Steinhoff International’s share price dipped by more than 4 percent on the JSE after the group announced that it would delay publishing its 2017 annual results by another month. Photo: Bloomberg
DURBAN – Steinhoff International’s share price dipped by more than 4 percent on the JSE after the group announced that it would delay publishing its 2017 annual results by another month.

The trouble retailer had anticipated publishing the results in mid-April, but it has delayed them to May 7.

The group said the delay was partly due to the release of PricewaterhouseCoopers' (PwC’s) forensic report on March 15, which was completed later than originally expected. The PwC report is key to the process of finalising Steinhoff’s financial statements for the 2017 and 2018 financial years.

Chief financial officer Philip Dieperink said the company sincerely regretted this further delay.

“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 and the distraction of the company voluntary arrangement challenge have combined to create a significantly greater workload than was anticipated at the time the mid-April target was agreed,” Dieperink said. He said substantial progress had been made, and despite a major and sustained effort from the whole team, more time was required.

The share declined to R1.72 a share after the release of the update, from Thursday’s closing price of R1.80.

Ron Klipin, a senior analyst at Cratos Capital, said the numerous postponements had once again created uncertainty, which, in turn, had created price volatility to the downside.

“In addition, the complexity of the group structure is hampering a deep dive into an extensive analysis of the group. There also appears to be a number of fictitious deals reported, which entail delays in formulating satisfactory analysis of the financials,” Klipin said.

The group said that since PwC released its report, significant progress had been made in analysing, assessing and finalising the accounting treatment required for the numerous transactions identified in the report.

“The issues highlighted have proved to be exceptionally complex in both accounting and auditing terms and Steinhoff wishes to be diligent in ensuring that all issues are correctly dealt with and disclosed in the group’s annual financial statements,” the group said.

Jordan Weir, a trader at Citadel, said it was reasonable to assess the unexpected additional delay in announcing the results as arising from the complexities woven into the company's historical accounting practices and that these complexities might indeed have been profoundly underestimated.

“Having said this, the audit firms are following the correct procedure in seeking out the most transparent and accurate way to present the information. Given the intricacies of the situation, in addition to attempting to meet shareholder expectations as best as they can, providing definitive timelines and feedback will prove decidedly difficult for Steinhoff at present,” Weir said.

The group added that it had also made substantial progress with Deloitte, its external auditor, on the audit process and expected to conclude on the remaining issues in the next week.

Steinhoff said the 2018 results would be released a month later on June 18.

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