Group confirms suffering damage to its reputation

STEINHOFF International confirmed suffering reputational damage from the recent accounting scandal as it recorded a 2 percent growth in group revenue to €12.9 billion (R221.7bn) in the nine months to June. The company has appeared before several parliamentary committees since its accounting crises broke. It also faces the wrath of its shareholders. A court in the Netherlands is expected to rule next week on whether the company is liable for the loss of billions in shareholder money. “Last month a hearing was held in Amsterdam in terms of the preliminary motions filed by Steinhoff in the Vereniging van Effectenbezitters (VEB) proceedings. A ruling on the preliminary motions is expected to be rendered on September 26,” the company said. VEB investors said they had suffered considerable pain due to years of fraud at Steinhoff. In less than a year, about 98 percent of the value of their stake in the company has evaporated. The VEB reportedly summoned Steinhoff and accountant Deloitte in the Netherlands. Steinhoff also blamed the low economic growth rates, increased competition, overtrading, the impact of online retailers, and customer indebtedness for denting sales. It said that it had made gains at its merchandise subsidiary, Pepkor, with the opening of 350 new stores in the nine months to June. Pepkor’s market cap declined sharply to R16bn from about R21bn in September. Steinhoff was thrown a lifeline after penning a lock-up agreement with creditors, which it expects to result in financial stability until 2021.