File image: IOL.
File image: IOL.

Steinhoff's grim financial data reveals R64bn loss

By Sandile Mchunu Time of article published May 9, 2019

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DURBAN – Troubled retailer Steinhoff International’s long delayed 2017 audited financial results were finally released after the close of the market on Tuesday midnight, revealing a loss of €3.99 billion (R64.5bn) for the year to end September.

This figure was up from a €237 million loss compared to the restated financial statements for the 15 months to end September 2016. Steinhoff released the 2017 audited financial results in a 329-page annual report which provided an update on the group’s operations since it was plunged into a crisis when it admitted to accounting irregularities in December 2017.

The admission led to a 95 percent decline in the group’s share price and wiped out more than R200bn in market capitalisation, and led to the resignation of former chief executive Markus Jooste after the scandal emerged.

PricewaterhouseCoopers was hired to conduct to conduct a forensic investigation, which was completed in March, with the probe revealing that an estimated €6.5bn worth of fictitious transactions took place between 2009 and 2017, which had inflated the group’s profits and asset value.

Steinhoff shares traded 8 percent higher on the JSE on Tuesday morning on the expected release of the results. However, the shares closed 1.01 percent higher at R2.01 a share at the end of the day.

In the results, the group reported revenue of €18.82bn for the year, compared to €16.13bn as restated for the 15 months to end September 2016.

The group said the increase in revenue was largely attributable to the first-time inclusion of Mattress Firm in the US and Poundland in the UK for a full year, with both acquired in September 2016.

“Sales in 2017 were further boosted by the acquisitions of Fantastic in Australia and Tekkie Town in South Africa during the reporting period,” the group said. Steinhoff also reported sustainable earnings before interest, tax, depreciation and amortisation of €765m in 2017, up from €753m in 2016.

The group said that in both years, operating results were hit by impairment charges relating to goodwill and other intangible assets of €3.4bn in 2017 and €42m in 2016; impairment charges related to property, plant and equipment of €521m in 2017 and €26m in 2016; and impairment charges relating to other assets of €103m in 2017 and €161m in 2016. 

The group reported a basic loss a share of 95.9 euro cents compared to the restated figure of 7.6c loss a share for 2016. Steinhoff admitted that the process of completing and reporting on the results had been long and complex.

“The last 17 months have been by far the most challenging in Steinhoff International's history. As a management board, our priority through this period has been to re-establish stability for the business by achieving a financial restructuring. This process has been highly complex and demanding but will shortly be complete,” the group said.

The group expects to release the 2018 financial statements on June 18.


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