Poundland has reported an 84% fall in annual pre-tax profits to £5.9m, as it is stalked by a potential South African buyer which now owns almost a quarter of the business.
The discount retailer said same-store sales fell just shy of 4% in the year to 27 March.
But total sales rose 18.7% to £1.3bn - boosted by 60 new stores and its troubled £55m purchase of rival 99p Stores.
It said the numbers reflected a "challenging but transformative" year in which it also spent heavily on converting 130 99p Stores sites.
The Group put costs of almost £18m on the purchase, including conversions.
Jim McCarthy, outgoing chief executive at Poundland, said: "After a period of significant change, including an unprecedented integration programme at pace, Poundland now has a unified estate of over 900 stores.
"The retail environment remains challenging, but with our significantly enlarged store portfolio, greater scale and ability to focus fully on trading our stores, I believe we are well placed to make progress in the year ahead".
The company announced the figures just hours after Steinhoff, which failed in a battle with Sainsbury's to land Argos, confirmed it had taken a 23% stake in Poundland and confirmed any potential offer would be made in cash.
Its bid interest had emerged earlier on Wednesday with Poundland urging its investors to take no action.
Steinhoff, which is backed by South African billionaire Christo Wiese, gave little detail on its interest in Poundland, only saying it would make a further announcement "in due course".
It already owns Bensons for Beds in the UK and Conforama in France, as well as other retailers in Europe, Africa and Australasia.
Mr Wiese's Brait investment group also owns controlling stakes in Virgin Active, New Look and food chain Iceland.
Under City takeover rules, it must make a firm bid or walk away before 5pm on 13 July.
Poundland shares, which remain over 30% down on a year ago, rose more than 2% in Thursday trading.
Verdict Retail analyst Andrew Hall said of the chain's results: "The integration of 99p Stores has dealt a blow to profits, however even stripping out the impact of the takeover, profits still tumbled by 13.5% to £37.8m.
"It is clear then that the integration, and resulting sizeable increase in size of the business, has certainly proved unsettling for Poundland.
"At the same time, the retailer is reeling from the effects of tough high street conditions; a key contributor to its -3.9% decline in like-for-like sales".
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