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
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.
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 under a cloud a few days after its share price plummeted.
The group said PwC was close to completing its report on a forensic investigation into serious accounting irregularities at the retailer, and once it handed it over to the company, it would 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 Manager, said besides shedding light on what happened at the group, the PwC report would likely be used as evidence in several civil actions against the group.
Butters was however concerned that after saying it would release the entire report, Steinhoff was now only considering releasing a summarised version of it.
According to the minutes of its annual general meeting in April, it was seriously considering such a move. Steinhoff’s new CEO, Louis du Preez, said at the time, that though the group intended to publish the full report, this was 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 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 (VEB) is already taking class action against the group, and Steinhoff's largest shareholder Christo Wiese has issuedsummons to the group for R59bn.
When asked if it intended to take legal action of its own, the group said in a statement: “Steinhoff has also previously stated that, regarding the forensic investigation, those responsible will be held accountable. This view has not changed.”
It declined to answer questions on whether Jooste had cooperated with the forensic investigation.
The PwC investigation was not expected to affect the agreements it had reached with its creditors.
“Our financial restructuring continues to make good progress. 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 announcement,” said Steinhoff chair Heather Sonn.
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.