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Steinhoff expects PwC forensic report by mid-March, creates litigation committee to asses lawsuits

Feb 28 2019 13:50
Jan Cronje, Fin24

Steinhoff International [JSE:SNH] announced on Thursday that a forensic probe in to the company's financial statements by PricewaterhouseCoopers Advisory Services was "substantially complete" and would be presented to the group's supervisory board by mid-March.

This is slightly later than the initial date of the end of February 2019, which the Stellenbosch-headquartered retailer announced in late 2018.

The group published its unaudited quarterly update on Thursday for the three months ended December 31.

It showed that revenue from continuing operations in Europe, Africa, the US and Australia had grown by 3% to €4.69bn over the three months. In the last three months of 2017, revenue was €4.56bn.

These figures include results for its subsidiary Pepkor - formerly known as Steinhoff Africa Retail - which is separately listed on the JSE. 

Steinhoff publishes its results in euros as it is domiciled in the Netherlands and has its primary listing on the Frankfurt Stock Exchange. 

PwC probe 

PwC was hired to conduct an independent forensic probe into the multinational retailer in late 2017 following the abrupt resignation of its CEO, Markus Jooste, after the company's auditors flagged accounting irregularities in its financial statements.

The group's share price plunged in the wake of Jooste's resignation, cutting its market capitalisation down by R200bn. 

"The task was substantial and complex and involved interaction with, among others, Deloitte, the Company’s auditor; regulators; Steinhoff entities; and current and former employees," said Steinhoff CEO, Louis du Preez, in a letter in the group's unaudited quarterly update, published on Thursday.

The update overs the three months ended December 31.

"The requirement to work through an extensive volume of documents and the significant complexity of the investigation, with multiple work streams operating across a number of jurisdictions, meant that this was necessarily a time-consuming process."

Privileged info

Du Preez said the company anticipates providing an "overview of the report" prior to the publication of its audited 2017 and 2018 financial results, once it has reviewed the full document in detail.

"This overview will ensure that the legally privileged nature of the report is not undermined and its position in the various pending legal and other proceedings, including any recovery proceedings to be instituted by Steinhoff, is not jeopardised."

The CEO also announced the company had constituted a new litigation committee to assess the merits of various class-action and other lawsuits filed against it. He said that "a number of initial defences have already been filed" by the group in these legal proceedings.

He added Steinhoff was confident it would be able to publish its audited annual reports for 2017 and 2018 on April 18, 2019. These reports had been delayed as PwC conducted its investigation.

steinhoff  |  pwc
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