What retail chain Steinhoff's accounting troubles mean for Australia

07 December, 2017, 02:20 | Author: Malcolm Fuller
  • A Steinhoff International Holdings NV logo sits on display outside the company's offices in Stellenbosch South Africa on Wednesday Aug. 17 2016

The JSE says it's been talking to Steinhoff to find out the exact allegations against the worldwide company after the furniture retailer shares plummeted.

Steinhoff International CEO Marcus Jooste resigned on Tuesday night, and the release of the company's full-year results - originally scheduled for Wednesday - has been delayed indefinitely.

Steinhoff's biggest shareholder and chairman, the billionaire Christo Wiese, has taken over as executive chairman temporarily. The company added it also needs to determine if any financial statements from previous years need to be restated.

Steinhoff's African businesses include a range of credit-based household goods retailers and the company also has extensive interests in Europe, including German chain Poco and France's Conforama.

"The Supervisory Board of Steinhoff wishes to advise shareholders that new information has come to light today which relates to accounting irregularities requiring further investigation", the company said in a statement. Steinhoff has been aggressively expanding in developed markets since moving its primary share listing from Johannesburg to Frankfurt in 2015, snapping up Britain's Poundland, US-based Mattress Firm and Australia's Fantastic.

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While the nature of its accounting investigation was not disclosed, it had already been known that it was facing a tax probe in Germany.

Omri Thomas of Abax Investments, the 15th largest investor in Steinhoff, said because there was no immediate prospect of any clarity on its results, it was hard to put a value on Steinhoff and this had prompted the severe share reaction.

The investigation could result in prior years' financial statements needing to be adjusted.

The FT approached Deloitte - which was appointed the company's external auditor in 2015 and audited its accounts in 2015 and 2016, according to Steinhoff's annual reports.

KAP Industrial Holdings, in which Steinhoff is a major shareholder, fell the most in six months even as the firm said in a statement it is independently managed.

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