15225 replies to this topic

[leo]

No problem, mate.  Kudos for actually responding – I appreciate it.

 

Normalised EBIDTA:  I have had discussions regarding this.  For simplicity and to have a fat margin of safety,  I used a full year € 640m.   However, using the value that you are using…

 

Can you clarify where you got the 10% interest rate?

 

You are also double-counting in that the € 599m loss for 1H, already includes the finance costs.  In effect, therefore the sustainable earnings also includes this interest charge.  You cannot correctly now lump the entire interest again off the sustainable earnings and arrive at this “200m in the red”.

 

The 1H18 results reflected Net Finance costs of  € 224m.  As a thumb suck  calculation, doubling this will get you € 448m net finance costs.  This is approximately half of you projects.  It is possible that the Group have taken on more debt that may push this € 448m  up (eg.  Mattress Firm loans etc).  However, only the Hemisphere  refinanced debt has a short term rate of 10%.

 

The point is that the average interest rate is nowhere near the 10% being quoted.  This is largely due to the fact that a huge portion of the debt is the convertible bonds which had very low interest rates.  This in itself is a fascinating conversation which we should discuss.

 

IMPAIRMENTS:

Management has taken its best estimate of the adjustments required. As a caution, they also advise that this impairments value “could change materially”.  I would be extremely surprised though if these did change materially.  My investigation and feedback is that the Board and Management has used this opportunity to clean up the balance sheet as accurately as possible.  The last thing they want is to have repeated impairments in future years.  So, while it is possible to have further material impairments, my sense says that this is unlikely.

 

You are spot on regarding the equity value of €3.8b.  However, PwC are not charged with the impairment testing.  Deloittes is the company  auditors, and they have contributed to the heavy impairments that have already been reported.  They have recognised that the shenanigans of the past years has heavily impacted the forecasted future cashflow of the various CGUs.  The discount rate was also adjusted to reflect the significantly higher risk that the  Group has which regatively impacted the WACC .  As a result the equity has been materially impacted very heavily by HUGE impairments.  €2.8b for Goodwill and Trade names (includes €1.5b for Mattress Firm);  PPE was impaired by €1.3b (Hemisphere & Conforama); plus a further €7.2b classified as “other”.   In total €12.3b of assets has already been impaired.

 

So it is possible to have a “negative equity value”, but I think the likelihood is quite remote.  I note that DTD has also asked for thoughts on the NAV.  I will respond on the relevance of NAV for a retailer in my response to his post.

 

Best Regards

Captainfrom82

 

https://www.business...inhoffs-plan-b/

 

The agreement covers an estimated €9.4bn of debt and is offering a hefty 10% PIK (payment-in-kind, which includes interest and fees) return on that debt, which will be rolled up twice a year for the three years to 2021.

The 10%, which includes an "early-bird fee" for creditors who signed up early to the LUA, means the group will be adding almost €1bn a year to its debt burden, leaving it with a potential €13bn when the agreement expires.

You are also double-counting in that the € 599m loss for 1H, already includes the finance costs.  In effect, therefore the sustainable earnings also includes this interest charge.  You cannot correctly now lump the entire interest again off the sustainable earnings and arrive at this “200m in the red”.

 

Refer to page 14 of the half year 2018 results. Sustainable (ie normalised) EBITDA (Earnings BEFORE ...) HYFYF18 340m and HYFYF17 405... Double the half year earnings and account for INTEREST, tax, Depr and Amort.

[andi222]

Really good trading Update. Revenue once again increased even though all the current issues. PEPCO had a growth of 37%. That is amazing. Just a matter of time until this share will continue its upward trend.

[DayTraderDad]

Unfortunately, this led to a further delay in their

release, but we are confident that the teams remain

on track to publish both reports on 18 April 2019,

subject to any delay caused by the LSW application

to challenge the SEAG CVA.

Following the publication of the Group’s results,

targeted for 18 April 2019, the financial statements of

subsidiary company Steinhoff Investment Holdings

Limited is scheduled to be published by the end of

May 2019.

[DayTraderDad]

http://www.steinhoff...Q1_Feb 2019.pdf

[Captainfrom82]

Can't seem to find the 6B article , my bad.

 

Looking at the FY18 half year report.

 

H1 FY18 adn F17 normalised EBITDA, of 340m and 40m. Thus full year, say 800. Debt is c. 10B at 10% is about 1b just in interest. So we about (200) in red. Without an asset sale, can't see how things will get better.

 

Net equity - 3.8b, that includes 6.1b GoodWill and 3.2b intangibles. I can tell you that PWC will be hard on the impairment testing. So you might even be looking at a negative asset value...

 

So negative PBT and possible negative NAV.

 

Even knowing this, I'm still going to long this share over the next two days.  

 

No problem, mate.  Kudos for actually responding – I appreciate it.

 

Normalised EBIDTA:  I have had discussions regarding this.  For simplicity and to have a fat margin of safety,  I used a full year € 640m.   However, using the value that you are using…

 

Can you clarify where you got the 10% interest rate?

 

You are also double-counting in that the € 599m loss for 1H, already includes the finance costs.  In effect, therefore the sustainable earnings also includes this interest charge.  You cannot correctly now lump the entire interest again off the sustainable earnings and arrive at this “200m in the red”.

 

The 1H18 results reflected Net Finance costs of  € 224m.  As a thumb suck  calculation, doubling this will get you € 448m net finance costs.  This is approximately half of you projects.  It is possible that the Group have taken on more debt that may push this € 448m  up (eg.  Mattress Firm loans etc).  However, only the Hemisphere  refinanced debt has a short term rate of 10%.

 

The point is that the average interest rate is nowhere near the 10% being quoted.  This is largely due to the fact that a huge portion of the debt is the convertible bonds which had very low interest rates.  This in itself is a fascinating conversation which we should discuss.

 

IMPAIRMENTS:

Management has taken its best estimate of the adjustments required. As a caution, they also advise that this impairments value “could change materially”.  I would be extremely surprised though if these did change materially.  My investigation and feedback is that the Board and Management has used this opportunity to clean up the balance sheet as accurately as possible.  The last thing they want is to have repeated impairments in future years.  So, while it is possible to have further material impairments, my sense says that this is unlikely.

 

You are spot on regarding the equity value of €3.8b.  However, PwC are not charged with the impairment testing.  Deloittes is the company  auditors, and they have contributed to the heavy impairments that have already been reported.  They have recognised that the shenanigans of the past years has heavily impacted the forecasted future cashflow of the various CGUs.  The discount rate was also adjusted to reflect the significantly higher risk that the  Group has which regatively impacted the WACC .  As a result the equity has been materially impacted very heavily by HUGE impairments.  €2.8b for Goodwill and Trade names (includes €1.5b for Mattress Firm);  PPE was impaired by €1.3b (Hemisphere & Conforama); plus a further €7.2b classified as “other”.   In total €12.3b of assets has already been impaired.

 

So it is possible to have a “negative equity value”, but I think the likelihood is quite remote.  I note that DTD has also asked for thoughts on the NAV.  I will respond on the relevance of NAV for a retailer in my response to his post.

 

Best Regards

Captainfrom82

[DayTraderDad]

If this happens, I will also be healthy again...and drunk for a few days/weeks!

Hahaha!

[Bubble]

If this happens will be the last piece of the puzzle then SNH healthy again.

If this happens, I will also be healthy again...and drunk for a few days/weeks!

[DayTraderDad]

(Bloomberg) --But and Fly are candidates to buy French furniture seller Conforama, Figaro reports on Thursday, without saying where it got the information.
- Conforama could cut 1,500 to 2,000 jobs in France
- A But-Conforama combination would probably create competition issues
- But already was a candidate in 2011

 

If this happens will be the last piece of the puzzle then SNH healthy again.

Edited by DayTraderDad, 28 February 2019 - 11:01 AM.

[leo]

(Bloomberg) --But and Fly are candidates to buy French furniture seller Conforama, Figaro reports on Thursday, without saying where it got the information.
- Conforama could cut 1,500 to 2,000 jobs in France
- A But-Conforama combination would probably create competition issues
- But already was a candidate in 2011

Tx for the info

Sent from my SM-G935F using Sharenet Sharechat mobile app

[Burnt as well]

(Bloomberg) --But and Fly are candidates to buy French furniture seller Conforama, Figaro reports on Thursday, without saying where it got the information.
- Conforama could cut 1,500 to 2,000 jobs in France
- A But-Conforama combination would probably create competition issues
- But already was a candidate in 2011

[ESS]

If the share continues to go up the next resistance and pull backs will be around R2.54, R2.90 and R3.12 and then a big resistance at R3.83 that will test the share before it continues up. I am just doing a prediction for fun (Sorry Lionelza I know it irritates you when I say fun but I am invested in the share)

Even Polly said it to peak at R5.20 if I recall correctly. I do not see SNH releasing any part of a report incriminating itself. I also do not see the release of any financials until agreements and restructuring are in place due to write downs. Litigation risk, who knows. Final value and market perception, who knows. Big risk and uncertanty that we know.

[Milo]

If the share continues to go up the next resistance and pull backs will be around R2.54, R2.90 and R3.12 and then a big resistance at R3.83 that will test the share before it continues up. I am just doing a prediction for fun (Sorry Lionelza I know it irritates you when I say fun but I am invested in the share)

[DayTraderDad]

Hi Captainfrom82,

 

I am interested on your views on the news article below. What would be the final NAV of SNH in your view?

 

Cheers,

DTD

 

====================

BFM Business, announced Wednesday morning that the South African shareholder Steinhoff wants to separate from its subsidiary Conforama, which distributes furniture. 2,000 jobs would be threatened, mainly in France. For the moment, the management does not confirm.

 

It is  BFM Business  who announced this intention this Wednesday, February 27th. The South African shareholder Steinhoff, in financial difficulty, who owns the subsidiary Conforama, would like to separate. The sale, given in management at Rothschild Bank, could be completed by this summer. 

 

Stricken market

The furniture distributor would seek to separate from the French subsidiary because of financial difficulties. This is due to increased competition in the cheap furniture market in stores and e-commerce. Economic radio notes that the Ministry of Economy is following the case closely through the Interministerial Committee for Industrial Restructuring (Ciri). According to the unions, some twenty stores could disappear in France and nearly 2,000 jobs would be threatened, including a part in France.

 

The competitors of the brand, Fnac-Darty and Casino have thrown in the towel for a recovery of stores. For the time being. "The furniture is a market that is too bad and the brand Conforama is a notch below," said a close Fnac-Darty group, BFM Business.

 

"No denial internally"

Questioned, the French management of the group did not wish to answer our questions. The CFDT union representative on the central works council, Pascal Jacquemain, can not confirm this information either. "We know that Steinhoff has been in trouble since 2017 but we have no more news on the announcements made by BFM. We did not have a denial internally. Given the situation of Conforama and the context of the group, it is plausible. We asked for a special meeting of the CTE. We are waiting for an answer ».

 

For now, in stores Conforama "it's not panic but we already feel the gloom in the employees, and unfortunately we can not reassure them," blows the union representative for lack of information by management. 

 

 337 stores in Europe

In the Steinhoff group, the American (Mattress) and British (Poundland) subsidiaries have already undergone major restructuring. While the Austrian activities have also already been sold.

 

Conforama has 337 stores located mainly in France , Spain and Switzerland. The group employs 14,000 people in Europe, including 9,000 in France.

[leo]

Can't seem to find the 6B article , my bad.

 

Looking at the FY18 half year report.

 

H1 FY18 adn F17 normalised EBITDA, of 340m and 40m. Thus full year, say 800. Debt is c. 10B at 10% is about 1b just in interest. So we about (200) in red. Without an asset sale, can't see how things will get better.

 

Net equity - 3.8b, that includes 6.1b GoodWill and 3.2b intangibles. I can tell you that PWC will be hard on the impairment testing. So you might even be looking at a negative asset value...

 

So negative PBT and possible negative NAV.

 

Even knowing this, I'm still going to long this share over the next two days.  

 

 

 

 

[Captainfrom82]

Thanks for info Captain. I appreciate your detailed response.

Sent from my SM-G950F using Sharenet Sharechat mobile app

 

No problem mate. I appreciate honest questions and valid comments.   I do detest those who bear false witness.

 

While it is possible for someone to make a mistake, surely this person cannot perpetuate this same mistake repeatedly - especially after their error has been pointed out.  If they insist on lying, then they possibly have an agenda that they are driving, or possibly they hold onto their position through a false sense of pride (nobody likes to be wrong).

 

There are so many mistakes, lies and blatant false information spewed onto this platform, that I cringe when I read some views.  I cannot keep up with correcting some of them.  The more outlandish claims, I do respond to.  Unfortunately, most go by unchallenged.

 

Be careful too of people who state things which may be factual, but are actually not relevant. 

 

Here is a tip:  If someone makes a claim, and I question the veracity of this claim with evidence,  and then I ask them for their evidence.  If that person is silent, or he/she sulks off to other Topics...who do you think has a more valid case?

 

Even if a person has a different opinion to mine, and if the same person is able to back it up with evidence, I am happy to acknowledge the differences and concede that their views are a possibility.  We can then agree to disagree.

 

Best Regards

Captainfrom82

[Investment novice]

Thanks for info Captain. I appreciate your detailed response.

Sent from my SM-G950F using Sharenet Sharechat mobile app

[andi222]

Recovery underway, people starting to understand the SENS now hahaha. And hopefully the short sellers are out for now.

[Captainfrom82]

Worst idea ever! That in includes myself.

Do yourself a favour. Sell half on the day when the trade update comes out, I'd say the avi. It will go down again. Then buy back in at a lower price.

Pwc report is going to cane this share. But will bounce again. 6b cash just disappeared. Massive fraud and deep down we all know it.

Will do a quick *** val when the update comes out. Tangle asset value will be negative. 99% sure.

That's my plan.

Ok. Ready for a beating


Sent from my SM-G935F using Sharenet Sharechat mobile app

 

Hi Leo,

 

Your comment "6b cash just disappeared" refers.  What is the source for your quoting this figure?

 

There is a lot of misinformation being bandied about.  People are quoting various things that those who are not completely in the know, mistakenly believe these to be facts.

 

As per Note 17.7 (Restatements) of the 1H18 financials released, the previous Cash and Cash Equivalents was amended by  € -2 479m from € 3 114m to € 620m.  A large part of this was the werchels.

 

Can you either please provide a reference for your comment or acknowledge that you posted the "6b" in error?

 

Best Regards

Captainfrom82

[Captainfrom82]

Have you factored in new Conforama sites as well as online business sales revenues.


Sent from my SM-G950F using Sharenet Sharechat mobile app

 

Good day IN,

 

As a basis, I have used the trading updates as provided by Steinhoff.  These included E-Commerce sales and the 4 new stores opened during the period.  Conforama has the biggest footprint in France which saw flat sales.   Italy and Switzerland reported negative like for like sales.  Iberia, Croatia and Serbia recorded growth (but these are of a low base).  

 

Please note that I like to build in a significant margin of safety in all my future-looking assessments.  However,  it is not a simple matter of comparing Y-O-Y.  There are a number of reasons for this:

 

a) Steinhoff shifting their year-end from 30 June to 30 Sept.  Under the previous FY Q1 would end in Sept.  Now Q1 end in Dec.

 

They have in the more recent past provided a far more in-depth trading update for each business unit (so we know exactly what Conforama contributed).  Historically Conforama was lumped together as Household Goods - Europe.  This in turn comprised a number of companies including Kika-Leiner and ERM.  It is impossible now to know exactly what only Conforama contributed.

 

c) Steinhoff did not provide Q1 data for 2016.  They have provided 1H figures and had we had the 1Q figures we could possibly have calculated Q2 (which is actually Q1 for the new FYE).

 

d) France did not have a particularly good time over the past year.

 

TLDR: I have used the figures reported by Steinhoff for 2017 and 2018.  If I have to estimate a figure for Conforama I would call a figure of between

€ 960 and € 999.  The poor performance I am expecting in France set off somewhat by the performances outside France.

 

 

Best Regards

Captainfrom82

[DayTraderDad]

Tomorrows Update will be huge, they need to give us the revenue figures as well as the monthly update. Will be very interesting. I think thats why we saw the fall. Short sellers wanted to get out before tomorrow. Close to 40 million shares traded on Tradegate and Xetra within a few hours.

Haha now every body reading SENSE correctly. Up she goes!!