WHS - Warehouse Group

[Fiordland Moose]

Thats an obscene salary list.

what's that saying...if you can't be part be part of the solution, there's still great money to be made in prolonging the problem

[winner (n)]

WHS say about retail conditions peak misery till to come

[Basil]

WHS say about retail conditions peak misery till to come

It certainly is for WHS shareholders.  It occurs to me they are more than happy for shareholders to be the sacrificial lamb roasted on the bonfire of their idiotic and systemically flawed attempt to build a mini N.Z. version of Amazon. What's Nick's goal here?, doubling registered The Market users to about 2 million and doubling losses to about $60-$70m per annum sending the whole company broke?

That $14m in unallocated corporate overhead I was talking about yesterday is quite the "black hole"  Lets just for arguments sake allocate that equally among the various divisions so one fifth to blue sheds, red sheds, Noel Leeming, Torpedo 7 and The market = another $2.8m in costs to each division so that takes the loss of The Market up from $16.0m to $18.8m, more than the company actually made in the half year so if they got rid of the market they could more than double their reported profit and pay shareholders a dividend!

I would hope that the pending job losses and restructuring would involve getting rid of at least half the pigs at the trough I referred to yesterday with their egregiously high salaries and then halving the remaining salaries of those left.  The one who clearly deserves to go the most is Nick himself. The WHS is not a complicated international manufacturing operation requiring NASA scientist levels of intellectual capabilities, it's a simple retailer importing goods and selling them at retail, why the need to pay a whole army of high priced people?

[winner (n)]

I see there's a line in under the Profit line which sales Movement in hedge reserves (net of tax) (27,337)
- such items are noted as 'Items that may be reclassified subsequently to the Income Statement'

The impact was reducing Net Profit of $17.3m to a Total Compehensive Income of negative $10.3m

Wonder what thats all about

[winner (n)]

wonder how much the chocolate factory contributed to profit

[winner (n)]

Shouldn't skim through the Notes on the Financials

This is interesting - they hold $25m for 'Reward schemes, lay-bys, Christmas club deposits and gift vouchers'

That's quite a sum - a bit like AIR prepaid fares

[Basil]

Oh my goodness, another black hole in the accounts, surely not!
Looks like they got hammered on their forex forward cover, see note 16
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/WHS/408784/391203.pdf
As at last balance date they had derivatives as a $28.8m asset and as at 31 January that's now a $22.4m liability, a turnaround in net derivatives position of $51.2m.  It would seem they have accounted for $27.3m of that change as a below the line extraordinary item but that's not actually explained by way of note in the statement of financial performance so who knows for sure?   If I'm right, and I am not sure I am, as they are in the game of importing things using forex is it really an extraordinary item?  I think not so the real picture just got a LOT worse.
I guess a fair bit of that remaining derivatives liability of $22.4m will be brought to account in the current period so out of the money forex contracts look like a real headwind in 2H.  No wonder they are so coy on whether they will pay a final dividend.

How on earth do you value this company now?     Best I don't post my gut feel of what it's really worth now...seeing as we are supposed to be all politically correct and sensitive to others feelings now.  One thing for sure, if they got rid of Nick and canned the stupid market thing it would be worth a LOT more!

[jimdog]

$30 million spent on "computer software" note 11.

Hmm, i wonder how much of this is themarket further development.

[jimdog]

Oh my goodness, another black hole in the accounts, surely not!
Looks like they got hammered on their forex forward cover, see note 16
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/WHS/408784/391203.pdf
As at last balance date they had derivatives as a $28.8m asset and as at 31 January that's now a $22.4m liability, a turnaround in net derivatives position of $51.2m.  It would seem they have accounted for $27.3m of that change as a below the line extraordinary item but that's not actually explained by way of note in the statement of financial performance so who knows for sure?   If I'm right, and I am not sure I am, as they are in the game of importing things using forex is it really an extraordinary item?  I think not so the real picture just got a LOT worse.
I guess a fair bit of that remaining derivatives liability of $22.4m will be brought to account in the current period so out of the money forex contracts look like a real headwind in 2H.  No wonder they are so coy on whether they will pay a final dividend.

How on earth do you value this company now?     Best I don't post my gut feel of what it's really worth now...seeing as we are supposed to be all politically correct and sensitive to others feelings now.  One thing for sure, if they got rid of Nick and canned the stupid market thing it would be worth a LOT more!

 I suspect this is more smoke & mirrors from management.... 

As per their 22 Annual report their Interest cover covenant is "Interest cover will not be less than 2 times operating profit."

They are only just scraping by with how they report. If they added this in they would be in breach.

I estimate their interest costs to be $32m next 6 months which will require Operating profit $64m

Also of note is their gearing ratio is 50%. With borrowings at $116m, they only have $72m of headroom.

While im sure all of this can be negotiated, be interesting to know what penalties they face if in breach.

[Basil]

Thanks for looking into the gearing Jimdog and for your comments on the other site.  Gosh that debt situation looks scary.  The board must be held accountable for allowing Nick to lead the company down into what is perhaps best described as a black hole with The Market.   To have a line item of a whopping $27.3m in the statement of financial performance without an explanatory note in the accounts giving more detail, is a bit of a scandal in itself in my opinion.
You could have a very good point that this is creative accounting to get around a breech in debt covenants.
The question people might like to ask themselves is even if they do somehow manage to make double the interim profit at the full year result, $34m, that\s just 9.8 cents per share.  Even if you were really kind and put a bottom of the economic cycle PE of 13 on that, my goodness that's a LONG way south of the current share price.  Just as well it's all going to come right next year...or is it?

[winner (n)]

WHS share price pretty weak last week and closed at 239

Heading back to the 200 level I reckon

Wonder if Nick regrets buying Basils shares at 411 not that long ago ...prob not as he's on a pretty good deal with his pay and bonuses

That was just before the results came out

Below 2 bucks ...probably stay around 2 bucks for a while now.

[Basil]

Closing (Net Debt) / Net Cash (83.4) 150.0 (233.4)  Completed a review of their half year presentation.  This really stood out.

Absolutely remarkable that they went from having $150m in cash on the balance sheet at this time last year to having $83.4m in net debt a cash outflow of $233.4m in one year.  A complete unmitigated disaster of Titanic proportions in my opinion.

98% of their vehicle fleet are EV's.  How lovely for them that in addition to their fabulously generous salaries, management can swan around with greenie virtue signaling new EV's with all the expensive capex involved just being swung onto shareholders who have to forego a dividend.

[winner (n)]

If we have a closing price of 187 it will be the lowest close this century

Some effort

[Buzz]

98% of their vehicle fleet are EV's.  How lovely for them that in addition to their fabulously generous salaries, management can swan around with greenie virtue signaling new EV's with all the expensive capex involved just being swung onto shareholders who have to forego a dividend.

Does WHS buy the vehicles, or lease them like most other large corporate fleets?

[Basil]

That may be disclosed somewhere, but I didn't notice it.