South African retailer Steinhoff has reported a $4 billion operating loss in the 2017 fiscal year, in a much-delayed earnings report revealing the impact of a $7.4 billion accounting fraud.
Steinhoff, which is also listed in Frankfurt, said operating loss came in at €3.7 billion euros in the year ended September 2017, compared with profit of €278 million in the restated 2016 figures.
The company blamed writedowns for the loss as it cleans up its balance sheet. The total writedowns have already topped €13 billion since revealing the fraud, which wiped out more than 200 billion rand of shareholder equity.
Reversing The Irregularities
"The consequential impact of reversing the accounting irregularities is the fact that the restatements highlight that several of the group’s operating entities are unprofitable," Steinhoff said in a 359-page annual report posted on its website shortly before midnight.
An investigation by auditor PwC released in March found that eight people, including former Steinhoff executives, were involved in a complex scheme where potential intercompany transactions worth €6.5 billion were fraudulently recorded as external income to prop up profits and hide costs in money-losing subsidiaries.
The retailer has delayed releasing results several times as it waited for the findings of the PwC investigation and audit process of its external auditor Deloitte.
The 2018 results are now due on June 18.