The company also warned it will not be able to keep going longer than 12 months unless its debt is reorganised and it skirts mounting lawsuits and possible regulatory fines.
Monday 13, May 2019
(Bloomberg) --Steinhoff International Holdings, the global retailer at the centre of South Africa’s biggest corporate scandal cut the value of its assets by EUR 15.3 billion $17 billion) because of accounting irregularities.
At risk is a business with 120,000 employees across chains including Mattress Firm in the US, Conforama in France as well as Poundland in the UK and European clothing retailer Pepco.
The Stellenbosch, South Africa-based company released its 2017 annual report minutes before a self-imposed deadline last week.
Additionally, the results came 17 months after Steinhoff’s auditors refused to sign off on the accounts, leading to the resignation of then-Chief Executive Officer Markus Jooste and a 97 per cent drop in its share price.
Investigations have since found deals were structured to inflate profits and asset values.
Steinhoff had EUR 17.5 billion assets at the end of September 2017, compared with total liabilities of EUR 15.4 billion, the report showed.
The firm reduced its assets by EUR 11.4 billion in the 15 months through September 2016 to EUR 21 billion, the bulk of which related to wrongdoing that occurred before mid-2015.
Further write-downs came from additional impairments of EUR 3.9 billion for fiscal 2017.
The outlook comes as the list of those seeking compensation for losses keeps rising, with former Chairman Christo Wiese alone demanding about EUR 3.8 billion.
More uncertainties include ongoing efforts to restructure borrowings, which Steinhoff said is critical to the group’s liquidity, and the need to negotiate with various authorities about the tax implications of the accounting wrongdoing.