Steinhoff. Picture: BLOOMBERG/DWAYNE SENIOR
Steinhoff. Picture: BLOOMBERG/DWAYNE SENIOR

Steinhoff, reeling from an accounting scandal, said on Friday that while its losses narrowed in the six months to end-March, its long-term survival remained uncertain.

The household-goods retailer group, which is now up to date with its financial reporting having recently published statements for 2017 and 2018, said its losses reduced to €571m (R9bn) in the first half of financial year 2019, from €609m a year before.

While revenue from continuing operations rose 2.9% to €6.9bn thanks mainly to Pepkor Europe, Steinhoff said the costs of stabilising the group remained high and that had dented profits.

Advisory fees in the six-month period amounted to €82m, including €11m for a forensic investigation and “technical accounting support”, and €30m relating to creditor advisory fees.

“While every effort is made to limit costs, we expect this to remain our reality for some time.”

In June, the company launched proceedings against former CEO Markus Jooste and former CFO Ben la Grange in the Cape Town high court, aimed at recovering salaries and bonus payments made to them.

Jooste resigned when Steinhoff announced “accounting realities” in December 2017 and sparked a sharp sell-off of the company’s shares. The stock, which was above R50 prior to the announcement, was last traded at R1.31 on Friday, a 3.2% increase on the day.

The board said in the report that since Steinhoff’s current liabilities exceeded current assets, and the fact that it faced numerous claims, there was “significant doubt” about the group’s ability to continue as a going concern beyond the next 12 months.

“If the group and company are to continue as a going concern, the management board and operational management require sufficient time to stabilise the group and re-establish value at operational level.

"This will enable the group and company to realise assets in a non-distressed fashion and thus maximise value to repay or reduce debt to manageable levels.”

At the same time, a solution for the potential litigation against the group “will need to be sought and implemented”.

hedleyn@businesslive.co.za