Last week Steinhoff International announced an investigation into accounting irregularities which prevented the company from releasing their 2017 results on the scheduled date.
The irregularities include doubts about the recoverability of non-South African assets to the amount of €6bn. It was also announced that the CEO, Markus Jooste, had resigned with immediate effect. The Chairman, Dr. Christo Wiese and Pieter Erasmus, the previous CEO of Pepkor, have taken interim responsibility for managing the group. At this stage there is limited publicly available information from which to ascertain the full impact of the announcements. In response to the uncertainty, the Steinhoff share price declined materially.
While a number of the fund managers we include in our portfolios for instance Investec, Coronation, Nedgroup Core (passive) and in a lesser extent Prudential have exposure to Steinhoff, we also included equity managers that does not have exposure to Steinhoff. Because of this robust portfolio manager selection and construction we are able minimise the impact on our investors returns.
The total exposure Bovest Portfolios had in Steinhoff before the selloff was as follows:
The Steinhoff group comprises many iconic brands and include businesses such as Pep, Conforama and Poundland, all of which have good prospects and underpin real value in the group. As more information is released in the coming weeks, it will become more apparent how much of this value is still attributable to ordinary shareholders. We are monitoring the situation very closely and will continue to act in the best interests of our clients as we receive further information
Please let us know if you have any questions