, irrespective of whether there is any indication of impairment.

Goodwill attributable to share price increase The increase in the Steinhoff share price between the initial Pepkor purchase agreement (R57.00 per share) and the accounting recognition date, 31 March 2015 (R67.58), gave rise to an additional consideration recognised for accounting purposes of R8 879 million on the transaction.

Review of impairment The impairment test compares the carrying amount of the unit, including goodwill, both goodwill attributable to acquisition at offer price and goodwill attributable to share price increase, to the value-in-use, or fair value of the unit. The recoverable amount of the CGU is determined from the value-in-use calculation. The key assumptions for the value in use calculation are those regarding the discount rates, growth rates and the expected changes to the selling prices and the direct costs during the period. The discount rates are based on the weighted average cost of capital, while growth rates are based on management's experience and expectations. Growth rates used do not exceed the long-term average growth rate for the area in which the CGU operates. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market and are derived from the most recent financial budgets and forecasts that have been prepared by management.

Where an intangible asset, such as a trademark, trade name and brand name and/or patent, has been assessed as having an indefinite useful life (see accounting policies), the cash flow of the CGU, supporting the goodwill and driven by the trademark, brand or patent is also assumed to be indefinite.

An impairment charge is required for both goodwill and other indefinite life intangible assets when the carrying amount exceeds the recoverable amount. An impairment charge of R823 million was recorded for the year ended 30 June 2015 (2014: R15 million). It mainly relates to JD Group, which is included in the Integrated retail: Household goods segment.

The group prepared cash flow forecasts derived from the most recent financial budgets approved by management for the next year and extrapolated cash flows for the following years based on an estimated growth rate as set out on the next page.

All impairment testing was consistent with methods applied as at 30 June 2014.

40 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Impairment tests for CGUs containing goodwill The following units have significant carrying amounts of goodwill: Pre-tax Post-tax 2015 2014 discount rate discount rate Forecasted cash flows Rm Rm

Integrated retail: Household goods Europe Conforama Holdings S.A. 3.35% 2.58% Budget years 1 to 3, thereafter 10 890 11 076 1.0% growth rate. Steinhoff Retail GmbH (Austria) 2.39% - 3.16% 2.07% - 2.53% Budget years 1 to 3, thereafter 9 083 9 652 1.0% growth rate. Pacific Rim Steinhoff Asia Pacific 10.50% 8.08% Budget year 1, thereafter growth 1 387 1 412 for sales of 3.5% and growth of expenses of 2.5% until year 5, and thereafter zero sales growth with a reduced discount rate.

Africa JD Group Limited1 - 935 United Kingdom Alvaglen Estates Limited 6.83% 5.60% Budget years 1 to 3, thereafter 166 159 1.0% growth rate. JWC (International) Limited 6.83% 5.60% Budget year 1, thereafter growth 163 175 of 2.7% until year 3 and thereafter 1.0% growth rate. Steinhoff UK Holdings 6.83% 5.60% Budget year 1 to 3, thereafter 4 550 4 339 2.7% growth rate. Other 149 62 Integrated retail: General merchandise Pepkor Holdings Proprietary 11.46% 11.11% Budget years 1 to 3, thereafter 54 114 - Limited2 decreasing growth rates to year 10, and a growth rate of 4.5% thereafter. Carrying amount at end of the year 80 502 27 810

1 The goodwill relating to JD Group was fully impaired during the year and is included in capital items (note 1). Goodwill relating to individual businesses in JD Group are included in Integrated retail: Household goods: other. 2 The goodwill relating to Pepkor was measured as the sum of the parts of the African, Australian and European businesses. The discount rates disclosed are calculated as the weighted average of the businesses, based on the size of the businesses.

The impairment models were prepared on the same basis as the comparative year. Discount rates reduced in line with the decrease in global risk- free interest rates. The forecast cash flow periods and other inputs are all consistent with those of the comparative year.

Sensitivity analysis Management has adjusted the cash flows of each CGU for entity-specific risk factors to arrive at the future cash flows expected to be generated from the CGU. There is no indication based on a reasonable fluctuation in those risk factors that the goodwill of the CGUs is further impaired.

41 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Dealership Trade and Software and agreements brand names ERP systems and other Total Rm Rm Rm Rm

9. INTANGIBLE ASSETS

Balance at 1 July 2013 37 702 1 124 2 759 41 585 Additions - 369 10 379 Amortisation (5) (215) (70) (290) Disposals - (52) - (52) Acquired on acquisition of subsidiaries (note 25) - 61 2 63 Disposal of subsidiaries (note 26) (6 896) (27) (1 054) (7 977) Impairment - - (32) (32) Transfer to assets classified as held for sale - (171) (8) (179) Transfer (to)/from property, plant and equipment (2) 86 - 84 Exchange differences on consolidation of foreign subsidiaries 4 623 101 1 4 725 Balance at 30 June 2014 35 422 1 276 1 608 38 306 Additions - 258 - 258 Amortisation (5) (224) (5) (234) Disposals - (16) - (16) Acquired on acquisition of subsidiaries (note 25) 18 434 5 - 18 439 Impairment (48) (4) - (52) Transfer to assets classified as held for sale - (77) - (77) Transfer to goodwill - (33) - (33) Exchange differences on consolidation of foreign subsidiaries (1 968) (51) (2) (2 021) Balance at 30 June 2015 51 835 1 134 1 601 54 570

Cost 35 441 2 357 1 715 39 513 Amortisation and impairment (19) (1 081) (107) (1 207) Net book value at 30 June 2014 35 422 1 276 1 608 38 306

Cost 51 910 2 372 1 704 55 986 Amortisation and impairment (75) (1 238) (103) (1 416) Net book value at 30 June 2015 51 835 1 134 1 601 54 570

Patents and trademarks have been aggregated with dealership agreements and other.

42 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Review of impairment In determining the appropriate methodology to be adopted in the valuation of the value in use of the majority of the group's intangible assets, the relief from royalty approach was considered to be the most applicable as a primary valuation methodology, because it is predominantly and widely used as a basis for the structuring of licensing agreements both locally in the countries where these intangible assets originate and internationally, and this approach is generally accepted internationally as a reliable means of valuing trademarks.

IAS 38 - Intangible Assets (IAS 38) gives guidance on how the fair value of intangible assets can be determined. The guidance has been applied throughout the valuation of the trade names, brand names and trademarks. Impairment tests typically take into account the most recent management forecast whereafter a reasonable rate of growth is applied based on market and industry conditions. Discount rates used in the discounted cash flow models are based on a weighted average cost of capital, while royalty rates used are determined with reference to industry benchmarks.

Impairment All intangible assets were tested for impairment during the year under review, and a R52 million impairment was recognised (2014: R32 million).

All impairment testing was done consistently with methods used in the prior year. The inputs to the models are classified as level 3 in the fair value hierarchy.

Useful lives Under IAS 38, the useful life of an asset is either finite or indefinite. An indefinite life does not mean an infinite useful life, but rather that there is no foreseeable limit to the period over which the asset can be expected to generate cash flows for the entity. Intangible assets with an indefinite useful life are not amortised; they are tested for impairment at least annually.

The majority of the group's trade names, brand names and/or trademarks have been assessed as having an indefinite useful life. The majority of these trade names and brand names were assessed independently at the time of the acquisitions, and the indefinite useful life assumptions were supported by the following evidence: • The industry is a mature, well-established industry. • The trade names, brand names and/or trademarks are long established relative to the market and have been in existence for a long time. • The intangible assets relate to trade names, brand names, trademarks and patents rather than products and are therefore not vulnerable to typical product lifecycles or to the technical, technological, commercial or other types of obsolescence that can be seen to limit the useful lives of other trade names and brand names. • There is a relatively low turnover of comparable intangible assets, implying stability within the industry.

Royalty rates The royalty rate represents the assumed amount which would be paid to the owner of the intangible asset as a royalty fee, expressed as a percentage of revenue, for the use of the intangible asset. It is necessary to look to the industry in which the brand is operational to determine an appropriate notional royalty rate.

A database search of the RoyaltySource Intellectual Property Database for comparable worldwide licensing or franchising transactions of trademarks in the retail industry, focusing on furniture and/or household goods, revealed royalty rates varying from 2.5% to 5.0%, with an average rate of 4.0%. The royalty rates used in assessing the value in use of the Steinhoff trade names and brand names all fall within or below this recommended range and vary from 0.25% to 4.0%.

Dealership agreements Dealerships are expected to continue trading with the group as there have been no major changes in the operating environment of the group or the dealers. No material changes have taken place and there is no foreseeable limit to the period over which the asset is expected to generate cash flows, therefore dealership agreements have been determined to have indefinite useful lives. A discounted cash flow valuation was performed, which used management forecasts for three years. The pre-taxation discount rate used to test for impairment is 10.5%, and cash flows were expected to grow at 5.5%.

43 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Office and computer Leasehold equipment, Investment Land and Plant and Capital work- improve furniture and property buildings machinery in-progress -ments other assets Total Rm Rm Rm Rm Rm Rm Rm

10. PROPERTY, PLANT AND EQUIPMENT

Balance at 1 July 2013 480 34 171 1 602 939 3 655 4 530 45 377 Additions 13 1 815 271 421 973 1 462 4 955 Reclassification to assets held for sale (20) - (11) (3) - (18) (52) Depreciation - (315) (225) - (822) (1 080) (2 442) Disposals (27) (213) (12) (11) (85) (134) (482) Impairment - - (27) - (39) 22 (44) Acquisition of subsidiary companies (note 25) - 8 760 4 155 70 8 8 997 Disposal of subsidiary companies (note 26) (19) (1 574) (1 626) (82) (33) (3 428) (6 762) Reclassification - (153) 390 (796) 384 175 - Transfer (to)/from intangible assets - - - (94) - 10 (84) Exchange differences on consolidation of foreign subsidiaries - 4 315 27 35 428 154 4 959 Balance at 30 June 2014 427 46 806 393 564 4 531 1 701 54 422 Additions 167 1 288 360 1 099 869 898 4 681 Depreciation - (142) (224) - (892) (590) (1 848) Disposals (3) (105) (19) (18) (93) (49) (287) Impairment - - - - - (10) (10) Acquisition of subsidiary companies (note 25) - 1 325 2 360 - 550 224 4 459 Disposal of subsidiary companies (note 26) - (30) - - - - (30) Reclassification 387 (1 511) (98) (553) 1 281 494 - Transfer to goodwill - - - (17) - (18) (35) Transfer to inventories - (31) - (7) - (7) (45) Exchange differences on consolidation of foreign subsidiaries - (2 821) 105 (32) (216) (49) (3 013) Balance at 30 June 2015 978 44 779 2 877 1 036 6 030 2 594 58 294

Cost 427 48 829 970 564 7 928 4 129 62 847 Accumulated depreciation and impairment - (2 023) (577) - (3 397) (2 428) (8 425) Net book value at 30 June 2014 427 46 806 393 564 4 531 1 701 54 422

Cost 978 45 758 6 078 1 036 10 336 6 339 70 525 Accumulated depreciation and impairment - (979) (3 201) - (4 306) (3 745) (12 231) Net book value at 30 June 2015 978 44 779 2 877 1 036 6 030 2 594 58 294

The investment property note has been combined with property, plant and equipment note. Long-haul motor vehicles, bus fleet and equipment have been aggregated with office and computer equipment, furniture and other assets.

44 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Investment property No depreciation was recognised on investment property in the current or prior years as the residual values exceeded the carrying values of all properties classified as investment property.

At 30 June 2015, investment property was valued by management at R1 364 million (2014: R548 million). The fair valuation of the group's investment has been carried out by Steinhoff Properties. Steinhoff Properties has adequate knowledge and experience to value the properties and therefore an independent valuator was not used. The fair value was based on the income approach whereby the market-related net income of the property is discounted at the market yield for a similar property. The market yields used in the valuation ranged between 9.00% and 12.00% (2014: 9.00% and 11.25%). In estimating the fair value of investment properties, the highest and best use for the majority of the properties is their current use. There has been no change to the valuation technique since the previous year.

The fair value of investment property is classified as level 3, based on the fair value hierarchy. There were no transfers between the levels during the year.

No restrictions exist on the sale of investment property.

There are no material contractual obligations to purchase, construct or develop investment property. There are, however, service level agreements and building maintenance contracts in place with third-party contractors for security, repairs, maintenance and minor enhancements.

Land and buildings Details of land and buildings are available for inspection by shareholders on request at the various registered offices of the company and its subsidiaries.

Encumbered assets Assets with a book value of R16 928 million (2014: R16 856 million) are encumbered as set out in note 20.

Insurance Property, plant and equipment, with the exception of motor vehicles and land, are insured at approximate cost of replacement. Motor vehicles are insured at market value.

Impairment losses Refer to 'Capital items' (note 1 and 5.3).

Useful lives The estimated useful lives are reflected under 'Judgements and estimates' in accounting policies.

45 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Nature of business % holding % holding

11. INVESTMENTS IN EQUITY ACCOUNTED COMPANIES

11.1 Associate companies Listed KAP Industrial Holdings Limited Diverse industrial and logistics business 43.3 44.71 PSG Group Limited Investment company 27.02 -3 Unlisted Various unlisted associate companies Insurance, manufacturing, retail and logistics 24.5 - 50.0 24.5 - 50.0

No material impairments on associate companies were recognised during any year presented.

Commitments The group's obligation in respect of losses and contingent liabilities from associate companies is limited to the extent of the carrying values of the investments.

11.2 Joint-venture companies Various joint-venture companies Property 50.0 -

No material impairments on joint-venture companies were recognised during both years presented.

1 KAP was previously accounted for as a subsidiary and became an associate on 30 June 2014. The decrease in percentage ownership in 2015 is a result of shares issued by KAP. 2 PSG was recognised as an associate on 30 June 2015. The percentage ownership calculated is net of treasury shares. 3 PSG was derecognised as an associate on 13 June 2014, and the 18.6% (net of treasury shares) interest then held was classified as investments and loans at 30 June 2014.

Rm Rm

11.3 Carrying values of associate and joint-venture companies KAP Industrial Holdings Limited 4 404 4 041 PSG Group Limited 10 930 - Various unlisted companies 535 182 15 869 4 223

11.4 Summarised information in respect of material associate companies Summarised information in respect of KAP The summarised financial information below represents amounts shown in the associate's financial statements prepared in accordance with IFRS. As KAP became an associate on 30 June 2014, only the statement of financial position disclosure is included below for 2014.

Non-current assets 10 777 10 039 Current assets 5 147 5 518 Non-current liabilities (4 308) (4 519) Current liabilities (3 686) (4 179) Non-controlling interests (169) (150) Net assets 7 761 6 709

46 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Rm Rm

Revenue 15 664 - Profit for the year 930 - Other comprehensive income for the year 27 - Total comprehensive income for the year 957 -

Reconciliation of the above summarised financial information to the carrying amount of the interest in KAP recognised in the consolidated financial statements:

Net assets of KAP 7 761 6 709 Proportion of the group's ownership interest in KAP 43.3% 44.7%

Proportion of the group's ownership interest in the net assets of KAP 3 362 2 999 Goodwill 1 042 1 042 Carrying amount of the group's interest in KAP 4 404 4 041

Market value of KAP 6 087 4 088

Summarised information in respect of PSG The summarised financial information below represents amounts shown in the associate's financial statements prepared in accordance with IFRS. PSG's financial year-end is 28 February. Adjustments are made for material transactions occurring between 28 February and 30 June each year (where necessary). PSG was derecognised as an associate on 13 June 2014. Due to the additional shares acquired by Steinhoff in 2015, PSG became an associate on 30 June 2015. As PSG became an associate on 30 June 2015, only the statement of financial position disclosure is included below for 2015.

Non-current assets 32 642 - Current assets 12 965 - Non-current liabilities (15 328) - Current liabilities (11 183) - Non-controlling interests (9 097) - Net assets 9 999 -

Reconciliation of the above summarised financial information to the carrying amount of the interest in PSG recognised in the consolidated financial statements:

Net assets of PSG 9 999 - Proportion of the group's ownership interest in PSG (net of treasury) 27.0% -

Proportion of the group's ownership interest in the net assets of PSG 2 702 - Transitory goodwill1 8 228 - Carrying amount of the group's interest in PSG 10 930 -

Market value of PSG 11 153 -

1 The recognition of PSG as an associate company took place on 30 June 2015 and therefore, the fair value allocation in terms of IAS 28 - Investments in Associates and Joint Ventures will be completed and the final allocation done before 30 June 2016 as allowed by IFRS.

47 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Rm Rm

The 30 June 30-day volume-weighted average share prices on the JSE Limited (JSE) were used to determine the market value of listed associates. Where there were impairment indicators, discounted cash flows were used to determine the value in use of these associates. This is consistent with methods and models applied in the prior year. For listed associates, publicly available information was used to determine value in use. No impairment was recognised on listed associates during any of the years presented. The fair value of listed associates is classified as level 1 in the fair value hierarchy. There were no transfers between levels during the year for listed associates.

11.5 Aggregate total comprehensive income from associate and joint-venture companies The group's share of profit 569 290 The group's share of other comprehensive income 12 1 The group's share of total comprehensive income 581 291

12. INVESTMENTS AND LOANS

Long-term investments and loans At fair value through profit or loss Listed investments Unit trusts 86 80 Available-for-sale financial assets Listed investments Ordinary shares1 64 3 685 Preference shares - 4 Unlisted investments Ordinary shares 286 206 350 3 895 Loans and receivables at amortised cost Unlisted investments Preference shares 65 386 Interest-bearing loans 6 196 6 038 6 261 6 424 6 697 10 399

Short-term investments and loans At fair value through profit or loss Listed investments Ordinary shares 1 599 - Loans and receivables at amortised cost Interest-bearing loans 7 306 5 928 8 905 5 928

1 The 2014 balance includes the investment in PSG. On 30 June 2015, PSG became an associate company.

48 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Rm Rm

The following fair value adjustments were made during the year (increase/(decrease)): At fair value through profit or loss Listed investments Ordinary shares 481 - Unit trusts 6 10 487 10 Available-for-sale financial assets - through other comprehensive income Listed investments Ordinary shares 3 714 (220) Fair value through other comprehensive income recycled to profit or loss (3 469) - Unlisted investments Ordinary shares 98 165 343 (55) Total fair value adjustments 830 (45)

Details of investments are available at the registered office of the company for inspection by shareholders.

The loans and receivables at amortised cost consist of various loans with repayment terms ranging between 1 and 73 months unless called earlier, bearing interest at market-related interest rates and participating in profit share.

None of the loans and receivables at amortised cost are past due or impaired at reporting date and there are no indications that any of these counterparties will not meet their repayment obligations.

The fair value of loans are disclosed in note 28.

13. DEFERRED TAXATION ASSETS/(LIABILITIES)

13.1 Deferred taxation movement (Liabilities)/assets Balance at beginning of the year (9 488) (8 922) Deferred taxation of subsidiaries acquired (3 001) 58 Deferred taxation of subsidiaries disposed - 1 090 Transferred to asset/liabilities held for sale - (279) Amounts charged directly to other comprehensive income and equity Convertible bond - (208) Share-based payments 160 189 Other (22) 59 Current year charge Continuing operations 927 (758) Discontinued operations - 649 Exchange differences on consolidation of foreign subsidiaries 528 (1 366) Balance at end of the year (10 896) (9 488)

49 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Rm Rm

13.2 Deferred taxation balances Assets Provision for taxation on temporary differences resulting from South African normal taxation rate (28%), South African capital gains taxation (SA CGT) rate (18.6%) and foreign taxation rates: Prepayments and provisions 809 253 Property, plant and equipment 56 171 Share-based payments 372 185 Other 61 (4) 1 298 605 Taxation losses and credits Taxation losses 1 384 785 Total deferred taxation assets 2 682 1 390

Realisation of the deferred taxation asset is expected out of future taxable income, which was assessed and deemed to be reasonable.

Liabilities Provision for taxation on temporary differences resulting from South African normal taxation rate (28%), SA CGT rate (18.6%) and foreign taxation rates: Equity component of convertible bonds (125) (227) Intangible assets (9 701) (7 918) Investments (513) (583) Prepayments and provisions 193 (92) Property, plant and equipment (2 796) (2 322) Share-based payments - 68 Other (670) 162 (13 612) (10 912) Taxation losses and credits Taxation losses 34 34 Total deferred taxation liabilities (13 578) (10 878)

13.3 Unrecognised deferred taxation assets Deferred taxation assets have not been recognised in respect of the following items: Taxation losses 7 974 2 722

The taxation losses and deductible temporary differences do not expire under current taxation legislation. Deferred taxation assets have not been recognised in respect of these items because it is not yet certain that future taxable profits will be available against which the group can realise the benefits therefrom. Deferred taxation assets are assessed at each statutory entity individually.

13.4 Taxation losses Estimated taxation losses available for offset against future taxable income 13 080 5 479

50 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Rm Rm

14. TRADE AND OTHER RECEIVABLES

Non-current trade and other receivables Instalment sale and loan receivables1 - 55 Derivative financial assets 133 - Non-current trade and other receivables (financial assets) 133 55 Equalisation of operating lease payments 17 15 150 70

Current trade and other receivables Trade receivables 10 986 13 163 Instalment sale and loan receivables1 1 928 415 Other amounts due 2 823 2 635 Less: Provision for bad debts (note 28.6) (848) (890) Derivative financial assets 268 13 Current trade and other receivables (financial assets) 15 157 15 336 Prepayments 1 503 1 275 Taxation receivable 496 451 Value added taxation receivable 1 052 1 050 18 208 18 112

1 During the 2014 year, JD Group's consumer finance business was classified as a disposal group held for sale and has been disclosed as such for 2014 and 2015.

The credit terms of instalment sale and loan receivables range from 3 to 36 months.

The credit period on sales of goods is between 30 and 90 days. Where relevant, interest is charged at market-related rates on outstanding balances.

Before accepting any new customers, credit risk management uses various credit bureaux and performs credit assessments to assess the potential customer's credit potential and credit limit. The credit limits are reviewed on a regular basis as and when increased limits are required. Customers with material balances are subject to additional security requirements or are insured as appropriate.

In determining the recoverability of a customer, the group considers any change in the credit quality of the customer from the date credit was initially granted up to the reporting date.

The provision against instalment sales and loan receivables has been deducted against the current portion of the instalment sales and loan receivables. Due to the nature of the calculation of the provision, it was not split into non-current and current portions.

Given the diverse nature of the group's operations (both geographically and segmentally), it does not have significant concentration of credit risk in respect of trade receivables, with exposure spread over a large number of customers. Accordingly, the directors believe that no further credit provision is required in excess of the provision for bad debts.

No customer represents more than 5% of the total trade receivables at year-end.

The group's exposure to currency and credit risk related to trade and other receivables is disclosed in notes 28.3 and 28.6.

51 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Rm Rm

15. INVENTORIES AND VEHICLE RENTAL FLEET

15.1 Inventories at cost less provisions Finished goods and merchandise 23 992 17 599 Goods in transit 1 239 - Raw materials 313 282 Other 107 40 25 651 17 921

15.2 Vehicle rental fleet Balance at beginning of the year 534 455 Additions 1 116 800 Impairment and scrapping of vehicle rental fleet (23) (18) Transfer to inventories (744) (570) Depreciation (140) (133) Balance at end of the year 743 534 26 394 18 455

15.3 Amount of write-down of inventories to net realisable value included as an expense during the year 116 52

Included in inventories above are vehicles relating to the operations of Unitrans Automotive, which were subject to a lien of R1 526 million (2014: R1 459 million) in respect of the manufacturers' floorplan financing, comprising interest-bearing and interest-free amounts and which are included in trade and other payables.

Inventories carried at net realisable value are immaterial.

Encumbered assets Vehicle rental fleet with a book value of R696 million (2014: R255 million) are encumbered as set out in note 20.

52 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Rm Rm

16. ASSETS/(LIABILITIES) AND DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE

As described in note 5, JD Group is in the process of disposing the JD Group Financial Services division and anticipates that the disposal will be completed in the next financial year. The group does not expect that the aggregate carrying amount of the related assets and liabilities will exceed the fair value less costs to sell off the business. Therefore an impairment loss was recognised on the assets and liabilities as held for sale as at 30 June 2015 and 30 June 2014 to the extent that the carrying amount of the assets exceeds the fair value of the assets.

These assets are available for sale in their present condition. Management is committed to the sale, which is expected to occur within 12 months of year-end.

The carrying amount of total assets held for sale still carried on the statement of financial position is:

Assets Goodwill - 767 Intangible assets 252 180 Property, plant and equipment 14 2 Deferred taxation asset - 279 Trade and other receivables (including instalment sale and loan receivables) 4 140 7 212 4 406 8 440 Impairment of goodwill - (767) Impairment of disposal group (1 042) (808) 3 364 6 865 Liabilities Trade and other payables - (153) Employee benefits (6) (43) (6) (196) Net assets/(liabilities) and disposal groups classified as held for sale 3 358 6 669

The event that gave rise to the impairment of goodwill in 2014 was the impending sale of the JD Financial Services division for a price less than the carrying amount of the net assets held for sale. Deteriorating quality of the instalment sale and loan receivable book, the increase in the debtors cost and the resulting loss from discontinued operations in 2014 have resulted in the impairment of the disposal group as a whole.

The fair value of the disposal group is based on the estimated selling price as offered by a third party. The disposal group assets and liabilities held for sale are therefore considered to be a level 3 financial asset/liability.

53 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 2015 2014 Number of Number of shares shares Rm Rm

17. ORDINARY STATED SHARE CAPITAL

17.1 Authorised Ordinary shares of no par value (2014: 0.5 cents each) 6 000 000 000 3 000 000 000 - 15

17.2 Issued Balance at beginning of the year 2 109 880 692 1 836 154 196 20 648 9 962 Shares issued during the year net of transaction costs 1 552 388 904 273 726 496 92 844 10 685 Profit on treasury share transactions net of capital gains taxation - - - 1 Balance at end of the year 3 662 269 596 2 109 880 692 113 492 20 648

17.3 Treasury shares Balance at beginning of the year (9 963 800) (11 053 042) (141) (161) Purchases of shares (266 434) - (6) - Sale of shares 18 023 1 089 242 - 20 Balance at end of the year (10 212 211) (9 963 800) (147) (141) Total issued ordinary stated share capital 3 652 057 385 2 099 916 892 113 345 20 507

17.4 Movement of net stated share capital Balance at beginning of the year 20 507 9 801 Net shares issued 92 844 10 685 Purchases of shares (6) - Proceeds on sale of shares net of capital gains taxation - 21 Balance at end of the year 113 345 20 507

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at the meetings of the company.

Number of Number of shares shares

17.5 Unissued shares Reserved for bond holders 320 666 847 529 416 368 Shares reserved for future participation in share schemes 97 109 276 104 372 913 Shares reserved for current participation in share schemes 32 235 368 35 885 136 Shares under the control of the directors until the forthcoming annual general meeting 167 973 415 87 605 581 Unissued shares 1 719 745 498 132 839 310 Total unissued shares 2 337 730 404 890 119 308

At year-end, the directors were still authorised, by resolutions of the shareholders and until the forthcoming annual general meeting, to issue 18 million unissued shares, subject to the Listings Requirements of the JSE.

Subsequent to year-end and before the date of this report, Steinhoff issued a convertible bond due 2022, which is convertible into 149 997 984 ordinary shares of the company. Refer to the directors' report.

54 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

17.6 Share-based payments Steinhoff Executive Share Right Scheme At the annual general meeting on 6 December 2010, a new share incentive scheme was approved and implemented. The share rights granted since December 2010 relate to the Executive Share Right Scheme, and are subject to the following conditions: a) Rights are granted to qualifying senior executives on an annual basis. b) Vesting of rights occur on the third anniversary of grant date, provided performance criteria, as set by Steinhoff's remuneration committee at or about the time of the grant date, have been achieved. c) In the event of performance criteria not being satisfied by the third anniversary of the relevant annual grant, all rights attaching to the particular grant will lapse.

2015 2014 Number of Number of rights rights

The number of share rights outstanding is: Outstanding at beginning of the year 35 885 136 31 147 659 Exercised during the year (10 913 405) (9 741 951) Forfeited during the year1 (753 404) (357 992) Granted during the year 8 017 041 14 837 420 Outstanding at end of the year 32 235 368 35 885 136

1 Certain divisions and individuals did not meet performance targets for the share vesting and forfeited their share rights relating to these grants.

Assumptions The fair value of services received in return for share rights granted is measured by reference to the fair value of the share rights granted. The estimated fair value of the services received is measured based on the assumption that all vesting conditions are met and all employees remain in service. The pricing model used was the Black-Schöles model. The volatility was estimated using the Steinhoff daily closing share price over a rolling three-year period.

2014 grant 2013 grant 2012 grant 2011 grant

Fair value of share rights and assumptions: Fair value at measurement date R53.76 R37.78 R25.01 R21.30 Share price at grant date R58.00 R40.42 R27.39 R23.40 Exercise price R0.005 R0.005 R0.005 R0.005 Expected volatility 24.39% 26.33% 21.44% 28.53% Dividend yield 2.57% 2.32% 3.08% 3.20% Risk-free interest rate 6.45% 6.72% 5.37% 6.12% Option life 3 years 3 years 3 years 3 years

Refer to note 31 for directors' interests in the share incentive scheme.

55 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 2015 2014 Number of Number of shares shares Rm Rm

18. PREFERENCE STATED SHARE CAPITAL

18.1 Authorised Steinhoff Non-redeemable, cumulative, non-participating preference shares of no par value (2014: 0.1 cents each) 1 000 000 000 1 000 000 000 - 1

Steinhoff Investment Variable rate, cumulative, non-redeemable, non- participating preference shares of 0.1 cents each 495 000 000 495 000 000 * *

Steinhoff Africa Class A perpetual preference shares of 1 cent each 2 000 2 000 * * Class B perpetual preference shares of no par value 2 000 - - - Cumulative redeemable preference shares of 1 cent each 2 000 - * -

18.2 Issued Steinhoff Investment In issue at beginning of the year 15 000 000 15 000 000 1 430 1 548 Loss on treasury share transactions net of capital gains taxation - - - (118) In issue at end of the year 15 000 000 15 000 000 1 430 1 430

Steinhoff Africa (class A and class B perpetual preference shares) In issue at beginning of the year 1 333 1 585 1 951 2 329 Shares issued during the year 2 000 - 2 000 - Shares redeemed during the year (333) (252) (499) (378) In issue at end of the year 3 000 1 333 3 452 1 951

18.3 Treasury shares Balance at beginning of the year - (3 347 393) - (380) Sale of shares - 3 347 393 - 380 - - - - Total issued preference stated share capital 15 003 000 15 001 333 4 882 3 381

* Amount less than R500 000.

Terms of issued Steinhoff Investment preference shares The preference shares earn dividends on the issue price at the rate of 82.5% of the SA prime lending rate quoted by Absa Bank Limited or its successor in title in South Africa. Although the rights to receive dividends are cumulative, declaration of such dividends is at the discretion of the board of directors of Steinhoff Investment Holdings Limited.

Terms of issued Steinhoff Africa preference shares The preference shares earn dividends on the issue price at the rate of 72% of the SA prime lending rate quoted by Standard Bank Group Limited or its successor in title in South Africa. Although the rights to receive dividends are cumulative, declaration of such dividends is at the discretion of the board of directors of Steinhoff Africa.

The directors are authorised, by resolution of the shareholders and until the forthcoming annual general meeting, to dispose of the unissued preference shares, subject to the Listings Requirements of the JSE relating to a general authority of directors to issue shares for cash.

56 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Proportion of ownership interests and voting rights held Profit or loss allocated to non- Accumulated non-controlling by non-controlling interests controlling interests interests 2015 2014 2015 2014 2015 2014 % % Rm Rm Rm Rm

19. NON-CONTROLLING INTERESTS

19.1 Details of subsidiaries that have material non-controlling interests: JD Group Limited1, 2 13 14 (293) (598) 713 1 117 KAP Industrial Holdings Limited1, 3 n/a n/a - 309 - - Individually immaterial subsidiaries with non-controlling interests4 65 62 374 424 (228) (227) 1 087 1 541

1 Incorporated in South Africa. 2 Subsequent to year-end, the non-controlling interests in JD Group were bought out on 6 July 2015. 3 KAP became an associate on 30 June 2014. 4 Included in immaterial subsidiaries with non-controlling interests is Pepkor, which had an 8% non-controlling interest for the period 31 March 2015 to 20 April 2015. On 20 April 2015, Steinhoff bought out the non-controlling interest by issuing 86.6 million ordinary share. The buyout resulted in a premium paid on acquisition of non-controlling interest of R4.7 billion accounted for in the premiums or discounts on changes in non-controlling interests reserve.

2015 2014 Rm Rm

19.2 Summarised financial information in respect of each of the group's subsidiaries that has material non-controlling interests: The summarised financial information below represents amounts before intragroup eliminations and consolidation entries. JD Group Limited Non-current assets 7 219 6 852 Current assets 11 290 14 183 Non-current liabilities (863) (5 726) Current liabilities (12 117) (7 485)

Revenue from continuing operations 31 356 30 582 Profit for the year from continuing operations 66 201 Loss for the year from discontinued operations (2 368) (2 124) Loss for the year (2 302) (1 923) Loss attributable to owners of the parent (2 327) (1 947) Profit attributable to the non-controlling interests 25 24 Loss for the year (2 302) (1 923)

Total comprehensive loss attributable to owners of the parent (2 330) (1 929) Total comprehensive income attributable to the non-controlling interests 25 24 Total comprehensive loss for the year (2 305) (1 905)

Dividends paid to non-controlling interests - 124

Net inflow from operating activities 1 540 489 Net outflow from investing activities (144) (212) Net outflow from financing activities (1 119) (197) Net cash inflow 277 80

57 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Rm Rm

20. INTEREST-BEARING LOANS AND BORROWINGS

20.1 Analysis of closing balance Secured financing Capitalised finance lease and instalment sale agreements 1 619 1 667 Mortgage and term loans 2 101 3 731 3 720 5 398 Unsecured financing Convertible bonds 14 447 24 198 German loan notes 8 654 - Steinhoff Services domestic medium-term note programme 5 494 4 644 JD Group domestic medium-term note programme 1 807 2 847 US note purchase agreements 1 755 3 768 Preference shares: Micawber 455 Proprietary Limited - 153 Preference shares: Ainsley Holdings Proprietary Limited 6 058 - Syndicated loan facilities 16 745 17 206 Term loans 3 127 3 484 Other loans 384 293 58 471 56 593 Total interest-bearing loans and borrowings 62 191 61 991 Portion payable within 12 months included in current liabilities (5 847) (6 411) Total non-current interest-bearing loans and borrowings 56 344 55 580

The book value of assets encumbered in favour of the above mortgage and term loans and finance lease and instalment sale agreements amounts to R17 624 million (2014: R17 111 million) (notes 10 and 15).

20.2 Analysis of repayment Repayable within the next year and thereafter Next year 5 847 6 411 Within two years 6 281 9 528 Within three years 11 115 10 487 Within four years 13 088 8 320 Within five years 11 983 17 764 Thereafter 13 877 9 481 62 191 61 991

Loans and borrowings are carried at amortised cost. The only exception was the 2005 note purchase agreement, which was carried at fair value until it was repaid on 15 March 2015. The fair values of interest-bearing loans and borrowings are disclosed in note 28.

58 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Facility 2015 2014 million Maturity date Interest rate Rm Rm

20. INTEREST-BEARING LOANS AND BORROWINGS

20.3 Loan details Steinhoff Secured Mortgage loans Loans with various banks, repayable over €190 Various maturities up 3.05% to 6.13% 1 137 2 392 various repayment terms and secured under to June 2024 mortgage bonds over various properties in Europe in favour of the relevant banks. Syndicated property loan. This loan is secured €69 31 July 2016 EURIBOR plus 3.50% 941 1 339 by a charge over the assets financed by this loan. Capitalised finance lease and instalment sale agreements - - Various 1 173 1 378 Secured hire purchase and lease agreements repayable in monthly or annual instalments over periods of one to five years. These leases are with various counterparties.

Unsecured Convertible bond due 2016 - 22 May 2016 5.00% - 5 795 The bond was converted and redeemed between November 2014 and April 2015. Convertible bond due 2017 €181 26 May 2017 6.38% 2 378 5 780 The bond is convertible to 56.98 million ordinary shares of Steinhoff at R33.84 per ordinary share. The coupon rate is 6.375% per annum and the redemption price is 100%. Convertible bond due 2018 €468 31 March 2018 4.50% 6 408 6 657 The bond is convertible to 144.30 million ordinary shares of Steinhoff at R30.86 per ordinary share. The coupon rate is 4.5% per annum and the redemption price is 110.68%. Convertible bond due 2021 €465 30 January 2021 4.00% 5 661 5 966 The bond is convertible to 119.38 million ordinary shares of Steinhoff at R58.11 per ordinary share. The coupon rate is 4% per annum and the redemption price is 100%. The fair values of the liability components and the equity conversion components were determined at issuance of the bonds and were calculated using market interest rates for equivalent non-convertible bonds. The residual amounts, representing the values of the equity conversion components, are included in shareholders' equity, net of deferred taxation.

59 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Facility 2015 2014 million Maturity date Interest rate Rm Rm

German loan note SSD five-year floating rate note €402 17 July 2020 EURIBOR plus 1.25% 5 459 - SSD seven-year floating note €92 18 July 2022 EURIBOR plus 1.50% 1 248 - SSD five-year fixed rate note €62 17 July 2020 1.88% 848 - SSD seven-year fixed rate note €77 18 July 2022 2.46% 1 038 - SSD ten-year fixed rate note €4 17 June 2025 3.08% 61 -

Steinhoff Services domestic medium-term note R10 000 programme: senior unsecured SHS01 - R227 million floating rate note 15 December 2016 JIBAR plus 2.30% 228 228 SHS04 - R651 million floating rate note 29 June 2017 JIBAR plus 2.30% 653 654 SHS05 - R421 million fixed rate note 29 June 2017 8.75% 426 428 SHS06 - R580 million floating rate note 12 December 2017 JIBAR plus 2.20% 583 582 SHS07 - R150 million floating rate note 10 April 2016 JIBAR plus 1.60% 153 152 SHS08 - R200 million floating rate note 21 May 2016 JIBAR plus 1.60% 200 200 SHS11U - R300 million floating rate note 19 November 2016 JIBAR plus 1.70% 303 303 SHS12 - R100 million floating rate note 12 December 2016 JIBAR plus 1.60% 100 100 SHS14 - R200 million floating rate note 17 June 2017 JIBAR plus 1.60% 201 201 SHS16U - R100 million floating rate note 29 June 2016 JIBAR plus 2.40% 100 100 SHS17U - R200 million floating rate note 30 September 2016 JIBAR plus 4.75% 200 200 SHS18U - R250 million amortising floating rate 30 November 2016 JIBAR plus 2.40% 189 250 note SHS19 - R247 million fixed rate note 10 September 2017 10.16% 255 - SHS20 - R149 million floating rate note 19 April 2016 JIBAR plus 2.25% 151 - SHS22 - R250 million floating rate note 23 February 2020 JIBAR plus 2.00% 252 - SHS23 - R400 million floating rate note 29 June 2018 JIBAR plus 1.65% 400 - SHS24 - R350 million floating rate note 29 June 2020 JIBAR plus 1.95% 350 - SHS25 - R250 million fixed rate note 29 June 2020 9.83% 250 - SHS26 - R500 million floating rate note 29 June 2020 JIBAR plus 1.95% 500 - Fixed rate notes that have been repaid 19 September 2014 to 8.08% to 10.16% - 308 10 September 2017 Floating rate notes that have been repaid 28 July 2014 to JIBAR plus 0.65% to - 938 19 April 2016 3.00% Steinhoff, Steinhoff Investment and Steinhoff Africa have committed themselves as guarantors in respect of the Steinhoff Services (SHS) note programme.

In addition and after year-end, Ainsley Holdings Proprietary Limited and Pepkor Holdings Proprietary Limited resolved to accede as guarantors to the note programme.

2005 US note purchase agreement Senior notes series B - 15 March 2015 EURIBOR plus 0.88% - 1 594 The group has entered into a combined cross- currency interest rate swap on the series B loan (note 28). The series B loan was fair valued through profit or loss in order to eliminate the accounting mismatch arising from measuring the derivative hedging instrument through profit or loss. This loan was repaid during the year

60 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Facility 2015 2014 million Maturity date Interest rate Rm Rm

2012 US note purchase agreement Senior notes series A - 25 April 2015 EURIBOR plus 3.07% - 431 This loan was repaid during the year Senior notes series B $28 25 April 2019 EURIBOR plus 3.49% 343 302 Senior notes series C $32 25 April 2022 EURIBOR plus 3.74% 392 345 Senior notes series D €38 25 April 2019 5.38% 510 548 Senior notes series E €38 25 April 2022 5.92% 510 548 The group has entered into a combined cross- currency interest rate swap on the series A, B and C loans (note 28). These swaps are designated as cash flow hedges. The notes are carried at amortised cost.

Preference shares: Ainsley Holdings Proprietary R6 000 30 March 2019 69.00% of SA prime 6 058 - Limited

Preference shares: Micawber 455 Proprietary Limited - 28 January 2015 74.00% of SA prime - 153 This loan was repaid during the year

Syndicated loan facilities Revolving credit facility1 €1 800 29 June 2019 EURIBOR plus 1.75% 9 494 16 612 Structured term loan €20 31 March 2031 Structured rate of 4.10% 271 291 plus 3.00% Term loan £11 31 March 2016 LIBOR plus 3.00% 159 303 Revolving credit facility R2 000 31 March 2016 JIBAR plus 0.65% 687 - Syndicated term loan R2 500 30 March 2018 JIBAR plus 1.65% 2 534 - Syndicated term loan R1 050 30 March 2019 JIBAR plus 1.80% 1 064 - Syndicated term loan R2 500 30 March 2020 JIBAR plus 2.00% 2 536 -

Term loans Term loan £5 15 February 2021 LIBOR plus 1.00% 52 - Term loan €6 31 August 2021 4.22% 79 - Term loan €23 30 June 2024 EURIBOR plus 1.50% 316 - Term loan €6 31 December 2021 4.54% 75 - Amortising term loan AUD17 10 May 2018 BBR plus 0.50% 284 20 Term loan AUD3 31 January 2017 BBSY 57 - Floating rate term loans that have been repaid - 15 June 2015 to 31 JIBAR plus 2.00% to - 3 088 August 2020 2.85% Fixed rate term loans that have been repaid - 24 August 2016 to 8.66% to 9.01% - 376 8 May 2017

Other loans 349 245

1 The margin could vary, depending on the achievement of financial covenants.

61 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Facility 2015 2014 million Maturity date Interest rate Rm Rm

JD Group Secured Capitalised finance lease and instalment sale - - SA prime less 2.50% to 444 289 agreements 0.90% Secured hire purchase and lease agreements repayable in monthly or annual instalments over periods of one to five years. These leases are with various counterparties.

Unsecured JD Group domestic medium-term note programme: R8 000 senior unsecured JDG01 - listed fixed rate note 30 October 2015 7.17% 982 1 000 JDG03 - listed floating rate note 15 April 2016 JIBAR plus 1.65% 440 450 JDG04 - listed floating rate note 15 April 2018 JIBAR plus 2.03% 300 300 JDG03U - unlisted floating rate note 21 February 2016 JIBAR plus 1.80% 85 85 Unlisted fixed rate notes that have been repaid 29 January 2015 6.98% - 114 Unlisted floating rate notes that have 14 November 2013 to JIBAR plus 0.65% to - 898 been repaid 18 March 2015 1.40%

Accrued interest 25 48

Pepkor Secured Capitalised finance lease and instalment sale - Various Various 2 - agreements Secured hire purchase and lease agreements repayable in monthly or annual instalments over periods of one to six years. These leases are with various counterparties.

Amortising term loan PLN8 31 March 2024 WIBOR plus 2.20% 23 -

Unsecured Term loans Term loan AUD30 25 February 2017 BBSY plus 2.25% 280 - Term loan AUD35 3 December 2016 BBSY plus 2.25% 327 - Term loan AUD32 14 March 2017 BBSY plus 2.20% 297 - Term loan R1 300 30 September 2015 LIBOR plus 1.40% 1 300 - Term loan NZD7 18 July 2018 BBBR plus 3.20% 60 -

Other loans 10 - 62 191 61 991

62 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Rm Rm

20.4 Convertible bonds Balance at beginning of the year 24 198 18 515 Proceeds from issue of convertible bonds - 6 457 Amount classified as equity - (802) Redemption of convertible bonds (7) (1 050) Conversion of convertible bonds (8 829) (1 770) Coupon interest (998) (1 101) Market implied interest 1 558 1 729 Exchange differences on consolidation of foreign subsidiaries (1 475) 2 220 Balance at end of the year 14 447 24 198

21. EMPLOYEE BENEFITS

Conforama France Pension Fund 641 594 Other pension funds 53 62 Post-retirement medical benefits 75 - Performance-based bonus accrual 339 285 Leave pay accrual 662 331 Other 457 346 Total liability 2 227 1 618 Transferred to short-term employee benefits (1 166) (750) Long-term employee benefits 1 061 868

21.1 Defined contribution plans The group has various defined contribution plans to which employees contribute. The assets of these schemes are held in administered trust funds separate from the group's assets.

21.2 Defined benefit plans Various defined benefit plans are in operation throughout the group. The assets of these schemes are held in administered trust funds separate from the group's assets. Certain of the funds have surpluses, which have not been recognised as the employer is not entitled to any of the surpluses or unutilised reserves.

Conforama France Pension Fund Under the scheme, the employees are entitled to retirement benefits based on final salary on attainment of retirement age (or earlier withdrawal or death) and the number of years worked for Conforama. No other post-retirement benefits are provided.

The fund was valued on 30 June 2014, which is in line with group policies. There are 8 396 (2014: 8 406) employees currently covered by the fund.

21.3 The financial details of the different funds and the effect on the group's annual financial statements are: Conforama Pension Fund Other pension funds 2015 2014 2015 2014 Rm Rm Rm Rm

The amount included in the consolidated statement of financial position arising from the entity's obligation in respect of its defined benefit plans are as follows: Present value of funded defined benefit obligation (641) (631) (1 365) (1 342) Fair value of plan asset - 37 1 312 1 280 Net liability arising from defined benefit obligation (641) (594) (53) (62)

63 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Conforama Pension Fund Other pension funds 2015 2014 2015 2014 Rm Rm Rm Rm

Components of defined benefit cost recognised in total comprehensive income Service cost (32) (28) - - Net interest expense (15) (13) (2) (5) Other expenses - - (14) (7) Components of defined benefit cost recognised in profit or loss (47) (41) (16) (12) Remeasurement on the net defined benefit liability: Return on plan assets (excluding amounts included in net interest expense) (14) - 36 33 Remeasurement gains/(losses) arising from changes in: Demographic assumptions - (25) - 9 Financial assumptions (37) (18) (51) (70) Experience adjustments 2 (26) 2 70 Components of defined benefit cost recognised in other comprehensive income (49) (69) (13) 42 (96) (110) (29) 30

Movements in the present value of the defined benefit obligation Opening defined benefit obligation (631) (476) (1 342) (1 147) Current service cost (32) (28) - - Interest cost (15) (14) (54) (57) Remeasurement gains/(losses) arising from changes in: Demographic assumptions - (25) - 9 Financial assumptions (37) (18) (51) (70) Experience adjustments 2 (26) 2 70 Past service cost 4 16 (6) - Acquired on acquisition of subsidiary company (3) (18) - - Benefits paid 27 22 149 88 Exchange differences on consolidation of foreign subsidiaries 44 (64) (63) (235) Closing defined benefit obligation (641) (631) (1 365) (1 342)

Movements in the fair value of the plan assets Opening fair value of plan assets 37 32 1 280 1 034 Interest income - 1 52 52 Return on plan assets (excluding amounts included in net interest expense) (14) - 36 33 Employer contributions 24 22 46 41 Other expenses - - (14) (7) Settlements (18) - - - Benefits paid (27) (22) (149) (88) Exchange differences on consolidation of foreign subsidiaries (2) 4 61 215 Closing fair value of plan assets - 37 1 312 1 280

The major categories of plan assets are: Equities/diversified growth fund - - 824 832 Bonds - - 486 433 Cash - 37 2 4 Escrow account - - - 11 Total market value of assets - 37 1 312 1 280

64 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Conforama Pension Fund Other pension funds 2015 2014 2015 2014 Rm Rm Rm Rm

The principal assumptions used for the purposes of the actuarial valuations are: Discount rate 2.0% 2.5% 3.9% 4.2% Expected rates of salary increase 2.0% 2.0% n/a n/a Inflation 2.0% 2.0% 3.2% 3.2%

Performance- based bonus Leave pay Total Rm Rm Rm

21.4 Performance-based bonus and leave pay accruals Balance at 1 July 2013 372 416 788 Accrual raised 316 213 529 Amounts unused reversed (23) (29) (52) Amounts utilised (217) (180) (397) Transferred to assets classified as held for sale (9) (21) (30) Net acquisition and disposal of subsidiaries and businesses (155) (90) (245) Exchange differences on consolidation of foreign subsidiaries 1 22 23 Balance at 30 June 2014 285 331 616 Accrual raised 176 263 439 Amounts unused reversed (13) (4) (17) Amounts utilised (109) (198) (307) Net acquisition and disposal of subsidiaries and businesses - 281 281 Exchange differences on consolidation of foreign subsidiaries - (11) (11) Balance at 30 June 2015 339 662 1 001

Performance-based bonus accrual The bonus payable is fixed by applying a specific formula based on the employee's achievement of performance targets.

Leave pay accrual The leave pay accrual relates to vesting leave pay to which employees may become entitled on leaving the employment of the group. The accrual arises as employees render a service that increases their entitlement to future compensated leave and is calculated based on an employee's total cost of employment. The accrual is utilised when employees become entitled to and are paid for the accumulated leave or utilise compensated leave due to them.

65 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Dilapidation, Contingent onerous lease liabilities and onerous raised on contract Warranty business provisions provisions combinations Other Total Rm Rm Rm Rm Rm

22. PROVISIONS

Balance at 1 July 2013 2 904 139 374 204 3 621 Provision raised 209 246 - 443 898 Amounts unused reversed (587) (14) - (182) (783) Amounts utilised (1 063) (19) (155) (361) (1 598) Net acquisition and disposal of subsidiaries and businesses (5) 8 87 163 253 Exchange differences on consolidation of foreign subsidiaries 122 26 43 234 425 Balance at 30 June 2014 1 580 386 349 501 2 816 Provision raised 181 185 - 340 706 Amounts unused reversed (352) (7) - (276) (635) Amounts utilised (271) (193) (192) (29) (685) Net acquisition and disposal of subsidiaries and businesses 251 1 1 598 78 1 928 Exchange differences on consolidation of foreign subsidiaries (63) (24) (22) 193 84 Balance at 30 June 2015 1 326 348 1 733 807 4 214

2015 2014 Rm Rm Long-term provisions 2 927 1 603 Short-term provisions 1 287 1 213 4 214 2 816

Contingent liabilities raised on business combinations were re-presented from other.

Dilapidation, onerous lease and onerous contract provisions Provision for dilapidation of buildings occupied by the group and provision for long-term leases containing onerous provisions or terms in comparison with average terms and conditions of leases.

Provision for unfavourable legally binding contracts where the terms of the contract are unfavourable, based on market-related rates.

Warranty provisions The warranty provision represents management's best estimate, based on past experience, of the group's liability under warranties granted on products sold.

Contingent liabilities raised on business combinations IFRS 3 requires certain contingent liabilities of the acquiree to be recognised and measured in a business combination at acquisition date fair value. Therefore, contrary to IAS 37 - Provision, Contingent Liabilities and Contingent Assets, the acquirer recognises a contingent liability assumed in a business combination at the acquisition date even if it is not probable that an outflow of economic benefits will be required to settle the obligation. This provision includes amounts for possible supplier settlements, customer claims and legal disputes.

Other provisions Other provisions include the amounts under insurance contracts, see note 29.

66 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Rm Rm

23. TRADE AND OTHER PAYABLES

Non-current trade and other payables Derivative financial liabilities 93 34 Equalisation of operating lease payments 827 354 920 388

Current trade and other payables Trade payables 30 706 21 676 Accruals 1 995 2 023 Floorplan creditors 1 739 1 663 Cash received in advance 3 284 3 138 Other payables and amounts due 5 203 3 267 Derivative financial liabilities 61 197 Trade and other payables (financial liabilities) 42 988 31 964 Equalisation of operating lease payments 30 94 Taxation payable 2 019 745 Value added taxation payable 1 341 1 419 46 378 34 222

The fair value of trade and other payables is disclosed in note 28.

67 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Rm Rm

24. CASH GENERATED FROM OPERATIONS

Operating profit 17 828 14 122 Adjusted for: Operating loss of discontinued operations including loss on disposal (2 370) (532) Debtors' costs 3 282 3 258 Depreciation and amortisation 2 222 2 865 Fair value profit on financial assets (504) (88) Impairments 830 154 Inventories written down to net realisable value and movement in provision for inventories 378 308 Loss on disposal of discontinued operations 313 229 Net loss on disposal and scrapping of property, plant and equipment, vehicle rental fleet and intangible assets 104 80 Profit on disposal and dilution of investments (3 527) (1 745) Share-based payment expense 393 295 Other non-cash adjustments (59) 93 Cash generated before working capital changes 18 890 19 039

Working capital changes Decrease/(increase) in inventories 1 133 (1 001) Increase in vehicle rental fleet (118) (323) Decrease in trade and other receivables 2 038 1 746 (Increase)/decrease in assets held for sale (42) 400 Movement in net derivative financial liabilities/assets (223) 284 Decrease in liabilities held for sale (190) (67) Decrease in non-current and current provisions (813) (1 452) Increase in non-current and current employee benefits 39 36 Increase in trade and other payables 5 992 4 484 Net changes in working capital 7 816 4 107 Cash generated from operations 26 706 23 146

The cash flow has been re-presented to combine the secured and unsecured instalment sales receivables movement, previously disclosed separately under working capital and cash flows from operating activities. Additions to vehicle rental fleet, which are financed through finance leases, are now excluded from working capital as non-cash items.

68 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Pepkor Other 2015 2014 Rm Rm Rm Rm

25. NET CASH FLOW ON ACQUISITION OF SUBSIDIARIES AND BUSINESSES

25.1 The fair value of assets and liabilities assumed at date of acquisition Assets Intangible assets 18 434 5 18 439 63 Property, plant and equipment 4 315 144 4 459 8 997 Investments in equity accounted companies 38 - 38 - Long-term investments and loans 452 - 452 172 Deferred taxation assets 321 31 352 63 Short-term investments and loans - - - 12 Cash on hand 1 902 30 1 932 494 Liabilities Non-current interest-bearing loans and borrowings (3 647) - (3 647) (2 879) Deferred taxation liability (3 353) - (3 353) (5) Current interest-bearing loans and borrowings (469) (342) (811) (361) Bank overdraft and short-term facilities (657) - (657) (26) Working capital 1 835 (26) 1 809 335 Existing non-controlling interests (9) - (9) (132) Total assets and liabilities acquired 19 162 (158) 19 004 6 733 Less: Non-controlling interests' portion of assets and liabilities acquired (1 468) - (1 468) - Group's share of total assets and liabilities acquired 17 694 (158) 17 536 6 733 Goodwill attributable to acquisition at offer price 45 235 360 45 595 7 295 Goodwill attributable to share price increase 8 879 - 8 879 - Gain on bargain purchase at acquisition - - - (1) Total consideration 71 808 202 72 010 14 027 Cash on hand at date of acquisition (1 902) (30) (1 932) (494) Purchase price settled through loan account - (9) (9) (2) Purchase price settled through issue of shares (56 703) - (56 703) (7 058) Net cash outflow on acquisition of subsidiaries 13 203 163 13 366 6 473

The goodwill arising on the acquisition of these companies is attributable to the strategic business advantages acquired, principal retail locations and leases, as well as knowledgeable employees and management strategies that did not meet the criteria for recognition as other intangible assets on the date of acquisition.

25.2 Acquisition of Pepkor The fair value of the ordinary shares issued as part of the consideration paid for Pepkor was measured using the 30-day VWAP of Steinhoff's ordinary shares on the acquisition date. The valuation is a level 1 input, based on the fair value hierarchy.

The increase in the Steinhoff share price between the initial Pepkor purchase agreement (R57.00 per share) and the accounting recognition date, 31 March 2015 (R67.58), gave rise to an additional consideration recognised for accounting purposes of R8 879 million on the transaction.

The fair value of the non-controlling interest in Pepkor was recognised at the proportionate share of net asset value. This non-controlling interest was acquired in a subsequent transaction on 20 April 2015.

The revenue and net profit, included in the consolidated income statement since 31 March 2015, contributed by Pepkor was R12 199 million and R1 135 million, respectively.

69 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Acquisition-related costs, included in operating expenses in Steinhoff's Income Statement for the year ended 30 June 2015, amounted to R109 million.

Pepkor Other 2015 2014 Rm Rm Rm Rm

25.3 The carrying value of identifiable assets and liabilities immediately prior to acquisition Assets Goodwill 1 315 - 1 315 - Intangible assets 472 5 477 63 Property, plant and equipment 4 399 144 4 543 8 997 Investments in equity accounted companies 38 - 38 - Long-term investments and loans 452 - 452 172 Deferred taxation assets 565 31 596 63 Short-term investments and loans - - - 12 Cash on hand 2 002 30 2 032 494 Liabilities Non-current interest-bearing loans and borrowings (4 808) - (4 808) (2 879) Deferred taxation liability (202) - (202) (5) Current interest-bearing loans and borrowings (469) (342) (811) (361) Bank overdraft and short-term facilities (657) - (657) (26) Working capital 4 070 74 4 144 335 Non-controlling interests (9) - (9) (132) Total assets and liabilities acquired 7 168 (58) 7 110 6 733

2015 2014 Rm Rm

26. NET CASH FLOW ON DISPOSAL OF SUBSIDIARIES AND BUSINESSES

The carrying values of assets and liabilities disposed of at the date of disposal were: Assets Goodwill - 209 Intangible assets - 7 977 Property, plant and equipment 30 6 762 Consumable biological assets - 1 875 Investment in equity accounted companies - 620 Investments and loans - 44 Deferred taxation assets - 75 Cash on hand - 1 028 Liabilities Interest-bearing loans and borrowings - (3 161) Deferred taxation liability - (1 165) Working capital (28) (5 859) Non-controlling interests - (2 814) Carrying value of assets and liabilities disposed 2 5 591 Investment in associate company recognised - (4 041) (Loss)/profit on disposal (2) 1 433 Proceeds on disposal - 2 983 Cash on hand at date of disposal - (1 028) Net cash inflow on disposal of subsidiaries - 1 955

70 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Rm Rm

27. COMMITMENTS AND CONTINGENCIES

27.1 Capital expenditure Contracts for capital expenditure authorised 575 1 370

Capital expenditure authorised but not contracted for 1 535 718

Capital expenditure will be financed from cash and existing loan facilities.

27.2 Borrowing facilities In terms of the memorandum of incorporation, the borrowing powers of the company are unlimited.

27.3 Unutilised borrowing facilities at 30 June 29 266 19 272

Plant, equipment, vehicles and 2015 2014 Property other Total Total Rm Rm Rm Rm

27.4 Operating leases Amounts outstanding under non-cancellable operating lease agreements payable within the next year and thereafter: Next year 6 411 296 6 707 3 475 Within two to five years 14 718 360 15 078 8 537 Thereafter 5 731 3 5 734 5 270

Balances denominated in currencies other than South African rand were converted at the closing rates of exchange ruling at 30 June.

The majority of the property operating leases relate to retail stores from which the group trades.

27.5 Contingent liabilities Certain companies in the group are involved in disputes where the outcomes are uncertain. However, the directors are confident that they will be able to defend these actions and that the potential of outflow or settlement is remote and, if not, that the potential impact on the group will not be material.

There is no other litigation, current or pending, which is considered likely to have a material adverse effect on the group.

The group has a number of guarantees and sureties outstanding at year-end. However, the directors are confident that no material liability will arise as a result of these guarantees and sureties.

Steinhoff Investment Holdings Limited (Steinhoff Investment) has subordinated R4 250 million of the shareholder's loan due from Steinhoff Africa in favour of all other creditors.

Steinhoff has subordinated R1 306 million of the shareholder's loan due from Steinhoff Investment in favour of all other creditors.

71 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

28. FINANCIAL INSTRUMENTS

The executive team is responsible for implementing the risk management strategy to ensure that an appropriate risk management framework is operating effectively across the group, embedding a risk management culture throughout the group. The board and the audit and risk committee are provided with a consolidated view of the risk profile of the group, and any major exposures and relevant mitigating actions are identified.

The system of risk management is designed so that the different business units are able to tailor and adapt their risk management processes to suit their specific circumstances.

Regular management reporting and internal audit reports provide a balanced assessment of key risks and controls. The financial director provides quarterly confirmation to the board that financial and accounting control frameworks have operated satisfactorily and consistently.

The group does not speculate in the trading of derivative or other financial instruments. It is group policy to hedge exposure to cash and future contracted transactions.

72 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Loans and receivables Loans and Designated and other receivables At fair value as at fair financial and other through value Available for liabilities at Total financial profit or through sale financial amortised carrying liabilities at Total fair loss1 profit or loss assets cost values fair value values Rm Rm Rm Rm Rm Rm Rm

28.1 Total financial assets and liabilities 2015 Investments and loans 86 - 350 6 261 6 697 6 261 6 697 Trade and other receivables (financial assets) 133 - - - 133 - 133 Non-current financial assets 219 - 350 6 261 6 830 6 261 6 830

Trade and other receivables (financial assets) 268 - - 14 889 15 157 14 889 15 157 Investments and loans 1 599 - - 7 306 8 905 7 306 8 905 Cash and cash equivalents - - - 37 905 37 905 37 905 37 905 Current financial assets 1 867 - - 60 100 61 967 60 100 61 967

Long-term interest-bearing loans and borrowings - - - (56 344) (56 344) (58 455) (58 455) Trade and other payables (financial liabilities) (93) - - - (93) - (93) Non-current financial liabilities (93) - - (56 344) (56 437) (58 455) (58 548)

Short-term interest-bearing loans and borrowings - - - (5 847) (5 847) (5 847) (5 847) Bank overdrafts and short-term facilities - - - (1 856) (1 856) (1 856) (1 856) Trade and other payables (financial liabilities) (61) - - (42 927) (42 988) (42 927) (42 988) Current financial liabilities (61) - - (50 630) (50 691) (50 630) (50 691) 1 932 - 350 (40 613) (38 331) (42 724) (40 442)

Net gains recognised in profit or loss (511) (64) (3 551) - (4 126) Net gains recognised in other comprehensive income - - (341) - (341) (511) (64) (3 892) - (4 467)

Total interest income from continuing and discontinued operations - - (1 967) (1 967) Total interest expense from continuing and discontinued operations 63 - 3 509 3 572 63 - 1 542 1 605

1 This category includes derivative financial instruments.

73 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Loans and receivables Loans and and other receivables Designated as financial and other At fair value at fair value Available for liabilities at financial through profit through profit sale financial amortised Total carrying liabilities at Total fair or loss1 or loss assets cost values fair value values Rm Rm Rm Rm Rm Rm Rm

2014 Investments and loans 80 - 3 895 6 424 10 399 6 424 10 399 Trade and other receivables (financial assets) - - - 55 55 55 55 Non-current financial assets 80 - 3 895 6 479 10 454 6 479 10 454

Trade and other receivables (financial assets) 13 - - 15 323 15 336 15 323 15 336 Investments and loans - - - 5 928 5 928 5 928 5 928 Cash and cash equivalents - - - 16 341 16 341 16 341 16 341 Current financial assets 13 - - 37 592 37 605 37 592 37 605

Long-term interest-bearing loans and borrowings - - - (55 580) (55 580) (59 548) (59 548) Trade and other payables (financial liabilities) (34) - - - (34) - (34) Non-current financial liabilities (34) - - (55 580) (55 614) (59 548) (59 582)

Short-term interest-bearing loans and borrowings - (1 594) - (4 817) (6 411) (4 831) (6 425) Bank overdrafts and short-term facilities - - - (2 436) (2 436) (2 436) (2 436) Trade and other payables (financial liabilities) (197) - - (31 767) (31 964) (31 767) (31 964) Current financial liabilities (197) (1 594) - (39 020) (40 811) (39 034) (40 825) (138) (1 594) 3 895 (50 529) (48 366) (54 511) (52 348)

Net (gains) and losses recognised in profit or loss 168 (143) 43 (354) (286) Net (gains) and losses recognised in other comprehensive income - - 55 69 124 168 (143) 98 (285) (162)

Total interest income from continuing and discontinued operations - - (1 506) (1 506) Total interest expense from continuing and discontinued operations 78 - 3 656 3 734 78 - 2 150 2 228

1 This category includes derivative financial instruments.

No items were classified as 'held to maturity' during either period presented.

74 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Fair value Fair value 2015 2014 hierarchy Valuation techniques and key inputs Rm Rm

28.2 Fair values Listed investments - ordinary Level 1 Quoted 30-day volume weighted average prices in 1 749 3 769 shares, preference shares and an active market. unit trusts Unlisted investments - ordinary Level 2 Adjusted quoted prices in an active market. 286 206 shares Trade and other receivables - Level 2 The fair values of interest rate swaps are based on broker 133 - derivative financial assets - quotes. Those quotes are tested for reasonability by interest rate swaps discounting estimated future cash flows based on the terms Trade and other payables - Level 2 and maturity of each contract using market interest rates for (93) (165) derivative financial liabilities - a similar instrument at the measurement date. interest rate swaps Trade and other receivables - Level 2 The fair values of forward exchange contracts are based on 268 13 derivative financial assets - foreign their listed market price, if available. If a listed market price currency forward contracts is not available, then the fair value is estimated by Trade and other payables - Level 2 discounting the difference between the contractual forward (61) (66) derivative financial liabilities - price and current forward price for the residual maturity of foreign currency forward contracts the contract using a risk-free interest rate (based on government bonds). Interest-bearing loans and Level 2 Discounted cash flow. Future cash flows are estimated - (1 594) borrowings - 2005 US note based on forward exchange rates (from observable forward purchase agreement exchange rates at the end of the reporting period) and contract forward rates, discounted at a rate that reflects the credit risk of the counterparty.

The fair values are not necessarily indicative of the amounts the group could realise in the normal course of business.

There were no level 3 financial assets or financial liabilities at 30 June 2015 and 30 June 2014. There were no transfers between level 1 and level 2 during the year.

28.3 Foreign currency risk The group's manufacturing and sourcing operating costs and expenses are principally incurred in Chinese yuan, Hungarian forint, Polish zloty, South African rand and US dollars. Its revenue derived from outside Africa, however, is principally in Australian dollars, euros, Polish zloty, Swiss franc, UK pounds and US dollars. The group's business model is based on the strategy of locating production in, and sourcing materials from, emerging low-cost economies and supplying finished products into developed economies.

It is group policy to hedge exposure to cash and future contracted transactions in foreign currencies for a range of forward periods, but not to hedge exposure for the translation of reported profits or reported assets and liabilities.

Exposure to currency risk Currency risk (or foreign exchange risk), as defined by IFRS 7, arises on financial instruments that are denominated in a foreign currency, i.e. in a currency other than the functional currency in which they are measured. For the purpose of IFRS 7, currency risk does not arise from financial instruments that are non-monetary items or from financial instruments denominated in the functional currency.

Differences resulting from the translation of subsidiary financial statements into the group's presentation currency are not taken into consideration.

75 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

The carrying amounts of the group's material foreign currency denominated monetary assets and liabilities (excluding intragroup loan balances) that will have an impact on profit or loss when exchange rates change, at reporting date, are as follows: Euros UK pounds US dollars Rm Rm Rm

2015 Investments and loans 10 - - Trade and other receivables (financial assets excluding financial derivatives) 327 99 55 Cash and cash equivalents 123 11 7 Long-term interest-bearing loans and borrowings (21) - (737) Short-term interest-bearing loans and borrowings (8) (159) - Trade and other payables (financial liabilities excluding financial derivatives) (719) (3) (970) Pre-derivative position (288) (52) (1 645) Derivative effect 8 - 205 Open position (280) (52) (1 440) 2014 Investments and loans 1 - - Trade and other receivables (financial assets excluding financial derivatives) 187 146 52 Cash and cash equivalents 36 2 35 Long-term interest-bearing loans and borrowings - (193) (646) Short-term interest-bearing loans and borrowings - (160) (2 025) Trade and other payables (financial liabilities excluding financial derivatives) (154) (1) (1 030) Pre-derivative position 70 (206) (3 614) Derivative effect 146 - (1 505) Open position 216 (206) (5 119)

The following significant exchange rates applied during the year and were used in calculating sensitivities: Reporting Reporting Forecast Forecast date spot date spot rate 1 rate 1 rate rate 30 June 2016 30 June 2015 2015 2014

Rand Euro 13.1225 14.1025 13.5628 14.5721 UK pound 19.1208 17.7125 19.0652 18.1816 US dollar 12.5700 10.5950 12.1211 10.6697

Euro UK pound 0.6863 0.7962 0.7114 0.8015 US dollar 1.0440 1.3311 1.1189 1.3657

1 The forecast rates represent a weighting of foreign currency rates forecasted by the major banks that the group transacts with regularly. These rates are not necessarily management's expectations of currency movements.

Sensitivity analysis The table below indicates the group's sensitivity at year-end to the movements in the major currencies that the group is exposed to on its financial instruments. The percentages given below represent a weighting of foreign currency rates forecasted by the major banks that the group transacts with regularly. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis was performed on the same basis for 2014.

76 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Rm Rm

The impact on the reported numbers, using the forecast rates as opposed to the reporting date spot rates, is set out below. Through (profit)/loss Euro weakening by 3.2% (2014: 3.2%) to the rand (9) 7 UK pound strengthening by 0.3% (2014: weakening by 2.6%) to the rand - (5) US dollar strengthening by 3.7% (2014: weakening by 0.7%) to the rand 53 (36)

If the foreign currencies were to weaken/strengthen against the rand, by the same percentages as set out in the table above, it would have an equal, but opposite, effect on profit or loss.

Foreign exchange contracts The group uses forward exchange contracts to hedge its foreign currency risk against the functional currency of its various global operations. Most of the forward exchange contracts have maturities of less than one year after reporting date. As a matter of policy, the group does not enter into derivative contracts for speculative purposes. The fair values of such contracts at year-end, by currency, were:

Short-term derivatives Assets Fair value of foreign exchange contracts Chinese yuan 45 - US dollar 221 - Other 2 13 268 13 Liabilities Fair value of foreign exchange contracts Euro (46) (1) Swiss franc (14) (11) US dollar (1) (53) Other - (1) Interest rate swap and third currency embedded derivatives - (131) (61) (197) Net derivative assets 207 (184)

Long-term derivatives Interest rate swaps and cross-currency derivatives Assets 133 - Liabilities (93) (34) 40 (34)

Currency options are only purchased as a cost-effective alternative to forward currency contracts.

Cash flow hedges The group classifies certain of its forward exchange contracts that hedge forecast transactions as cash flow hedges. The fair value of such contracts recognised as derivative assets and liabilities and adjusted against the hedging reserve at year-end was:

Fair value loss for the year recognised in other comprehensive income 113 69

Changes in the fair value of forward exchange contracts of economically hedged monetary assets and liabilities in foreign currencies and for which no hedge accounting is applied, are recognised in profit or loss.

77 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

28.4 Interest rate risk Given the group's global footprint and its strategy of low-cost manufacturing and sourcing in emerging markets and sales in developed countries, the group follows a policy of maintaining a balance between fixed and variable rate loans to reflect, as accurately as possible, different interest rate environments, the stability of the relevant currencies, the effect which the relevant interest rates have on group operations and consumer spending within these environments. These variables are taken into account in structuring the group's borrowings to achieve a reasonable, competitive, market-related cost of funding.

As part of the process of managing the group's borrowings mix, the interest rate characteristics of new borrowings and the refinancing of existing borrowings are positioned according to expected movements in interest rates. Interest rate exposure is managed within limits agreed by the board.

The interest and related terms of the group's interest-bearing loans are disclosed in note 20.

At the reporting date the interest rate profile of the group's financial instruments were: Subject to interest rate movement Variable Variable JIBAR and Variable Non-interest- EURIBOR SA prime other Fixed rate bearing Total Rm Rm Rm Rm Rm Rm

2015 Non-current financial assets 4 757 418 - 759 763 6 697 Current financial assets 136 4 896 2 893 44 936 9 106 61 967 Non-current financial liabilities (10 253) (16 247) (1 270) (28 540) (34) (56 344) Current financial liabilities (1 296) (3 003) (2 851) (5 479) (38 195) (50 824) (6 656) (13 936) (1 228) 11 676 (28 360) (38 504) Effect of interest rate swaps (2 886) - - 2 926 - 40 (9 542) (13 936) (1 228) 14 602 (28 360) (38 464) 2014 Non-current financial assets 5 173 62 - 1 159 4 060 10 454 Current financial assets 63 1 364 171 21 292 14 715 37 605 Non-current financial liabilities (19 871) (7 137) (334) (26 934) (1 304) (55 580) Current financial liabilities (5 775) (2 570) (1 779) (614) (29 942) (40 680) (20 410) (8 281) (1 942) (5 097) (12 471) (48 201) Effect of interest rate swaps (2 827) - - 2 662 - (165) (23 237) (8 281) (1 942) (2 435) (12 471) (48 366)

Sensitivity analysis The group is sensitive to movements in the EURIBOR, JIBAR and SA prime rates, which are the primary interest rates to which the group is exposed.

The sensitivities calculated below are based on an increase of 100 basis points for each interest category. These rates are also used when reporting sensitivities internally to key management personnel. 2015 2014 Rm Rm

Through (profit)/loss EURIBOR - 100 basis point increase 95 232 JIBAR and SA prime - 100 basis point increase 139 83

A 100 basis point decrease in the above rates would have had an equal, but opposite, effect on profit or loss.

78 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Cross-currency interest rate swap contracts The group has entered into a number of cross-currency interest rate swap contracts to effectively convert fixed-interest US dollar borrowings into variable-interest euro borrowings. The value of the group's cross-currency interest rate swaps can effectively be split into two components: a portion that is attributable to converting a US dollar-denominated borrowing liability into a euro-denominated borrowing liability (the currency portion) - the value of this portion changes as currency exchange rates change; and a portion that is attributable to converting fixed-rate US dollar interest payments into variable rate euro interest payments (the interest portion) - the value of this portion of the swap changes as US dollar fixed-interest rates, euro variable-interest rates and foreign currency exchange rates change.

The swaps are dedicated to convert a total of US$60 million (2014: US$242 million) of the fixed-rate US dollar-denominated senior notes (note 20) to a variable-rate euro liability. The maturity dates of the swaps are identical to those of the underlying series of senior notes that they effectively offset.

Under the terms of the swaps, the group receives fixed interest at rates varying from 4.49% to 6.27% and pays floating-rate interest at fixed spreads above the six-month EURIBOR rate. The interest payments are due bi-annually, with reset dates being the first day of each calculation period. The embedded derivatives contained within the transactions were calculated with the assistance of major investment banks.

The fair value of the swaps entered into on 15 March 2005, that matured on 15 March 2015, was estimated as a liability of R31 million at 30 June 2014 and was offset with the liability arising from the fair value of the underlying debt liability (the US dollar-denominated senior notes, see note 20) which effectively decreased during 2014 with a fairly similar amount. These fixed-interest rate note purchase agreement liabilities were fair valued through profit or loss in order to eliminate the potential accounting mismatch arising from measuring the derivative cross- currency interest rate swaps at fair value through profit or loss.

The fair value of the swaps entered into on 12 April 2012 was estimated as an asset of R134 million (2014: liability of R34 million). These swaps are designated as cash flow hedges of the exposure to variability in the cash flows arising from foreign currency exchange, initially on the note's US dollar nominal value to be exchanged, and subsequent to the effective date, on the repayments of US dollar interest and capital on the notes.

Fixed for floating interest rate swap contracts The group has entered into a number of fixed for floating-interest rate swap contracts to swap EURIBOR interest payments for fixed-rate interest payments. Cash flows from these swaps are matched with the interest payments on the underlying liabilities. The underlying loans have various maturity dates up to 30 June 2024.

28.5 Other price risks Equity price sensitivity analysis A one percent change in the 30-day VWAP used in the valuation of the listed ordinary shares, categorised as available for sale, would result in a R4 million (2014: R37 million) adjustment to the fair value, through other comprehensive income before taxation.

A one percent change in the 30-day VWAP used in the valuation of the listed ordinary shares, categorised as at fair value through profit or loss, would result in a R17 million (2014: nil) adjustment to the fair value, through profit and loss before taxation.

28.6 Credit risk Potential concentration of credit risk consists principally of short-term cash and cash equivalent investments, trade and other receivables, and loans receivable. The group deposits short-term cash surpluses with major banks of quality credit standing. Trade receivables comprise a large and widespread customer base and group companies perform ongoing credit evaluations on the financial condition of their customers, and appropriate use is made of credit guarantee insurance. At 30 June 2015, the group did not consider there to be any significant concentration of credit risk which had not been adequately provided for. The amounts presented in the statement of financial position are net of provisions for bad debts, estimated by the group companies' management based on prior experience and the current economic environment.

The carrying amounts of financial assets represent the maximum credit exposure.

79 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

2015 2014 Rm Rm

The maximum exposure to credit risk at the reporting date without taking account of the value of any collateral obtained was: Non-current financial assets 6 830 10 454 Current financial assets 61 967 37 605 Less: Instalment sale and loan receivables1 (1 928) (470) 66 869 47 589

1 Included in the trade and other receivables balance is the JD Group and Tenacity's instalment sale and loan receivables. These have been analysed separately, due to the different credit risk relating to these books. JD Group's instalment sale and loan receivables relating to the disposal group for 2014 and 2015 are included in assets held for sale.

The maximum exposure to credit risk, including instalment sale and loan receivables, at the reporting date by segment was (carrying amounts): Integrated retail: Household goods 61 465 46 950 Integrated retail: General merchandise 6 232 - Integrated retail: Automotive 1 100 1 109 68 797 48 059

The maximum exposure to credit risk at the reporting date by geographical region was (carrying amounts): Continental Europe 56 176 34 581 Africa 11 020 7 252 Other 1 601 6 226 68 797 48 059

2015 2015 2014 2014 Rm % Rm %

Ageing of financial assets, excluding instalment sales and loan receivables Not past due or impaired 65 781 98.4 46 596 97.9 Past due 1 to 30 days but not impaired 484 0.7 431 0.9 Past due 31 to 60 days but not impaired 83 0.1 96 0.2 Past due 61 to 90 days but not impaired 125 0.2 70 0.1 Past due more than 90 days but not impaired 350 0.5 362 0.8 Past due but not impaired in full 46 0.1 34 0.1 66 869 100.0 47 589 100.0

80 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Continuing operations Discontinued operations Secured Unsecured Total Secured Unsecured Total Rm Rm Rm Rm Rm Rm

Credit exposure by class to instalment sale and loans receivables 2015 Up to date 23 1 509 1 532 2 354 305 2 659 Performing 36 205 241 1 010 100 1 110 Non-performing 10 145 155 1 039 228 1 267 69 1 859 1 928 4 403 633 5 036 2014 Up to date - 1 1 2 732 872 3 604 Performing - 1 1 1 033 281 1 314 Non-performing 449 19 468 3 498 1 756 5 254 449 21 470 7 263 2 909 10 172

Discontinued operations 2015 2014 Provision As Provision and As and IFRS 5 percentage IFRS 5 percentage of impairments of loan impairments loan Rm receivable Rm receivable

Provision and IFRS 5 impairments against instalment sale and loan receivables included as assets held for sale: Up to date 23 0.9% 13 0.4% Performing 521 46.9% 158 12.0% Non-performing 1 267 100.0% 3 693 70.3% 1 811 36.0% 3 864 38.0%

The 'classes' have been determined on the basis of the market segment in which the individual trading brand operates: Secured Secured against retail product sold Unsecured Unsecured in nature and includes personal loans and third-party loans

The debtors book has been analysed into the following types of accounts, reflecting the accounts in the following categories: Up to date These accounts have no arrears, are therefore up to date and are neither past due nor impaired. An unidentified impairment is raised for these accounts. Performing These accounts are in arrears by less than four contractual instalments and are considered to be past due. Arrears are defined as less than 95% of a contractual instalment. An unidentified impairment is raised for these accounts. Non- These accounts are in arrears by four or more contractual instalments. Arrears are defined as less than 95% of a contractual performing instalment. An identified impairment provision is raised against accounts that are four or more instalments in arrears.

81 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

Continuing operations Discontinued operations Secured Unsecured Total Secured Unsecured Total Rm Rm Rm Rm Rm Rm

Risk analysis for up to date accounts 2015 Low risk 13 1 509 1 522 1 359 213 1 572 Medium risk 8 - 8 793 59 852 High risk 2 - 2 202 33 235 23 1 509 1 532 2 354 305 2 659 2014 Low risk - - - 1 066 521 1 587 Medium risk - 1 1 1 224 340 1 564 High risk - - - 442 11 453 - 1 1 2 732 872 3 604

2015 2014 Rm Rm

Movement in provision for bad debts Balance at beginning of the year (890) (1 749) Provision raised (including amounts acquired on acquisition of subsidiaries) (656) (3 753) Amounts unused reversed 76 22 Amounts used during the year 1 010 1 571 Transfer to assets classified as held for sale - 3 057 Acquired on acquisition of subsidiaries and businesses (450) - Eliminated on disposal of subsidiaries and businesses 26 39 Exchange differences on consolidation of foreign subsidiaries 36 (77) Balance at end of the year (848) (890)

The group has liens over items sold until full payment has been received from customers. The fair value of collateral held against these loans and receivables is linked to the value of the liens. Furthermore, the group has credit insurance to cover its exposure to risk on receivables.

28.7 Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting its obligations associated with financial liabilities. Liquidity risk arises because of the possibility that the entity could be required to pay its liabilities earlier than expected.

The group manages liquidity risk by monitoring forecast cash flows and by ensuring that adequate borrowing facilities are available. Cash surpluses and short-term financing needs of manufacturing and sales companies are mainly centralised in African and European central offices. These central treasury offices invest net cash reserves on the financial markets, mainly in short-term instruments linked to variable interest rates.

The following table details the group's remaining contractual maturity for its financial liabilities. The table has been drawn up on the undiscounted cash flows of financial liabilities based on the earliest date on which the group can be required to pay. The table includes both interest and principal cash flows: 2015 2014 Rm Rm

0 to 3 months (47 368) (30 417) 4 to 12 months (4 802) (11 311) Year 2 (8 970) (12 959) Years 3 to 5 (41 143) (40 164) After 5 years (15 556) (10 321) (117 839) (105 172)

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28.8 Treasury risk A finance forum, consisting of senior executives of the group, meets on a regular basis to analyse currency and interest rate exposure and to review and, if required, adjust the group's treasury management strategies in the context of prevailing and forecast economic conditions.

28.9 Capital risk The group manages its capital to ensure that entities in the group will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The capital structure of the group consists of debt, which includes the borrowings disclosed in note 20, cash and cash equivalents, and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in the statement of changes in equity.

The group's risk management committee reviews the capital structure of the group on a semi-annual basis. As a part of this review, the committee considers the cost of capital and the risks associated with each class of capital. Based on recommendations of the committee, the group will balance its overall capital structure through the payment of dividends, new share issues and share buy-backs as well as the issue of new debt or the redemption of existing debt.

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2015 2014 Rm Rm

29. INSURANCE AND INSURANCE RISK MANAGEMENT

29.1 Assets under insurance contracts Short-term operations Unearned reinsurance premium 73 75 Claims outstanding 55 58 Deferred acquisition costs 38 40 166 173

29.2 Liabilities under insurance contracts 29.2.1 Short-term operations Provision for unearned premiums 260 210 Provision for outstanding claims, including the incurred but not recognised (IBNR) provision 57 131 Reinsurance premium due 9 17 326 358

29.2.2 Long-term operation Provision for unearned premiums 22 54 Provision for outstanding claims, including IBNR 44 76 66 130

It is expected that all insurance contract liabilities will be settled within 12 months from year-end.

The group believes that the liabilities for claims reported in the statement of financial position are adequate. However, it recognises that the process of estimation is based upon certain variables and assumptions which could differ when the claims arise.

29.3 Financial assets Investments 86 79 Treasury bills 157 218 Short-term deposits 327 523 Cash at bank 117 105 687 925

29.4 Revenue Premium income comprised the following:

29.4.1 Short-term operations Gross premiums written 708 832 Provision for unearned premiums (28) (56) Outward reinsurance premiums (136) (216) Earned premiums 544 560

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2015 2014 Rm Rm

29.4.2 Long-term operation Gross premiums written 915 1 153 Provision for unearned premiums (32) 24 Earned premiums 883 1 177

29.4.3 Total premium income 1 427 1 737

29.5 Insurance operations 29.5.1 African operations Risk management objectives and policies for mitigating risk The primary insurance activities carried out by the insurance operations assume the risk of loss from persons that are directly subject to the risk. The insured risks are directly associated with furniture, electronic equipment, motor, accident and health, assets, business interruption, commercial crime and life cover. Cover is provided to persons taking secured and unsecured loans from retailers within the JD Group, to persons purchasing vehicles from dealerships within the JD Group and to companies within the Steinhoff group.

The theory of probability is applied to the pricing and provisioning for the portfolio of insurance contracts. The principal risk to the operations is pricing for the relevant insurance contracts written. With regard to the insured risks associated with furniture, electronic equipment, vehicles and the life of consumers, the pricing risk is considered to be low due to the low sums insured and the short duration of the indemnity period. Pricing risk with regard to the group asset insurance is managed through reinsurance treaties locally and offshore.

In addition, the insurance operation manages its insurance risk through underwriting limits, approval procedures for transactions that involve new products or that exceed set limits, pricing guidelines, centralised management of reinsurance transactions and monitoring of emerging issues.

Underwriting strategy The operation's underwriting strategy is to ensure a balanced portfolio and is based on a large portfolio of similar risks over a large geographical area. This reduces the variability of the outcome.

Terms and conditions of insurance contracts The short-term operations offer cover against physical loss or theft of, or damages to, the insured movable assets.

The long-term operations offer a credit life product. This insurance contract protects the policyholder against the financial obligations from the credit sale agreement in the event of death, temporary or disability or retrenchment. The long-term operations also offer funeral products with individual, immediate family, parent and extended family cover options.

Claims development The operation is liable for all insured events that occurred during the term of the contract, even if the loss is discovered after the end of the contract term, subject to predetermined time scales dependent on the nature of the insurance contract. The operation could therefore be exposed to the risk that claims reserves will not be adequate to fund historic claims (run-off risk). This risk is mitigated through adequate IBNR claims reserves.

In addition, the majority of the operation's insurance contracts are classified as ‘short-tailed’, meaning that any claim is settled within a year after the loss date, reducing the exposure to historic claims.

In terms of IFRS 4 - Insurance Contracts, an insurer need only disclose claims run-off information where uncertainty exists about the amount and timing of claims payments not resolved within one year. Therefore, detailed claims run-off information is not presented.

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Financial risk management Transactions in financial instruments may result in the operations assuming financial risks. These include market risk, credit risk and liquidity risk. Each of these financial risks is described below, together with a summary of the ways in which the operations manage these risks.

Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the operation’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The operations have limited market risk exposure due to the nature and duration of its financial instruments. The operations do not transact in foreign currency.

Credit risk The operation has exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due.

The operations have adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from default. The operations only transacts with entities that are rated the equivalent of investment grade and above. This information is supplied by independent rating agencies, where available, and, if not available, the operation uses other publicly available financial information and its own records to rate its policyholders.

The major concentration of credit risk arises from the operations' cash balances and trade and other receivables. Reputable financial institutions are used for investing and cash handling purposes. Management makes regular reviews to assess the degree of compliance with the operation's procedures on credit.

Credit exposure is controlled and managed by counterparty limits that are reviewed and approved by the insurance entities' risk committee, which meets quarterly.

Liquidity risk Liquidity risk is the risk that cash may not be available to pay obligations when due. The operation's liabilities are matched by appropriate assets and they have significant liquid resources to cover its obligations. The operation's liquidity and ability to meet such calls are monitored quarterly by the risk committee. Trade and other payables all fall due within 12 months.

Capital management The operation manages its capital base to achieve a prudent balance between maintaining capital ratios to support business growth and confidence, and providing competitive returns to shareholders. The capital management process ensures that the operation maintains sufficient capital levels for legal and regulatory compliance purposes. The operation ensure that their actions do not compromise sound governance and appropriate business practices and they eliminate any negative effect on payment capacity, liquidity or profitability.

Long-term operations The operation submit quarterly and annual returns to the Financial Services Board in terms of the Long-term Insurance Act, 52 of 1998. The capital adequacy requirement (CAR) is determined in terms of the same Act. It is an additional capital requirement, (i.e. in addition to capital required to fund current liabilities) for the financial soundness requirement of a long-term insurance company. As at 30 June 2015, the operation's CAR was R47 million (2014: R44 million) and the CAR cover was 13 times (2014: 12 times).

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Short-term operations The operation submits quarterly and annual returns to the Financial Services Board in terms of the Short-term Insurance Act, 53 of 1998. The operation is required at all times to maintain a statutory surplus asset ratio as defined in the same Act. The quarterly return as at 30 June 2015, submitted by the operations to the Regulator, showed that the companies met the minimum capital requirements as at year-end, calculated in terms of the new solvency and assessment management interim measures.

The Long-term and the Short-term operations meet the minimum capital requirements calculated in terms of the new solvency and assessment management's Comprehensive Parallel Runs.

29.5.2 International operations Risk management objectives and policies for mitigating risk Each line of business and each policy is underwritten individually. The risks and exposures are assessed and then mitigated using any of the following: premium, capital, reinsurance protection and collateral (e.g. letter of credit).

Underwriting strategy The underwriting strategy is to assist the clients in managing their insurance risk by providing cost-effective bespoke solutions. The insurance operations are unable to underwrite compulsory insurance.

Terms and conditions of insurance contracts The terms and conditions of the insurance contracts reflect the usual market cover for the risks being insured. The policies also include specific conditions reflecting the structure of the insurance operations.

Claims development The claims function is largely outsourced to third-party adjusters. Based on their assessment of the loss, a claims reserve is created on behalf of the relevant client. The claim reserve is then adjusted to reflect claim payments or additional claim costs as the claim develops.

Market risk, credit risk, liquidity risk and capital management The risks are continually monitored by the insurance managers, with oversight ultimately provided by the White Rock board of directors at the quarterly meetings.

Market risk is minimised by holding funds in local currency in order to match the expected claims.

Reinsurance is used to mitigate insurance risk, but a credit risk remains. The creditworthiness of the reinsurers is considered on an annual basis by reviewing their financial strength prior to finalisation of any contract.

All assets are held in cash using current bank accounts. The cash is deposited with European banks with a minimum Standard & Poor's credit rating of 'A-' (or equivalent).

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30. RELATED-PARTY TRANSACTIONS

Related-party relationships exist between shareholders, subsidiaries, joint-venture companies and associate companies within the group and its company directors and group key management personnel.

These transactions are concluded at arm's length in the normal course of business and include transactions as a result of the group-wide treasury management of foreign currency movements. All material intergroup transactions are eliminated on consolidation.

30.1 Significant subsidiaries 2015 2014 Ownership Ownership Country of incorporation % % Steinhoff Investment Holdings Limited South Africa 100 100 Steinhoff Africa Holdings Proprietary Limited South Africa 100 100 Ainsley Holdings Proprietary Limited South Africa 100 100 JD Group Limited South Africa 87 86 Pepkor Holdings Proprietary Limited South Africa 100 - Steinhoff Services Limited South Africa 100 100 Steinhoff Finance Holdings GmbH Austria 100 100 Steinhoff Möbel Holdings Alpha GmbH Austria 100 100 Steinhoff Europe AG Austria 100 100 Pat Cornick International BV The Netherlands 100 100 Steinhoff Asia Pacific Holdings Proprietary Limited Australia 100 100 Steinhoff Asia Pacific Limited Australia 100 100 Steinhoff Germany GmbH Germany 100 100 Steinhoff Europe AG Switzerland 100 100 Steinhoff Retail GmbH Austria 100 100 Conforama Holdings S.A. France 99 99 Steinhoff UK Holdings Limited United Kingdom 100 100 Homestyle Operation Limited United Kingdom 100 100 Steinhoff UK Beds Limited United Kingdom 100 100 Tau Enterprises GmbH Germany 100 100 Hemisphere International Properties BV The Netherlands 100 100

A full list of subsidiaries of the company is available for inspection by shareholders on request at the registered office of the company.

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30.2 Trading transactions Key management personnel did not have any material transaction with the group. All transactions were at market-related prices.

The following is a summary of material transactions with associate companies and joint-venture companies during the year and receivables and payables balances at year-end:

2015 2014 Rm Rm

Net goods and services purchased from/sold to: KAP Industrial Holdings Limited and its subsidiaries 376 60 Net fees and settlement discounts, including administration and management fees: KAP Industrial Holdings Limited and its subsidiaries 56 - PSG Group Limited and its subsidiaries 1 - 57 - Net rent received from: KAP Industrial Holdings Limited and its subsidiaries 34 - Net finance costs received from: KAP Industrial Holdings Limited and its subsidiaries 19 - Dividend received from: KAP Industrial Holdings Limited 125 - PSG Group Limited 75 50 200 50 Receivables from: KAP Industrial Holdings Limited and its subsidiaries 111 91 Payables to: KAP Industrial Holdings Limited and its subsidiaries 122 35 Loans from associate companies: KAP Industrial Holdings Limited and its subsidiaries (11) (116)

30.3 Compensation of key management personnel Key management personnel are defined as directors of the company and executive directors of the company's major subsidiaries (as defined in the JSE Listing Requirements): Short-term employee benefits 330 198 Share-based payments - related expense 194 183 524 381

Number of members 25 30

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The three top earners received R49.7 million (2014: R34.9 million) and share vestings to the value of R49.5 million (2014: R36.2 million) in compensation during the year. The employees of listed subsidiaries as well as the directors of Steinhoff have been excluded from this calculation.

30.4 Directors Details relating to directors' emoluments, shareholding in the company and interest of directors and officers are disclosed in note 31.

30.5 Shareholders The principal shareholders of the company are detailed in the analysis of shareholders.

Directors' shareholdings are detailed in note 31.

30.6 Interest of directors and officers in contracts All directors and officers of the company have, other than described below, confirmed that they had no interest in any agreement of significance with the company or any of its subsidiary companies, which could have resulted in a conflict of interest during the year.

During the year under review, contracts were concluded with the following companies:

• Hoffman Attorneys (of which SJ Grobler is a partner) provided legal services to group companies and was reimbursed for expenses to the amount of approximately R9.0 million (2014: R8.3 million).

• PSG Capital Limited and associate companies (of which JF Mouton is a director) (a subsidiary of PSG Group Limited of which JF Mouton and MJ Jooste are directors) acted as sponsor and advisor to the group, in respect of which fees were paid totalling approximately R0.7 million (2014: R1.3 million).

• During the year, Steinhoff acquired 52.47% of Pepkor Holdings Proprietary Limited from Titan Premier Investments Proprietary Limited (Titan). As consideration Steinhoff issued 609 145 624 ordinary shares to Thibault Square Financial Services Proprietary Limited (Thibault). CH Wiese is a beneficiary of a family trust, which is the ultimate controlling shareholder of Titan and Thibault.

• During the year, Steinhoff acquired 37.06% of Pepkor Holdings Proprietary Limited from Brait SE (Brait). As consideration Steinhoff issued 200 million ordinary shares to Brait and paid cash of R15.1 billion. CH Wiese has a 34.64% indirect interest in Brait ordinary shares.

• During the year, Pepkor Retail Proprietary Limited received fees from Southern View Finance Limited (in which CH Wiese has material indirect interests) to the amount of R67.1 million. At year-end, R5.2 million of this amount was still receivable.

• MJD Aviation Partnership (of which MJ Jooste, KJ Grové and DM van der Merwe are partners) provided aviation services to the group in the prior year for an amount of R0.2 million.

• During the 2014 year, Mayfair Speculators Proprietary Limited (of which MJ Jooste is a director) made short-term deposits with a subsidiary of the group. Interest paid during the year amounted to R1.0 million (2014: R3.4 million). The deposit of R186 million was repaid on 4 August 2014.

All the contracts were concluded at arm's length in the normal course of business and are no more favourable than those arranged with third parties.

90 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015 Remuneration and fees (including foreign amounts Company converted to contribution Company rand for Basic foreign Basic and expense Annual Strategic Deferred directors' reporting remuneration remuneration allowances bonus bonus bonus1 fees2 purposes) €'000 R'000 R'000 '000 R'000 R'000 R'000 R'000

31. REMUNERATION REPORT

31.1 Remuneration Executive directors 2015 HJK Ferreira 150 3 340 488 R9 360 6 667 - 788 22 702 SJ Grobler3 180 3 039 361 R9 360 6 667 - 788 22 687 TLJ Guibert4, 5 448 - - €1 431 - - 394 26 206 MJ Jooste 2 097 - 825 R25 478 6 667 12 018 788 74 574 AB la Grange 279 2 690 304 R10 000 6 667 - 788 24 278 FJ Nel 90 1 722 210 R1 855 1 000 - 788 6 810 DM van der Merwe 1 022 - 771 R13 102 2 500 8 927 788 40 125 . 5 122 217 382 2014 HJK Ferreira 150 3 192 474 R3 000 - - 744 9 527 SJ Grobler3 180 2 930 346 R3 000 - - 744 9 560 TLJ Guibert4 901 - - €450 - - 744 19 811 MJ Jooste 1 744 - 825 R11 306 - - 744 37 481 AB la Grange 279 2 353 278 R3 000 - - 744 10 310 FJ Nel 90 1 568 228 R1 750 - - 744 5 560 DM van der Merwe 850 - 719 R3 230 - - 744 16 692 . 5 208 108 941

Alternate directors and officers 2015 JNS du Plessis 60 2 858 - R4 240 1 500 - 788 10 210 KJ Grové - 3 650 662 R4 770 2 000 - 788 11 870 A Krüger-Steinhoff6 ------368 368 M Nel 50 2 636 364 R5 750 3 333 - 788 13 558 2 732 36 006 2014 JNS du Plessis 60 2 716 - R2 000 - - 744 6 307 KJ Grové - 3 405 621 R4 500 - - 744 9 270 A Krüger-Steinhoff6 ------344 344 M Nel 50 2 283 323 R1 750 - - 744 5 806 2 576 21 727

1 Refer to the remuneration report in the integrated report. 2 Directors' fees were paid with basic remuneration. 3 Includes fees and remuneration in respect of professional services rendered. 4 Paid to an entity as management fees. 5 TLJ Guibert became a non-executive director on 5 December 2014. 6 Non-executive director.

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Fees as director Fees for Basic Committees services Total R'000 R'000 R'000 R'000

Non-executive directors 2015 SF Booysen 415 389 440 1 244 DC Brink 415 384 357 1 156 CE Daun 415 - - 415 TLJ Guibert1, 2 208 18 - 226 D Konar 1 662 - - 1 662 MT Lategan 415 218 440 1 073 JF Mouton2 415 36 - 451 HJ Sonn 415 36 - 451 BE Steinhoff 415 - 5 766 6 181 PDJ van den Bosch 415 36 3 498 3 949 CH Wiese2 415 36 2 950 3 401 5 605 1 153 13 451 20 209

2014 SF Booysen 390 364 - 754 DC Brink 390 360 - 750 YZ Cuba3 195 17 - 212 CE Daun 390 - - 390 D Konar 1 560 - - 1 560 MT Lategan 390 204 - 594 JF Mouton2 390 34 - 424 FA Sonn3 195 65 - 260 HJ Sonn4 273 - - 273 BE Steinhoff 390 - 5 960 6 350 PDJ van den Bosch 390 34 3 866 4 290 CH Wiese 390 34 - 424 5 343 1 112 9 826 16 281

1 TLJ Guibert became a non-executive director on 5 December 2014. 2 Paid to various entities as management fees. 3 YZ Cuba and FA Sonn retired on 3 December 2013. 4 HJ Sonn was appointed as an independent non-executive director on 3 December 2013. 2015 2014 R'000 R'000

Directors' fees and remuneration Remuneration paid by: - Company 6 260 5 985 - Subsidiary companies 267 337 140 964 273 597 146 949

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Number Number of rights Number of of rights as at (exercised)/awarded rights as at Offer date 30 June 2014 during the year 30 June 2015

31.2 Share rights Executive directors HJK Ferreira December 20111 392 487 (392 487) - December 2012 393 250 - 393 250 December 2013 442 919 - 442 919 December 2014 - 203 370 203 370 1 228 656 (189 117) 1 039 539 SJ Grobler December 20111 392 487 (392 487) - December 2012 393 250 - 393 250 December 2013 442 919 - 442 919 December 2014 - 203 370 203 370 1 228 656 (189 117) 1 039 539 MJ Jooste December 20111 1 056 504 (1 056 504) - December 2012 1 186 514 - 1 186 514 December 2013 1 669 183 - 1 669 183 December 2014 - 869 301 869 301 3 912 201 (187 203) 3 724 998 AB la Grange December 20111 321 126 (321 126) - December 2012 393 250 - 393 250 December 2013 487 490 - 487 490 December 2014 - 233 499 233 499 1 201 866 (87 627) 1 114 239 FJ Nel December 20111 231 924 (231 924) - December 2012 229 396 - 229 396 December 2013 258 369 - 258 369 December 2014 - 120 515 120 515 719 689 (111 409) 608 280 DM van der Merwe December 20111 428 168 (428 168) - December 2012 610 207 - 610 207 December 2013 858 437 - 858 437 December 2014 - 439 041 439 041 1 896 812 10 873 1 907 685 Total executive directors 10 187 880 (753 600) 9 434 280

Alternate directors JNS du Plessis December 20111 249 765 (249 765) - December 2012 262 166 - 262 166 December 2013 295 279 - 295 279 December 2014 - 135 580 135 580 807 210 (114 185) 693 025 KJ Grové December 20111 267 605 (267 605) - 267 605 (267 605) - M Nel December 20111 196 597 (196 597) - December 2012 229 396 - 229 396 December 2013 278 565 - 278 565 December 2014 - 135 580 135 580 704 558 (61 017) 643 541 Total alternate directors and officers 1 779 373 (442 807) 1 336 566

1 The market price of share rights exercised was R65.97 on 17 February 2015.

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Number Number of rights Number of of rights as at (exercised)/awarded rights as at Offer date 30 June 2014 during the year 30 June 2015

Non-executive directors TLJ Guibert1 December 20112 568 281 (568 281) - December 2012 610 207 - 610 207 December 2013 858 437 - 858 437 Total non-executive directors 2 036 925 (568 281) 1 468 644

Share rights in associate company: KAP KJ Grové December 2012 2 377 036 - 2 377 036 December 2013 2 818 191 - 2 818 191 December 2014 - 2 191 160 2 191 160 5 195 227 2 191 160 7 386 387

1 Granted while serving the company as an executive director. 2 The market price of share rights exercised was R57.62 on 1 December 2014.

Some of the exercised share rights were sold by directors during the year. Refer to note 31.3 for directors' interest in share capital.

All the share rights granted were granted on 1 December 2014. The purchase price for Steinhoff shares is 0.5 cents per share and KAP shares is 20 cents per share.

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2015 2014 Number of Value of rights Number of Value of rights rights exercised rights exercised exercised R'000 exercised R'000

Value of share rights exercised during the year Executive directors HJK Ferreira 392 487 25 892 464 684 18 657 SJ Grobler 392 487 25 892 464 684 18 657 TLJ Guibert 568 281 32 744 - - MJ Jooste 1 056 504 69 698 1 266 034 50 831 AB la Grange 321 126 21 185 354 045 14 215 FJ Nel 231 924 15 300 265 534 10 661 DM van der Merwe 428 168 28 246 486 812 19 546 3 390 977 218 957 3 301 793 132 567 Alternate directors JNS du Plessis 249 765 16 477 292 087 11 727 KJ Grové 267 605 17 654 309 789 12 438 M Nel 196 597 12 970 141 618 5 686 713 967 47 101 743 494 29 851

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Direct interest Indirect interest Indirect Beneficial Beneficial Non-beneficial Total

31.3 Interest in Steinhoff share capital Executive directors 2015 HJK Ferreira - 3 055 577 - 3 055 577 SJ Grobler - 4 674 303 - 4 674 303 MJ Jooste - 67 056 502 - 67 056 502 AB la Grange 1 289 376 - - 1 289 376 FJ Nel 2 182 105 4 104 214 2 186 423 DM van der Merwe - 5 711 982 - 5 711 982 3 471 481 80 502 468 214 83 974 163 2014 HJK Ferreira - 2 663 090 - 2 663 090 SJ Grobler - 4 281 816 - 4 281 816 MJ Jooste - 65 527 209 - 65 527 209 AB la Grange 968 250 - - 968 250 FJ Nel 1 950 181 2 554 - 1 952 735 DM van der Merwe - 5 283 814 - 5 283 814 2 918 431 77 758 483 - 80 676 914

Non-executive directors 2015 SF Booysen - 213 907 - 213 907 DC Brink - 200 000 - 200 000 CE Daun - 2 399 856 - 2 399 856 TLJ Guibert - 300 000 - 300 000 D Konar 356 271 - - 356 271 ML Lategan 142 247 210 759 39 815 392 821 JF Mouton - 7 000 000 - 7 000 000 BE Steinhoff 9 100 000 182 750 000 - 191 850 000 PDJ van den Bosch 669 561 - - 669 561 CH Wiese - 654 874 971 - 654 874 971 10 268 079 847 949 493 39 815 858 257 387 2014 SF Booysen - 213 907 - 213 907 DC Brink - 200 000 - 200 000 CE Daun - 2 399 856 - 2 399 856 D Konar 356 271 - - 356 271 ML Lategan 142 247 194 759 39 815 376 821 JF Mouton - 7 000 000 - 7 000 000 BE Steinhoff 7 923 741 182 692 813 - 190 616 554 PDJ van den Bosch 669 561 - - 669 561 CH Wiese - 44 729 337 - 44 729 337 9 091 820 237 430 672 39 815 246 562 307

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Direct interest Indirect interest Indirect Beneficial Beneficial Non-beneficial Total

Alternate directors 2015 JNS du Plessis - 838 582 - 838 582 KJ Grové - 1 540 283 2 068 1 542 351 A Krüger-Steinhoff1 746 112 63 500 - 809 612 M Nel 427 268 - - 427 268 1 173 380 2 442 365 2 068 3 617 813 2014 JNS du Plessis - 688 723 - 688 723 KJ Grové - 1 272 678 2 068 1 274 746 A Krüger-Steinhoff1 746 112 63 500 - 809 612 M Nel 309 310 - - 309 310 1 055 422 2 024 901 2 068 3 082 391

1 Non-executive director.

Effective date - annual periods commencing on or after

32. NEW ACCOUNTING PRONOUNCEMENTS

At the date of authorisation of these annual financial statements, there are standards and interpretations in issue but not yet effective. These include the following standards and interpretations that have not been early adopted and may have an impact on future financial statements: IFRS 9 Financial Instruments 1 January 2018 IFRS 10 Consolidated Financial Statements: Investment entities: Applying the consolidation exception 1 January 2016 IFRS 11 Joint arrangements: Investment entities: Applying the consolidation exception 1 January 2016 IFRS 12 Disclosure of Interests in Other Entities: Investment entities: Applying the consolidation exception 1 January 2016 IFRS 14 Regulatory Deferral Accounts 1 January 2016 IFRS 15 Revenue from Contracts with Customers 1 January 2018 IAS 1 Presentation of Financial Statements: Disclosure initiative 1 January 2016 IAS 27 Separate Financial Statements: Equity method in separate financial statements 1 January 2016 IAS 28 Investments in Associates: Investment entities: Applying the consolidation exception 1 January 2016 Annual Improvements to IFRSs 2012-2014 Cycle 1 January 2016

32.1 IFRS 9 In July 2014, the IASB issued the completed version of IFRS 9 - Financial Instruments (IFRS 9). The statement addresses the classification and measurement of financial assets and financial liabilities. The new standard enhances the ability of investors and other users of financial information to understand the accounting of financial assets and financial liabilities and aims to reduce complexity. The group is in the process of evaluating the impact the standard will have on the group. This standard will be adopted by the effective date.

32.2 IFRS 10, IFRS 11, IFRS 12, IAS 27 and IAS 28 In December 2014, the IASB issued Investment Entities: Applying the Consolidation Exception. The amendments provide clarification to the requirements on accounting for investment entities. The amendments also provide relief in particular circumstances. The group currently does not meet the definition of an investment entity and therefore the amendments are not expected to affect the group. The amendments will be adopted by the effective date.

32.3 IFRS 14 In December 2012, the IASB decided to develop an interim standard to provide short-term guidance until the rate-regulated activities research project is completed. The group is in the process of evaluating the impact the standard will have on the group. This standard will be adopted by the effective date.

97 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2015

32.4 IFRS 15 In June 2014, the IASB issued IFRS 15 - Revenue from Contracts with Customers (IFRS 15). The standard is aimed at improving the financial reporting of revenue and improving the comparability of the top line in financial statements globally. The core principle of the new standard is for companies to recognise revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The group is in the process of evaluating the impact the standard will have on the group. This standard will be adopted by the effective date.

32.5 IAS 1 In December 2014, the IASB made improvements on the effectiveness of disclosure by issuing amendments to IAS 1 - Presentation of Financial Statements. The amendments encourage companies to apply further professional judgement in determining what information to disclose in their financial statements. The group is in the process of evaluating the impact the amendments will have on the group. The amendments will be adopted by the effective date.

32.6 Annual Improvements to IFRSs 2012-2014 In September 2014, the IASB issued Annual Improvements to IFRSs 2012-2014. The improvements cover the following topics: IFRS 5 - Non- current Assets Held for Sale and Discontinued Operations: Changes in methods of disposal; IFRS 7 - Financial Instruments: Disclosures: Servicing contracts and Applicability of the amendments to IFRS 7 to condensed interim financial statements; IAS 19 - Employee Benefits: Discount rate: regional market issue and IAS 34 - Interim Financial Reporting: Disclosure of information 'elsewhere in the interim financial report'. The group is in the process of evaluating the impact the standard will have on the group. The improvements will be adopted by the effective date.

98 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED ANALYSIS OF SHAREHOLDING for the year ended 30 June 2015

Directors and key Public % management % Other %

Shareholders in South Africa • Number of shareholders 48 095 99.91 41 0.09 1 - • Number of shares 1 445 579 814 62.14 873 671 612 37.56 6 941 250 0.30

Shareholders other than in South Africa • Number of shareholders 1 270 99.45 6 0.47 1 0.08 • Number of shares 1 139 742 525 85.31 196 214 114 14.69 120 281 -

Total • Number of shareholders 49 365 99.90 47 0.10 2 - • Number of shares 2 585 322 339 70.59 1 069 885 726 29.21 7 061 531 0.20

30 June 2015 30 June 2014 Number % Number %

According to the share register of the company, the following shareholders are registered as holding in excess of 5% of the issued share capital of the company: Standard Bank Nominees Transvaal Proprietary Limited 1 202 464 112 32.83 440 426 957 20.87 Ferbros Nominees Proprietary Limited 801 035 914 21.87 120 617 493 5.72 First National Nominees Proprietary Limited 401 716 499 10.97 279 129 149 13.23 SA Stockbrokers Nominees Proprietary Limited 202 070 094 5.52 847 287 - CMB Nominees Proprietary Limited 177 130 707 4.84 108 145 738 5.13 Nedcor Bank Nominees Limited 127 245 642 3.47 441 170 684 20.91 2 911 662 968 79.50 1 390 337 308 65.86

Save for the above, according to the disclosure in terms of section 56 of the Companies Act, the following shareholders are registered as holding in excess of 5% of the issued share capital of the company, as compiled from the nominee disclosures: BS Beteiligungs und Verwaltungs GmbH 191 850 000 5.24 190 616 554 9.03 Brait SE 190 000 000 5.19 - - Coronation Fund Managers 194 011 890 5.30 20 569 975 0.01 Public Investment Commissioners 345 776 460 9.44 297 777 975 14.11 Thibault Square Financial Services1 654 874 971 17.88 - -

1 CH Wiese's shares in 2014 were held in another entity.

99 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED SPECIAL RESOLUTIONS PASSED during the year ended 30 June 2015

STEINHOFF INTERNATIONAL HOLDINGS LIMITED

Resolutions passed at the annual general meeting of shareholders held on 2 December 2014, approving: • the directors’ remuneration for the period 2 December 2014 to the date of the 2015 annual general meeting; • the acquisition by the company, and any of its subsidiaries, of shares issued by the company; • the provision by the company of financial assistance to any related or inter-related company, in accordance with the provisions of sections 44(3)(a)(ii) and 45(3)(a)(ii) of the Companies Act; • the conversion of the issued and authorised ordinary shares and preference shares in the company to shares of no par value; and • the creation of a further 3 000 000 000 (three billion) ordinary no par value shares in the authorised share capital of the company so as to increase the existing no par value shares in the authorised ordinary share capital of the company to 6 000 000 000 (six billion) ordinary shares of no par value each.

Resolutions passed at a general meeting of shareholders held on 26 January 2015, approving the transactions giving rise to the acquisition by the Steinhoff group of Pepkor Holdings Proprietary Limited.

STEINHOFF INVESTMENT HOLDINGS LIMITED

Resolution passed at the general meeting of shareholders held on 9 September 2014, approving the provision by the company of financial assistance to any related or inter-related company, in accordance with the provisions of sections 44(3)(a)(ii) and 45(3)(a)(ii) of the Companies Act.

STEINHOFF AFRICA HOLDINGS PROPRIETARY LIMITED

Resolution passed at the general meeting of shareholders held on 29 August 2014, approving the provision by the company of financial assistance to any related or inter-related company, in accordance with the provisions of sections 44(3)(a)(ii) and 45(3)(a)(ii) of the Companies Act.

Resolution passed at the general meeting of shareholders held on 20 February 2015, approving the amendment to the memorandum of incorporation of the company by increasing the share capital of the company through the creation of 10 000 unclassified shares and adopting the terms and conditions attaching to the perpetual preference shares in issue.

Resolution passed at the general meeting of shareholders held on 21 May 2015, approving the further amendment to the memorandum of incorporation of the company by the reclassification of the existing preference shares in issue as A class preference shares of R0.01 (one cent) each; and adopting the terms and conditions attaching to a number of previously unclassified shares newly classified and issued as B Class preference shares.

AINSLEY HOLDINGS PROPRIETARY LIMITED

Resolution passed at the general meeting of shareholders held on 26 January 2015, approving the conversion of the authorised ordinary share capital in the company to no par value shares.

Resolution passed at the general meeting of shareholders held on 3 March 2015, approving the increase in the authorised share capital of the company through the creation of an additional 15 000 000 unclassified shares.

Resolution passed at the general meeting of shareholders held on 21 May 2015, approving the amendment to the memorandum of incorporation of the company through the adoption of the terms and conditions attaching to a number of previously unclassified shares newly classified and issued as preference shares in the share capital of the company.

100 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 STEINHOFF INTERNATIONAL HOLDINGS LIMITED CORPORATE INFORMATION

REGISTRATION NUMBER SPONSOR 1998/003951/06 PSG Capital Proprietary Limited (Registration number 2002/017362/06) REGISTERED OFFICE Building 8 28 Sixth Street Ground Floor, DM Kisch House Wynberg Inanda Green Business Park Sandton, 2090 54 Wierda Road West (PO Box 1955, Bramley 2018) Wierda Valley Sandton, 2196 WEBSITE (PO Box 987, Parklands 2191) www.steinhoffinternational.com TRANSFER SECRETARIES AUDITORS Computershare Investor Services Proprietary Limited Deloitte & Touche, Chartered Accountants (SA) (Registration number 2004/003647/07) Riverwalk Office Park, Block B Ground Floor, 70 Marshall Street 41 Matroosberg Road Johannesburg, 2001 Ashlea Gardens X6 (PO Box 61051, Marshalltown 2107) Pretoria, 0081 (PO Box 11007, Hatfield 0028) COMMERCIAL BANK Standard Corporate and Merchant Bank SECRETARY (A division of The Standard Bank of South Africa Limited) Steinhoff Africa Secretarial Services Proprietary Limited (Registration number 1962/000738/06) 28 Sixth Street Ground Floor, 3 Simmonds Street Wynberg Johannesburg, 2001 Sandton, 2090 (PO Box 61150, Marshalltown 2107) (PO Box 1955, Bramley 2018) In addition, the group has commercial facilities with various other banking and financial institutions worldwide.

101 WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15 www.steinhoffinternational.com WorldReginfo - 0e4330e0-f509-4794-9d69-7b7a6345fd15