Clive Peeters - CPR (and in need of it!)

[Lizard]

Seems the ticker code should have been a warning.

Just been rummaging through the stock lists, looking for a few new possibles for the trading list and came upon this one - thought Winner would like this story!

From a $1 listing in late 2005, this was a well-hyped growth story as they rolled out their chain of retail stores (http://www.clivepeeters.com.au/) selling home appliances, electrical and electronic goods. Growth in revenue was spectacular, reaching $534m last year, while growth in the share price took it to $3.50. Sadly, bottom-line profits peaked soon after listing when they beat prospectus to record $13.9m NPAT in FY06. This had deteriorated to $10.3m in 2008 and $1.0m in 1H09. Most recent trading in CPR gives it a market cap of just $21.6m...

Recent business update said they expected to report a net loss before tax of around $4.5-$5.0m, with about $2.1m of this being one-offs. But not to worry, as the bank has rolled over short term financing for another year and the company has implemented plans which should result in another $24m per year being saved next year (over and above the $14m saved this year).

Might have been a good recovery trade at some point. Except that they're now in halt checking out accounting discrepancies which they expect will take the loss to $11.0-$12.0m!

Perhaps if the bank lets them survive a hit of this size to the debt/equity ratio, there will still be a trade here for the thrill seekers. But for now, CPR stands as testimony to the perils of gluttonous and undisciplined retail expansion.

[Stranger_Danger]

I checked this one out recently, and passed, thank goodness.

There are a lot of value traps out there at present.

My No 1 investment question for the forseeable future : Remove all fake demand and stimulation. What will the demand will be for this businesses product over the next 3-5 years, and why, specifically, will they profitably capture more of it than their competitors?

CPR failed on that test.

[winner69]

Thanks for that Lizard

Had looked at CPR a few years ago but couldn't find much to attract me to them ... and JBH was my favourite business in that space

I wonder if the discepencies were sort of noticeable or obvious ... probably something to do with their stock valuations or something .... but then again reported margins were razor thin in H1 anyway

Interesting to see what eventuates

Phaedrus would say it was all in the charts anyway .... following the brown line (100MA) from DB site could have had you in from 100 to 300 (pretty good) but no reason to be in at all since mid 2007

[winner69]

Sounds like they have just become propert owners by default

$20m stolen .... surely they missed that somewhere along the line

http://business.theage.com.au/business/clive-peeters-hit-by-20m-sting-20090811-egq6.html

[Lizard]

Sounds like they have just become propert owners by default

$20m stolen .... surely they missed that somewhere along the line

http://business.theage.com.au/business/clive-peeters-hit-by-20m-sting-20090811-egq6.html

Thanks Winner - I missed that one. Will be interesting to see how this plays out and what they book from the properties. Properties worth nearly as much as market cap. Hard to tell for sure, but the impression is that the cost has already been expensed through payroll...

[winner69]

Thanks Winner - I missed that one. Will be interesting to see how this plays out and what they book from the properties. Properties worth nearly as much as market cap. Hard to tell for sure, but the impression is that the cost has already been expensed through payroll...


Which makes you wonder what their real underlying profitability is then ... might be better than most think ..... and the share price will take off

[Lizard]

Re-instated and will trade tomorrow.

Seems like almost all the fraudulent transactions occurred in current year - taking a loss of $4.8m and expecting to recover the rest through property sales. Properties end up on the book as receivables, offset by payroll accrual liability.

Not really clear about the cash - sale of properties to improve their cash position, but not clear where the accounts previously assumed this money to reside.

[Lizard]

... still managed to open up 10cps and closed at 26cps for a 52.9% increase.

Not convinced it's justified, but perhaps it'll make sense when the accounts are released?

[lissica]

Re-instated and will trade tomorrow.

Seems like almost all the fraudulent transactions occurred in current year - taking a loss of $4.8m and expecting to recover the rest through property sales. Properties end up on the book as receivables, offset by payroll accrual liability.

Not really clear about the cash - sale of properties to improve their cash position, but not clear where the accounts previously assumed this money to reside.

I don't own or follow the stock, but did read in the paper that the employee who stole the money had some pretty good property investments in Melbourne. I think they suggested that Clive Peters should actually make quite a tidy profit on the stolen (and invested) money

[Huang Chung]

Wouldn't it be hilarious if they made more money on the properties than selling furniture and electrical goods :eek:.

[lissica]

Here is the link:
http://tinyurl.com/mrpkfu

[Lizard]

Well, having read the accounts, I'm still not sure whether the rally to 39cps on the back of employee fraud was justified. After all, there is still a significant EBIT loss in the second half, even after adjusting for the cost of fraud and one-offs. And this was the period when supposedly they would have been obtaining most of the $15m benefit of their cost-saving projects. While second-half doesn't include the valuable Christmas period, it is still hard to see that they can turn this into a cash machine that will pay down debt as they indicate - it seems unlikely they can keep reducing inventories. And after all, they seem to be partly blaming the fraud for forcing them to reduce stock and thereby impacting sales.

The properties move back into current assets, but it seems the value of the misappropriations becomes an additional current liability - I'm not sure quite who the liability is to though... not enough accounts knowledge to work that one out.

Still, if the stock keeps rallying, they might be able to slip through a capital-raising (flagged as a possible in the presentation) and reduce debt that way. Probably keep the beast afloat until they can survive the sales downturn and that's worth something - another one of those instances where the share price rising creates an upward value spiral.

[steve fleming]

An absolutely amazing story.

http://www.smh.com.au/business/how-clive-peeters-lost-then-found-its-20m-20091204-kaz5.html

Unfortunately, is probably reasonably indicative of the lax internal controls evident in a lot of ASX companies. Also shows what a waste of time auditors are, given this fraud wasn't picked up in at least 3 audits/reviews (HY08, FY08 & HY09).

"the $19.3 million in variances between the ''live'' ledgers used in the office and the backup copies held by Peeters' IT department" - so it took them 2 years to realise there was a variance between the live ledgers (that were being manipulated) and the backup ledger???

Surely the CFO can't have been so stupid to not pick up on this earlier?? seems very suss to me.

[Huang Chung]

eeeeasy....so eeeeasy

Clive Peters...e-e-easy :(

[Dr_Who]

WOW....

They should make a movie out of this. Unbelievable!

[drillfix]

WOW....

They should make a movie out of this. Unbelievable!

Yeah, either that or totally use it to Haggle them down if you ever choose to buy a new LCD :rolleyes: :p

[Huang Chung]

Yeah, either that or totally use it to Haggle them down if you ever choose to buy a new LCD :rolleyes: :p

....or a house :p.

[winner69]

CPR seems to be in need of more CPR ,,, what a shocker

[Lizard]

Another trading halt while they undergo discussions with financiers... quick, pass the paddles... CLEAR! Beeeeeeppppp http://www.aussiestockforums.com/forums/images/smilies/deadhorse2.gif

[winner69]

well the CPR didn't work

In a strange sort of way I think the fraud last year seemed to give them a reprieve from the inevitiable .... and then when they sorted that the inevitiable happened

Prob more retailers will bite the dust in the next year or so

[h2so4]

You got "fat fingers" winner?:)

[winner69]

small keyboard

[Huang Chung]

http://bigpondnews.com/articles/Business/2010/08/02/Woman_stole_millions_from_Clive_Peeters_493421.htm l

A woman who stole nearly $20 million from retailer Clive Peeters contributed to the collapse of the company, a court has heard.
Sonya Causer, 39, during a two-year period stole more than $19 million using the money to buy 44 properties, cars and jewellery, the Victorian Supreme Court heard on Monday.
Causer, of Lilydale in outer Melbourne, has pleaded guilty to 24 counts of theft.
Prosecutor Peter Kidd said the senior accountant used her access to the company's payroll and superannuation accounts to steal the money.
'The theft, Your Honour, was one of a number of factors which contributed to the collapse of Clive Peeters,' he said.
'The Crown puts forward it was a factor in combination with a number of other factors.'
Clive Peeters has recovered all but $3.3 million of the stolen money, the court heard.
The electrical and computer retailer went into voluntary administration in May this year.
The pre-sentence hearing for Justice Jack Forrest is continuing.

[Huang Chung]

The outcome....

http://www.theage.com.au/victoria/mother-jailed-for-20m-clive-peeters-theft-20100819-12rns.html?autostart=1