The owner of Conforama in France and Mattress Firm in the US appointed PwC to probe its finances after reporting financial irregularities in December, with a particular focus on off-balance-sheet structures and deals with related parties. Any value lost on assets that can't be recovered due to a lack of security or information will be impaired, the Stellenbosch, South Africa-based company said in a statement Friday.
Must read: Steinhoff – the Full story: From small furniture shop to retail giant.
"The task is substantial, complex and time-consuming," Chairwoman Heather Sonn said in a letter that accompanied unaudited earnings for the half-year through March. "PwC's work remains ongoing and indications are positive that they are on track to deliver a final report by the end of 2018."
The net loss widened to 621 million euros ($735 million) in the six months through March, from a restated loss of 380 million euros a year earlier. Steinhoff also published a detailed restatement of figures for fiscal 2017, while cautioning that the calculation process was still ongoing. That included a lowering of asset values to 22.3 billion euros from 34.7 billion euros in the now discredited accounts.
"The results are as bad as one might have imagined them to be and the scale of the overstatements of profits last year is quite shocking," Charles Allen, an analyst with Bloomberg Intelligence, said by phone.
Debt extension
The shares traded 7.6 percent higher at 8.2 euro cents at the close in Frankfurt, where Steinhoff moved its primary listing from Johannesburg in 2015. The stock is down 97 percent since the scandal broke, and the retailer is in round-the-clock talks with creditors about restructuring 9.4 billion euros ($11 billion) of debt to shore up its balance sheet.
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Steinhoff is negotiating a two-year payment delay with bondholders and lenders that would include zero cash interest, people familiar with the matter said earlier, and has negotiated a standstill so talks can be completed. The retailer initially raised cash through the sale of real estate and shares in subsidiaries, but now says the strategy is unsustainable.
Former Chief Executive Officer Markus Jooste quit when the accounting irregularities emerged and has been referred to a South African anti-corruption police unit, which is investigating three cases of fraud related to the company.