Restated results impact Steinhoff

By Sandile Mchunu Time of article published Jun 18, 2019

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DURBAN - Steinhoff International’s share price declined by more than 5percent in the morning on the JSE on Friday, ahead of the release of its 2018 restated financial results for the year to end-September, scheduled to be released later today, which analysts hoped would shed more light on the road ahead.

The troubled retailer has already published its 2017 restated results last month following a forensic probe by PricewaterhouseCoopers, with the loss for the period coming in at e3.99billion (R66.13bn) - up from the e237million loss compared with the restated financial statements for the 15 months to the end of September 2016.

After releasing the 2017 results, Steinhoff had said it expected its 2018 and 2019 sales financial years to decline because of asset disposals, more competition and a weak trading environment.

It added that operating expenses would be substantially higher and financing costs would increase.

The retailer is still struggling to shrug off the accounting irregularities that led to a 95percent decline in its share price and wiped out more than R200bn in market capitalisation, after the scandal emerged.

Ron Klipin, a senior analyst at Cratos Asset Management, said the expected 2018 results were likely to continue to reflect additional losses for the group.

“But it is difficult to predict outcomes due to an extremely complex organisation whose structure is not transparent and it is operating in a number of jurisdictions in different regulatory conditions,” Klipin said.

He added that hopefully the release of the 2018 results would reveal the extent of the damage incurred by the company in the past.

“There could be further impairments of assets, higher operating losses, an increase in debt levels, which may have broken bank conveyance levels, and strained levels of liquidity, impacting on the ability to trade successfully,” Klipin said.

Jordan Weir, a trader at Citadel, said Citadel hoped that the 2018 results would bring further clarity to Steinhoff’’s shareholders, who had been left in the dark since the company’s fall in December 2017.

“Considering the size of the concealed dealings and cover-ups by certain Steinhoff board members, it is likely that there will be more negative news to come,” Weir said.

He added that there was the possibility that the 2018 results would reveal the majority of the damage done to the group.

“However, the likelihood of further detrimental news washing up down the line must still be considered. The scale and complexity of the business as well as the questionable past accounting practices tend to lean more towards further unscrupulous dealings that we may never fully uncover,” Weir pointed out.

Steinhoff shares on the JSE closed the day 4.55percent lower at R1.47.


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