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Saturday 23 June 2018

Steinhoff woes mount as firm admits accounting issue could run deeper

Steinhoff was plunged into crisis last month after revelations of accounting irregularities linked to its 2016 accounts.

Poundland
Poundland

By Ravender Sembhy, Press Association City Editor

The South African owner of Poundland has said that it may have to restate more historic accounts as an accounting scandal at the company deepens.

Steinhoff, which also owns Harvey’s and Bensons for Beds, was plunged into crisis last month after revelations of accounting irregularities linked to its 2016 accounts.

On Tuesday, the firm said although an internal investigation is ongoing, the restatement of the financial statements “for years prior to 2015 is likely to be required”, adding that the 2016 and 2015 financial statements “can no longer be relied upon”.

The group also warned investors to “exercise caution” in relation to the financial statements.

The initial revelation triggered a share price collapse, a management overhaul, lenders deserting the firm and credit insurance being withdrawn from its operating companies.

Last week Steinhoff was again downgraded by ratings agency Moody’s, which has warned that it may not have sufficient funds to “sustain its European operations”.

Cutting Steinhoff’s credit rating from B1 to Caa1, its second such downgrade, Moody’s said the move reflected the “increasing pressure on the company’s liquidity profile”.

Moody’s pointed out that Steinhoff has 1.47 billion euro of debt maturing next year, and the investigation into accounting irregularities could “make it challenging to either repay or refinance”.

In December, Steinhoff installed an acting chief executive, Danie van der Merwe, following the resignation of Markus Jooste.

Steinhoff’s chairman, the South African retail billionaire Christo Wiese, had been acting as executive chairman on an interim basis following Mr Jooste’s departure, but resigned in order to “address any possible conflict of interest that may exist”.

Mr Wiese’s Brait investment group owns stakes in Virgin Active, New Look and food chain Iceland.

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