Steinhoff delays earnings report over audit complexities

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Steinhoff International Holdings NV pushed back the dates for the publication of audited earnings for 2017 and 2018 after the findings of a forensic probe by PwC made the process more time consuming and complex.

The South African retailer, which almost collapsed amid an accounting scandal in late 2017, is working toward ensuring that all appropriate adjustments are made to valuations and profitability at various subsidiaries, the company said in a statement on Friday. That has slowed down the process considerably.

“We sincerely regret this further delay,” Chief Financial Officer Philip Dieperink said in the statement. “While substantial progress has been made, the volume and complexity of the accounting and audit work required to address the numerous transactions identified in the PwC report” have significantly increased the workload.

Steinhoff last month said PwC found that a small group of former executives — with the help of some outsiders — structured dubious deals that substantially inflated earnings and asset values. The owner of Conforama in France and Mattress Firm in the U.S. has been battling to stay afloat, with asset sales and a debt restructuring at the forefront of its survival plan.

Compliance Officer

The retailer has also been strengthening its various boards of directors, and on Friday appointed Louis Strydom, formerly leader of PwC’s African Forensic Services practice, as chief compliance and risk officer. He starts July 1 and will report to both the CEO and the audit and risk committee.

Full-year results for the year through September 2017 are now due to be published May 7, while the following year’s financials will be released on June 18. The stock fell as much as 4.6 percent in Frankfurt, and remains more than 96 percent below pre-crisis levels.

The cumulative effect of all prior year restatements will be disclosed in the as-yet-unpublished 2017 annual report, Chief Executive Officer Louis du Preez said last month. The restated 2016 income statement can therefore be used as comparative numbers in that report.

The write-down of total equity has been pegged at 11 billion euros ($12.4 billion), according to 2018 interim earnings released in June. Should Deloitte LLP make a material adjustment to that amount on the back of the PwC report, Steinhoff will make an announcement before the earnings are released, Du Preez said.

Bloomberg News
Forensic accounting Accounting fraud Audits PwC Deloitte