15225 replies to this topic

[DayTraderDad]

Hi DTD,

 

In a simple form, it would have been double counting if Steinhoff consolidated the same debt from the MF financials as well as the Steinhoff financials. 

 

MF loans with Group companies have been eliminated on consolidation.  In simple terms if Steinhoff gets a loan from an external party and then loans it to MF a subsidiary, only the Steinhoff debt to external party needs to be reported. 

 

The loan to an associate or similar could be booked as an asset if Steinhoff does not have control.  If you have control, the whole arms length and related parties issue is triggered.

 

But the real thing is whether the  inter-company financing falls within IFRS 9 or IAS 27.  Steinhoff needs to consider if this was a loan or an investment in another company.  There are also questions as to whether it is capital or not.

 

It is not a foregone conclusion that the loan will appear as a debt owed to Steinhoff by MF.  This is particularly the case as when Steinhoff acquired MF did they inject capital or did they loan the company funds.  It is further complicated by the fact that MF carried significant debt already when acquired by Steinhoff.   During the whole restructuring it seems that the Steinhoff position changed from investing in a wholly own subsidiary which was consolidated, to now wanting the investment in subsidiary to be regarded as a loan to an associate.

 

As I said.  Not simple.

 

Regards

Captainfrom82

Hi Captain,

 

Thank you for the explanation I just hope that the debt is taken by MF and Confo because do not believe SNH can give MF and Confo away for nothing and then have Pepkor SA and EU to pay the E7.9 bil.

It is clearly not possible to continue operation with a negative equity for shareholders which is the case at present.

I do not believe if SNH had to sell the 71% of Pepkor SA and 100% of Pepkor Eu they will get E7.9 bil?

 

 

Regards,

DTD

 

So maybe that is why the share price is were it is

[Captainfrom82]

Hi Captain,

 

I agree its not that simple but I was referring to the CVA debt only. I am not an accountant but if the balance sheet of MF shows debt of E2.9 to SNH surely SNH cannot also have the same debt because would be double accounting (after deconsolidation). I can understand that SNH might still be responsible for the debt but MF has the responsibility to pay it so the debt has to show as a loan once deconsolidated?

 

Anyway days to go and we will find out.

 

Regards,

DTD

 

Hi DTD,

 

In a simple form, it would have been double counting if Steinhoff consolidated the same debt from the MF financials as well as the Steinhoff financials. 

 

MF loans with Group companies have been eliminated on consolidation.  In simple terms if Steinhoff gets a loan from an external party and then loans it to MF a subsidiary, only the Steinhoff debt to external party needs to be reported. 

 

The loan to an associate or similar could be booked as an asset if Steinhoff does not have control.  If you have control, the whole arms length and related parties issue is triggered.

 

But the real thing is whether the  inter-company financing falls within IFRS 9 or IAS 27.  Steinhoff needs to consider if this was a loan or an investment in another company.  There are also questions as to whether it is capital or not.

 

It is not a foregone conclusion that the loan will appear as a debt owed to Steinhoff by MF.  This is particularly the case as when Steinhoff acquired MF did they inject capital or did they loan the company funds.  It is further complicated by the fact that MF carried significant debt already when acquired by Steinhoff.   During the whole restructuring it seems that the Steinhoff position changed from investing in a wholly own subsidiary which was consolidated, to now wanting the investment in subsidiary to be regarded as a loan to an associate.

 

As I said.  Not simple.

 

Regards

Captainfrom82

[DayTraderDad]

Buy / Sells triggering at 130c?? 

Could be my take is H1-2019 information leaked to the same institution that want to claim damages but its not insider trading!!! Hahaha

[DayTraderDad]

Hi DTD,

 

The definition and treatment of various Accounting principle have changed materially since I qualified.  This is especially the case for definition and treatment of Assets held for sale; and for Discontinued Operations.

 

The matter is not a simple matter of taking MF's debt of 2.9b and subtracting it.  On the 2018 Balance Sheet, management assessed that Mattress Firm had met the criteria as a disposal group and as a discontinued operation.MF has already been classified as Assets held for sale (E1927 of which E1003 in MF); and Liabilities for Assets held for sale (E1286 of which E908 is for MF).  

 

MF holds E254 external financial liabilities, with the bulk of their debt as inter-company (we got sight of this in the financials Steinhoff provided).  

 

It will be interesting to see the effects of the unbundling and restructuring of of SUSHI into SEAG in terms of the inter-company loan going forward.

 

Regards

Captainfrom82 

Hi Captain,

 

I agree its not that simple but I was referring to the CVA debt only. I am not an accountant but if the balance sheet of MF shows debt of E2.9 to SNH surely SNH cannot also have the same debt because would be double accounting (after deconsolidation). I can understand that SNH might still be responsible for the debt but MF has the responsibility to pay it so the debt has to show as a loan once deconsolidated?

 

Anyway days to go and we will find out.

 

Regards,

DTD

[DayTraderDad]

Hi DTD,

 

The so-called "outdated accounts" may be to some extend even be better than 2019.  For example, some expenses may be only partially reflecting.  The higher interest rates will reflect for a full period from 2019.  Same for restructuring costs, advisor fees, etc.

 

It is definitely not only positives with effect from the 2019 financials.

 

But the core message I was trying to make is that the underlying business needs to improve.  So when you exclude the overheads (which may arguably be attributed to the  Steinhoff troubles), and if you only focus on the revenue and the cost of sales.  Even here Steinhoff is some 10% worse of than the industry benchmarks. Note that MF has already been removed as it is treated as Discontinued Operations (along with ERM, Automotive and the European Manufcaturing).

 

So the point is that either the revenue is too low (as in the selling price is too low), or conversely the Cost of Sales is too high.  And this has nothing to do with finance costs, impairments, or MF activities.

 

Regards

Captainfrom82

Hi Captain,

 

What I was referring is no point looking at what happened because the future SNH will be much different all loss making business with be sorted or disposed. 

 

Very soon the full restructure should be in place and SNH will be a transformed company and quite sure the overheads will be much less and will be returning to profits.

 

If we look at Pepkor SA running well with a share price of R18 when Pepkor Eu lists it should be trading close to that and they are certainly profitable.

 

In  the 2017 and 2018 there was lots of loss making outfits running that did not reflect the true value of Pepkor Europe.

 

Anyway I agree the H1-2019 will show more what is really happening now.

 

Regards,

DTD

[DayTraderDad]

Hmmm!

 

Remember revenue only tells a part of the story.  Revenue on its own is worthless as you could be selling below your Cost of Sales.  That is disasterous ass the overheads then takes this bad situation and acts like steroids.

 

Even before the lawsuit, it turns out that many of the subsidiaries were lemons and running at losses.  Kika Leiner, Mattress Firm and Confo which account for a large slice of the historical revenue pie. 

 

Cannot blame the lawyers for the lower revenue and low gross profit margins.  Unless you are saying that Steinhoff had to sell goods at sale prices, or at hugely discounted as a result of the lawyers lawsuits which led to the off balance sheet liability risks going forward, which in turn led to higher borrowing costs...

 

We should be in a much better position to review matters in the 2019 financials.  But the guidance of lower revenue is worrying.  The lack of a trading update is also a concern.

 

Regards

Captainfrom82

Hi Captain,

 

No I was referring that shareholders appointed MJ, shareholders approved the MF purchase they even contributed on a share issue. Lets call this group A shareholders.

 

Subsequently they find out the same person they appointed defrauded the company and then some shareholders dumped the shares which caused the price to collapse.

So the new company shareholders group B is now responsible to make good losses suffered by the group A shareholders.

 

I don't blame the lawyers its the system that they made up/created  that allows a company owner to enjoy profits but claim losses when things go wrong which themselves were responsible to approve the CEO and board. Its simply crazy

 

Regards,

DTD

[new john]

Sudden drop anyone saw any news???

 

Buy / Sells triggering at 130c?? 

[DayTraderDad]

Sudden drop anyone saw any news???

[andi222]

From the SENS:

Heather Sonn, chairperson of Steinhoff International Holdings N.V. said:
"Our restructuring continues to make good progress and is nearing completion. Having stepped into
the role of CFO at a very difficult time, Philip has made a significant contribution to the Management
Board that has successfully stabilised the Group while it continues to work towards a recovery of value.

“Philip’s efforts and expertise have been invaluable as we faced the challenges of the last eighteen
months and we thank him for his guidance and leadership over this period. He will leave the Group
having accomplished the key objectives set at the time of his appointment and we wish him every
future success.

 

For me this means that the CVA is basically final and that the group is stabilised. To a very green week

 

[Captainfrom82]

 

The biggest joke the lawyers never invested in SNH had absolutely no risk all they had to do was spend sometime coaching shareholders how bad they got done and the need to fight back and get big bucks back for compensation because shareholders are only designed to make money upwards and all losses you can claim back provided you give lawyers a big fat cheque!!! Remember court are run by old boys lawyers so all a big game!! Making sure the law trade get income so allow shareholders to sue their company!!!

So the gullible shareholders are now giving them a big fat profit at they cost of keeping the share down. Then they call this clever investing. HAHA time for green beer!!!!

 

 

 

Hmmm!

 

Remember revenue only tells a part of the story.  Revenue on its own is worthless as you could be selling below your Cost of Sales.  That is disasterous ass the overheads then takes this bad situation and acts like steroids.

 

Even before the lawsuit, it turns out that many of the subsidiaries were lemons and running at losses.  Kika Leiner, Mattress Firm and Confo which account for a large slice of the historical revenue pie. 

 

Cannot blame the lawyers for the lower revenue and low gross profit margins.  Unless you are saying that Steinhoff had to sell goods at sale prices, or at hugely discounted as a result of the lawyers lawsuits which led to the off balance sheet liability risks going forward, which in turn led to higher borrowing costs...

 

We should be in a much better position to review matters in the 2019 financials.  But the guidance of lower revenue is worrying.  The lack of a trading update is also a concern.

 

Regards

Captainfrom82

[Captainfrom82]

Hi Captain,

 

Don't you think looking back at 2017 even 2018 accounts is outdated because SNH is much different now if one takes only

the continuing operations?

 

Regards,

DTD

 

Hi DTD,

 

The so-called "outdated accounts" may be to some extend even be better than 2019.  For example, some expenses may be only partially reflecting.  The higher interest rates will reflect for a full period from 2019.  Same for restructuring costs, advisor fees, etc.

 

It is definitely not only positives with effect from the 2019 financials.

 

But the core message I was trying to make is that the underlying business needs to improve.  So when you exclude the overheads (which may arguably be attributed to the  Steinhoff troubles), and if you only focus on the revenue and the cost of sales.  Even here Steinhoff is some 10% worse of than the industry benchmarks. Note that MF has already been removed as it is treated as Discontinued Operations (along with ERM, Automotive and the European Manufcaturing).

 

So the point is that either the revenue is too low (as in the selling price is too low), or conversely the Cost of Sales is too high.  And this has nothing to do with finance costs, impairments, or MF activities.

 

Regards

Captainfrom82

Edited by Captainfrom82, 07 July 2019 - 11:49 AM.

[Captainfrom82]

If  MF takes its debt of E2.9 bil, Confo takes the E1.6 bil and Greenlit Brands E0.4 bil there is E3 bil left of debt to be carried by SNH giving a Debt/EBITDA ration between 2.7 to 3.

 

 

Hi DTD,

 

The definition and treatment of various Accounting principle have changed materially since I qualified.  This is especially the case for definition and treatment of Assets held for sale; and for Discontinued Operations.

 

The matter is not a simple matter of taking MF's debt of 2.9b and subtracting it.  On the 2018 Balance Sheet, management assessed that Mattress Firm had met the criteria as a disposal group and as a discontinued operation.MF has already been classified as Assets held for sale (E1927 of which E1003 in MF); and Liabilities for Assets held for sale (E1286 of which E908 is for MF).  

 

MF holds E254 external financial liabilities, with the bulk of their debt as inter-company (we got sight of this in the financials Steinhoff provided).  

 

It will be interesting to see the effects of the unbundling and restructuring of of SUSHI into SEAG in terms of the inter-company loan going forward.

 

Regards

Captainfrom82 

[DayTraderDad]

Hi Captain,

 

Don't you think looking back at 2017 even 2018 accounts is outdated because SNH is much different now if one takes only

the continuing operations?

 

Regards,

DTD

[DayTraderDad]

https://www.dgap.de/...?newsID=1168825

 

Steinhoff International Holdings N.V. : Management Board changes

Steinhoff International Holdings N.V. / Key word(s): Miscellaneous

Steinhoff International Holdings N.V. : Management Board changes

 

05-Jul-2019 / 22:27 CET/CEST

Disclosure of an inside information acc. to Article 17 MAR of the Regulation (EU) No 596/2014, transmitted by DGAP - a service of EQS Group AG.

The issuer is solely responsible for the content of this announcement.

 

DISCLOSURE OF INSIDE INFORMATION PURSUANT TO ART. 17 OF THE EU MARKET ABUSE REGULATION (EU 596/2014, MAR)

 

Steinhoff - Management Board changes

 

Steinhoff International Holdings N.V. (the "Company" or "Steinhoff") and with its subsidiaries, the "Group")

 

Steinhoff announces that Philip Dieperink will step down, by mutual consent, from both his membership of the Management Board of Steinhoff and as CFO on 31 August 2019 after the 2019 AGM. Following a handover period, he will leave the Steinhoff Group on 31 December 2019. Philip will be succeeded as CFO by Theodore de Klerk, currently Operations Director and member of the Management Board.

 

The Nominations Committee engaged the services of an external company to help identify and select a new CFO. Having evaluated a number of internal and external candidates, the Nominations Committee recommended, and the Supervisory Board approved, the designation of Theodore de Klerk, the current Operations Director and member of the Management Board, to replace Philip as CFO. Theo has been with the Group in various positions since 2003 and is well-qualified for the post. Theo will assume his new this position with effect from 1 September 2019.

 

Shareholders and other investors in the Company are advised to exercise caution when dealing in the securities of the Group.

 

Stellenbosch, 5 July 2019

 

[Captainfrom82]

The CFO is leaving end of August :/

Sent from my SM-G950F using Sharenet Sharechat mobile app

 

Source?

[Captainfrom82]

All investments require patience imho (not trading).
I cannot see snh collapsing anymore so I’m going to hang on and see where this goes.
We all, as always, have a few options, going long is my choice.

Looking forward to a run, hopefully soon! Look how btc resurrected from the ashes

 

I would say, don't get carried away! 

 

It is not all good news.  Investing is not only about numbers.  If it were, this paint by numbers approach would be dead easy with everything automated and then having super-computers make the investments. 

 

My own thoughts are that a nuanced approach where a qualitative as well and quantitative evaluation is taken, will always give you an edge.  This also happens to separate the truly great investors and set them apart from the average or worse. 

 

Now that we have sight of Steinhoff’s post apocalypse financials, and having taken the time to really perform a proper fundamental valuation, some of the numbers are definitely off the market best performers.

 

Just looking at the Income Statement (there are tons more to say nothing of if I pull the numbers in the Balance Sheet)…

1. The cost of sales (and as a result the gross profit margins) going to wrong direction.  Way below industry benchmarks.
2. The overheads are rather high.  As a result the operating margin has been shrunk. 2017 actually had an operating loss (although we can attribute this to a one off heavy impairment).  But even the normalised figure was on the anaemic side).
3. The Finance Costs booked are between 5x to 7x the industry standard.  As various people have said, this may be normalised once the restructuring has taken place.
4. Industry standards for Net Profit after tax is around 5.5% for furniture and 7.5% for clothing.  Steinhoff’s numbers are negative due to the losses announced.

To end on a positive though, it’s not all bad news.  The Pepkor businesses (both Africa & Europe) are indeed world class.  Their numbers is actually what makes Steinhoff investable.  Without them, it would have been liquidated by now.

 

Not financial advice, blah blah blah...

 

Best Regards

Captainfrom82

Edited by Captainfrom82, 07 July 2019 - 09:54 AM.

[DayTraderDad]

All investments require patience imho (not trading).
I cannot see snh collapsing anymore so I’m going to hang on and see where this goes.
We all, as always, have a few options, going long is my choice.

Looking forward to a run, hopefully soon! Look how btc resurrected from the ashes

I agree there is a difference between investing and trading. For me SNH is a excellent long term share.

 

One needs to look past the noise.

 

For me ( again not trying to defraud anyone or get people to buy SNH) the sum is very simple.

 

If  MF takes its debt of E2.9 bil, Confo takes the E1.6 bil and Greenlit Brands E0.4 bil there is E3 bil left of debt to be carried by SNH giving a Debt/EBITDA ration between 2.7 to 3.

 

Once the balance sheet is strong (say by 2020 ) again then if they get loans at a rate of 3% means a interest payment of E90 mil which is easily managed giving a good EPS.

 

If Pepkor Europe continues its growth surely will justify a PE of 15 to 20 so my target price I have of R20 in 3 years is a good possibility and not far fetched.

 

Any my thoughts!!

[LarryK]

Thats the system...play the game...enjoy the run on the share ..pray pray pray
Cant fault the system

Sent from my SM-G950F using Sharenet Sharechat mobile app

All investments require patience imho (not trading).
I cannot see snh collapsing anymore so I’m going to hang on and see where this goes.
We all, as always, have a few options, going long is my choice.

Looking forward to a run, hopefully soon! Look how btc resurrected from the ashes 😁

[andi222]

The CFO is leaving end of August :/

Sent from my SM-G950F using Sharenet Sharechat mobile app

[Investment novice]

Thats the system...play the game...enjoy the run on the share ..pray pray pray
Cant fault the system

Sent from my SM-G950F using Sharenet Sharechat mobile app