Fri, 06 Dec 2019

Steinhoff says road to recovery still long

13 Jul 2019, 04:13 GMT+10

Steinhoff says the work of rehabilitating the company is far from over, as the scandal-hit conglomerate outlined the steps it has taken to stabilise the business.

In a statement issued on Friday after the company reported a loss of €571m (R8.9bn at current exchange rates) for the half-year ended March 31, the firm conceded that "past governance failings and new stronger structures for oversight and control needed to be put in place" in order to move forward.

"While our work is far from finished, and tough tasks still lie ahead, we can be clear that progress was made in the first half of the financial year," said the company.

The Stellenbosch-headquartered firm said it had developed a "Remediation Plan" aimed at addressing previously identified weaknesses and enhance standards of corporate governance and control.

Steinhoff's share price plummeted in December 2017 after its CEO Markus Jooste abruptly resigned at the start of an accounting scandal.

It said it was aware that uncertainties persist and "still face many tough challenges on the road to rehabilitation".

The group's shares have dived by over 95% since former CEO Markus Jooste stepped down in December 2017, cutting its market capitalisation by over R200bn.

Significant outstanding challenge

In March, a forensic report by PwC revealed that a "small group" of former executives, acting with directors of other companies, for years inflated the profit and asset values of Steinhoff.

The company stated that while the report was confidential, its findings "contributed significantly" to the completion of the 2017 and 2018 consolidated financial statements."

"It is also being used to assist decision making on areas for further investigation and remedial work."

Steinhoff is embroiled in multiple legal claims over its accounting scandal, a matter it says "remains a significant outstanding challenge".

"The management board, assisted by litigation committee, and the group's attorneys, continue to work towards a resolution of outstanding claims against the group.

"In parallel, we are also evaluating potential claims we may have against third parties, and recoveries against implicated entities and individuals are being initiated where appropriate."

The firm said it was confident that the financial restructuring undertaken in the first half and prior periods would soon bear fruit, and will bring stability that would allow it to "turn the page and concentrate fully on maximising value" from its operating companies.

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