Steinhoff Says Profit Overstatement Could Lead To More Impairments, Shares Dive
South African retailer Steinhoff said on Thursday that an investigation by auditors PwC has found that the overstatement of its profits may result in additional material impairments, sending its shares more than 13 percent lower.
Steinhoff, which runs chains such as Britain's Poundland, Mattress Firm in the U.S. and Conforama in France, is fighting for its survival after discovering irregularities in its accounts in December.
"The PwC feedback substantially aligns with and confirms the irregularities identified by Deloitte," it said in a statement.
"It has since emerged that the expected overstatement of profits and the accounting treatment of related parties may also result in material additional impairments of intangible and other assets."
The investigation by PwC is reviewing the validity and recoverability of certain non-South African assets which were initially estimated to be in the region of 6 billion euros ($7.16 billion), according to Steinhoff.
The extent of the increase in impairments is still being calculated and will be presented in June at the firm's interim results for the six-months period ended 31 March 2018.
The group aims to release its full year audited 2017 results by the end of December 2018 and the audited 2018 results before the end of January 2019.
Steinhoff is trying to renegotiate its debt and will likely sell more assets as part of any restructuring plan, newly appointed finance head Philip Dieperink said in April.