Gary Chaplin. Picture: FINANCIAL MAIL/JEREMY GLYN
Gary Chaplin. Picture: FINANCIAL MAIL/JEREMY GLYN

The KAP team are not impressed. For 12 months now they have been caught up in the Steinhoff swirl.

No matter what they do, the media keeps describing this muscular industrial group as a "Steinhoff subsidiary" or "Steinhoff associate"; the 20,000 employees cringe, investors look a little wary and the share price remains trapped on a rather miserly p:e of seven.

At the group’s AGM — held this year at Spier wine farm instead of (Steinhoff-linked) Lanzerac — CEO Gary Chaplin informed shareholders of what has been done to ensure there are no longer any links with Steinhoff.

Strangely, the encouraging information had to be prompted by a shareholder’s question.

This sombre industrial company doesn’t believe in shouting from rooftops. Chaplin tells the FM they informed shareholders of the moves at the results presentations during the year and issued two Sens announcements. Not quite rooftop stuff.

Immediately after the fateful December 5 2017 announcement of "accounting irregularities" at Steinhoff and the resignation of Markus Jooste, KAP held a special board meeting to determine what to do to protect its balance sheet and operations. It moved its head office from the building it shared with Steinhoff and terminated the service-level agreement that had been in place.

Property rentals were checked to make sure they had been done at arm’s length, banking relationships were checked to ensure there were no cross-guarantees. For a group of businesses that appeared to have been involved in much of Jooste’s corporate gymnastics up to about 2012, it was also important to ensure there were no off-balance sheet funnies hidden out of sight.

After all that work — on top of producing an impressive set of results — it’s probably understandable that the executives are a little agitated that they still haven’t been able to shake off the Steinhoff tag.

The most obvious problem is that Steinhoff is still the single largest shareholder, with a 26% stake, down from 43% in March. This means the market is waiting for a hefty block of shares to be dropped. Chaplin says he’d love for Steinhoff to provide some clarity on what it intends doing and notes that the 17% offload in March was handled with minimum disruption.

Less obvious is that many of the senior executives were appointed by Steinhoff — like it or not, the resulting perceptions may take time to fade.

Once out of the Steinhoff shadow it’s difficult not to imagine this share enjoying a robust rerating. The group offers an impressive African success story that deserves to be sung from the rooftops.