Stein­hoff plunges on re­sults de­lay

• Au­dits will be done once PwC has com­pleted its re­port on a foren­sic in­ves­ti­ga­tion into se­ri­ous ac­count­ing ir­reg­u­lar­i­ties at the re­tailer

Business Day - - Front Page - Larry Claasen Re­tail Writer [email protected]

Stein­hoff shares slumped as much as 20% in early trad­ing on Thurs­day after the em­bat­tled re­tailer said it was again post­pon­ing the re­lease of its year-end fi­nan­cial re­sults.

Stein­hoff shares slumped as much as 20% in early trad­ing on Thurs­day after the em­bat­tled re­tailer said it is again post­pon­ing the re­lease of its year end fi­nan­cial re­sults.

The news of the de­lay came al­most a year after it first post­poned the re­lease of its 2017 re­sults. That led to its share price col­laps­ing from R56 to R6 in four days, when the scale of SA’s largest cor­po­rate fraud started to emerge. Its then CEO Markus Jooste re­signed a few days after its share price plum­meted.

The group said PwC is close to com­plet­ing its re­port on a foren­sic in­ves­ti­ga­tion into se­ri­ous ac­count­ing ir­reg­u­lar­i­ties at the re­tailer. Once it has handed it over to the com­pany, it will do its au­dits for the 2017 and 2018 fi­nan­cial years.

Stein­hoff said the foren­sic in­ves­ti­ga­tion has been “sig­nif­i­cantly more com­plex than ini­tially an­tic­i­pated, with mul­ti­ple work streams op­er­at­ing across a num­ber of ju­ris­dic­tions”.

Craig But­ters, a port­fo­lio man­ager at Pru­den­tial In­vest­ment Man­agers, said be­sides shedding light on events at the group, the re­port will likely be used as ev­i­dence in sev­eral civil ac­tions against the group.

But­ters is con­cerned that after say­ing it will re­lease the en­tire re­port, Stein­hoff is now con­sid­er­ing re­leas­ing only a sum­marised ver­sion.

Ac­cord­ing to the min­utes of its an­nual gen­eral meet­ing in April, it is se­ri­ously con­sid­er­ing such a move. Stein­hoff’s new CEO, Louis du Preez, said at the time that al­though the group in­tends to pub­lish the full re­port, it is sub­ject to some pro­vi­sos.

“To the ex­tent the re­port refers to claims against third par­ties, the com­pany would have to take le­gal ad­vice and may choose not to pub­lish the full re­port, and to the ex­tent the re­port might in­flu­ence any prose­cu­tions or civil claims, the com­pany may choose not to pub­lish the full re­port,” said Du Preez.

The Dutch In­vestors As­so­ci­a­tion is al­ready tak­ing class ac­tion against the group. Stein­hoff’s largest share­holder, Christo Wiese, has is­sued sum­mons to the group for R59bn.

When asked if it in­tends to take le­gal ac­tion of its own, the group said: “Stein­hoff has also pre­vi­ously stated that, re­gard­ing the foren­sic in­ves­ti­ga­tion, those re­spon­si­ble will be held ac­count­able. This view has not changed.” The group de­clined to an­swer ques­tions on whether Jooste has co-oper­ated with the foren­sic in­ves­ti­ga­tion.

The PwC in­ves­ti­ga­tion is not ex­pected to af­fect the agree­ments it has reached with its cred­i­tors. “Our fi­nan­cial re­struc­tur­ing con­tin­ues to make good progress,” said Stein­hoff chair Heather Sonn.

“Our re­cently an­nounced plans re­gard­ing the re­struc­tur­ing of the group’s fi­nan­cial in­debt­ed­ness are sig­nif­i­cant mile­stones and will bring in a new pe­riod of fi­nan­cial sta­bil­ity for the group. These plans are un­af­fected by to­day’s [Thurs­day’s] an­nounce­ment,” she said.

Sonn was con­trite about the lat­est de­lay in pub­lish­ing the PwC re­port and its long-awaited re­sults. “We sin­cerely re­gret this re­vi­sion to the re­port­ing time­line. While sub­stan­tial progress has been made, the vol­ume and com­plex­ity of the work re­quired, in­clud­ing the in­ter­ac­tions be­tween the var­i­ous par­ties, has been sig­nif­i­cantly greater than ini­tially an­tic­i­pated and more time is needed for all par­ties in­volved to com­plete the out­stand­ing tasks,” she said.

THE VOL­UME AND COM­PLEX­ITY OF THE WORK RE­QUIRED … HAS BEEN SIG­NIF­I­CANTLY GREATER THAN AN­TIC­I­PATED

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