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Steinhoff pleads to save ‘burning building’

Apr 22 2018 10:12
Bloomberg, Fin24 And Justin Brown

Steinhoff International’s acting chairperson likened the retailer to a burning building when the accounting scandal broke four months ago, appealing for shareholder support for an ongoing investigation into the smoldering wreckage.

“There was a time in early December that it could be likened to finding oneself in a burning building,” Heather Sonn said at the retailer’s annual general meeting (AGM) in Amsterdam, where the company is registered.

“Typically when in a burning building you run out. Some stayed. We are happy some stayed in the burning building to help.

“We want to uncover the truth, show the world what has happened, prosecute any wrongdoing and reinstate trust in the company,” Sonn said.

She reiterated that Markus Jooste, the former CEO who quit in December when the financial irregularities were disclosed, has been referred to law authorities.

The owner of Conforama in France and Pep clothing in Africa said an investigation by auditors at PwC had uncovered a pattern of transactions being undertaken over a number of years across a variety of asset classes that led to the material overstatement of income and asset values.

More than 320 000 documents have been studied and 4.4 million records gathered in an attempt to find out what happened and who’s to blame, Steinhoff said.

The company said it expected the PwC probe to be completed before the end of the year and any release of results would be on hold until the investigation is complete.

Steinhoff said it would aim to publish the full PwC forensic report once it was completed, except for parts that might influence prosecutions or civil claims.

All Steinhoff directors that were proposed were voted on the board with at least the required 50% of shareholder backing.

Sonn got backing from 80% of Steinhoff shareholders.

Stefanus Booysen got only 56.8% support with 43.2% of shareholders voting against his nomination as company director. Angela Krueger-Steinhoff got just 59% of Steinhoff shareholder support with 41% voting against her nomination.

Steinhoff shareholders reappointed Deloitte as the company’s auditor with 73% of shareholding backing the reappointment and 28% voting against the motion.

Some shareholders and commentators have argued that the auditors should be changed, given the financial irregularities that caused Steinhoff’s share price to collapse.

Steinhoff’s shares reacted wildly gaining as much as 23% before paring gains to trade 2.5% higher in Frankfurt on Friday afternoon, to where Steinhoff moved its primary listing from Johannesburg in 2015.

“The market is telling you it’s turmoil, that there is so much rot there,” Bobby Snodgrass, who holds about 100 000 shares, said in Cape Town, where Steinhoff hosted a live broadcast of the AGM.

Investors “were misled by a charismatic leader and everyone listened to him”.

“Those that saw red flags were at the trough and didn’t want to upset the apple cart.”

On the JSE Steinhoff International was up more than 7% late on Friday afternoon, following the completion of the company’s AGM.

The Steinhoff share was quoted at R2.75, down 95% from R56.26 in late November last year before the news broke in early December that the company had uncovered accounting irregularities.

Steinhoff’s financial situation remains “very challenged” and the company has been “drained of working capital”, the company said.

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steinhoff  |  heather sonn
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