Steinhoff tax investigation & Frankfurt listing

Steinhoff stock was slammed Friday, the company put out a SENS early on what must have been one of the best kept secrets in a while. The stock was down seven and one quarter of a percent. Here goes, let me do a copy and paste: "In connection with tax investigations, the Westerstede offices of Steinhoff Europe Group Services GmbH (SEGS), a German subsidiary of SIHL, have been searched on November 26, 2015. The authorities are reviewing the balance sheet treatment of certain transactions involving transfers of participations and intangible assets among SEGS, additional subsidiaries and third parties pursuant to 331 HGB. The investigation focuses on adherence to an arms' length valuation and proper accounting pursuant to German GAAP. SEGS is fully committed to support the authorities, and has begun to take immediate steps, in clarifying and resolving these matters."

Westerstede looks like a nice little town in Lower Saxony, right in the North East of Germany, not too far from the border with the Netherlands. There is a very famous 4 yearly festival called the Rhodo festival, a springtime celebration of the rhododendron. Which as the avid gardeners amongst us know is a beautiful flower. Not such good smells emitting from the SENS announcement, equally a bad looking one at that. The group does state that they are cooperating and clarifying with the German tax authorities, I suspect that we should see some more in a while. Sooner rather than later, there is nobody I have ever met who likes uncertainty.

Talking of a lack of uncertainty, this is crystal clear, the company also announced late Friday that their shares are expected to debut on the Frankfurt exchange today. Management are expected to attend. Talk about a bad start and having to try and convince a very nervous subset of German investors, their confidence is shaken in recent times. The German way is one of compliance, high standards and being conservative. One would hope that there is nothing untoward in Steinhoff's accounting methodologies, this is not something that is not known to the market. Markus Jooste is a driven individual, who wants to conquer the world, he works very hard on the business. And knowing that Christo Wiese has thrown in his lot with Marcus, that is pretty comforting for all shareholders. Christo Wiese just clocked the top of the richest list in South Africa. Whilst one should tread with caution, this is certainly an opportunity.