TOSHIBA WARNS IT MIGHT NOT BE ABLE TO CONTINUE BUSINESS
Toshiba, the 142-year-old conglomerate, warned on Tuesday it may not be able to continue as a going concern as it grapples with billions of dollars in losses from its Westinghouse Electric nuclear business.
The disclosure came as the Japanese company reported earnings for the third quarter after missing two previous deadlines for financial results. Toshiba posted an operating loss of 576.3 billion yen ($5.2 billion) for the nine months ended December 31 and said it had negative shareholders equity of 225.6 billion yen, but, significantly, it wasn’t able to get auditor Price waterhouse Cooper sA ar at a to approve those figures.
Toshiba has been at odds with its auditors over Westinghouse, which filed for bankruptcy in the US last month. The auditing firm submitted an independent review with Toshiba’s results that emphasised the risks to its future because of losses in the Westinghouse unit responsible for atomic projects and breach of covenants on 284 billion yen in loans. Toshiba’s inability to report earnings has also raised speculation of a possible delisting from the Tokyo Stock Exchange.
“Toshiba has done everything in its power to gain the understanding of the auditors,” Chief Executive Officer Satoshi Tsunakawa said at a briefing with about 200 reporters in Tokyo. “Without clear prospects for auditor approval, we could no longer inconvenience and worry our investors and other stakeholders and decided on this very unusual way of releasing results.”
Toshiba has missed financial filing deadlines even before the current crisis. The company pushed back earnings announcements twice amid an accounting scandal in 2015, delaying the release by about four months. In theory, there is no limit on how many times the company can request an extension.
“How the TSE will take this is anyone’s guess now,” said Hideki Yasuda, an analyst at Ace Research Institute. “This is just quarterly earnings. Now the question is whether the company can release the fullyear statement in time.”
The TSE kept Toshiba on its list of securities on alert in a December announcement, after originally being included for overstating profits from 2008 through 2014. The company last month submitted a report detailing plans to improve internal controls. If deemed insufficient, the company will face delisting.