Steinhoff ’s loss stretches back
Retailer will have to restate its 2015 accounts and, maybe, earlier figures, it has said.
No timeline for completion of the PwC investigation.
Steinhoff will have to restate its 2015 accounts and maybe earlier figures, the South African retailer said yesterday, having already warned of its 2016 numbers.
The owner of more than 40 retail brands, including Conforama, Mattress Firm and Poundland, is fighting for survival after flagging accounting irregularities last month and parting ways with its veteran chief executive, Markus Jooste. A review being carried out by accounting firm PwC now suggests “accounting irregularities” may stretch beyond 2015, it said.
“While the internal review and investigation into the accounting irregularities have not yet concluded, the restatement of the financial statements... for years prior to 2015 is likely to be required,” Steinhoff said.
The company last month postponed its 2017 results until the investigation is over. Steinhoff said the timeline for the completion of the investigation remained uncertain.
The company had reported a €1.4 billion net profit in 2016 while its 2015 accounts showed earnings of €959 million, according to Steinhoff’s annual reports.
“The latest information confirms what we’ve suspected all along (about the reliability of the results for 2015 and beyond),” one hedge fund manager said, declining to be named. “What we’re eagerly waiting for is the outcome of the PwC investigation.”
The accounting scandal marks a fall from grace for the retailer which has grown rapidly via an international M&A spree that began in 2011 with the acquisition of Conforama, Europe’s second biggest furniture retailer. It has also tainted the reputation of Steinhoff’s chairperson and biggest shareholder Christo Wiese, considered one of SA’s most respected stewards of shareholder capital.
Shares in Steinhoff, once dubbed Africa’s Ikea, have fallen about 90% since news of the accounting irregularities broke in early December, wiping R185 billion off its market value. It warned then that there was a 2.4 billion hole in its balance sheet and has since said that some credit facilities have been suspended or withdrawn as it grapples with more than 10 billion euros in outstanding debt.
Separately, the company has been under investigation for suspected accounting fraud in Germany since 2015. It moved its primary share listing from Johannesburg to Frankfurt late that year.
Four current and former managers are under suspicion of having overstated revenue at subsidiaries, prosecutors said. Steinhoff has said the German probe relates to whether revenue was booked properly and taxable profits were correctly declared.
Steinhoff shares were up nearly 8% at 12.56 GMT. – Reuters