Steinhoff reports loss of R9.6 billion

The company’s interim results for the six months to March 31 do not make good reading.

In its first financial statements since previous reports were withdrawn.

Steinhoff International Holdings published interim results for the six months to March 31 on Friday afternoon, providing the first look at its financial position since Markus Jooste resigned as CEO in December last year.

However, management made it clear that because the PwC forensic investigation into financial irregularities is still ongoing, uncertainties remain.

The group reported a 2% rise in comparable group revenues over the unaudited, restated results for the first half of 2017 to €10.1 billion (R160.9 billion). However, comparable group earnings before interest, tax, depreciation and amortisation (Ebitda) fell 51% to €80 million (R1.3 billion).

The group reported an operating loss for the period of €381 million (R6.1 billion), compounded by net finance costs of €224 million (R3.6 billion). Steinhoff’s total loss for the period was €599 million (R9.6 billion).

Net cash outflow from operating activities was €802 million (R12.9 billion). This was more than a quarter of a billion euros greater than the restated net cash outlow from operating activities of €545 million (R8.7 billion) for the comparable period last year.

In her report attached to the results, chairperson Heather Sonn also reiterated that PwC is on track to deliver the findings of its forensic investigation before the end of 2018.

The group’s auditors, Deloitte, are on record as saying that they will not sign off on any results until PwC’s final report is delivered.

Sonn acknowledged that in the course of the investigation “certain transactions that may not have been entered into on an arm’s length basis have been identified”.

Steinhoff is working to identify and correctly account for these transactions “with a focus on determining the extent of the relationships and the recoverability of loans and assets”.

However, where there is no security on the loans or where Steinhoff does not have enough information to determine whether anything is recoverable, these assets have been impaired.

The total value of overstated assets and the reversal of non-arm’s length transactions was stated as €6.1 billion (R98 billion).

Steinhoff noted that in “all periods presented, the group’s current liabilities exceed the current assets”.

This means that it is factually insolvent. It has, however, thus far avoided liquidation by reaching agreements with creditors for them not to call in loans.

It also noted that if a restructuring plan is agreed with creditors, each of the group’s financing and operating companies will have “access to sufficient working capital facilities to continue to trade”.

This restructuring plan has, however, not yet been detailed.