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Steinhoff headquarters in Stellenbosch. (Photo: Getty Images).
- Steinhoff reported a net loss of R13.7 billion for the 2020 financial year.
- According to the annual report issued on Friday, the retailer is still considered a going concern for the next 12 months.
- It managed to report revenue growth of 3.5%, but its operations were affected by Covid-19.
Retail group Steinhoff reported a net loss of R13.7 billion for the 2020 financial year, but its management believes it is a going concern for the next 12 months and will be able to meet its liabilities as they mature.
The group on Friday released its annual results for the year ending September 30, 2020.
It managed to increase revenue by 3.5% to R63.7 billion compared to the previous year. However, it posted an operating loss of R9.5 billion, compared to the operating profit of R7.6 billion recorded last year. Overall earnings per share decreased from a gain of 7,971.6 cents to a loss of 23,116.4 cents.
The report indicated that the group recorded R5.1 billion in impairments. It also had to make a provision of R9.4 billion in respect of a proposed dispute settlement.
Earlier this year, Fin24 reported that the group pledged R16.5 billion as a settlement for various class action lawsuits filed against it, this after its share price plummeted by more than 90% in December 2017 after of former CEO Markus Jooste resigning. It has come to light that the group had a number of accounting irregularities in its financial reports, several of which have had to be restated.
The group took note of the multiple legal complaints and regulatory investigations in this regard.
“These legal proceedings and regulatory investigations were initiated after the events of December 2017. The board of directors, assisted by the Steinhoff NV litigation working group and in consultation with the attorneys of the Steinhoff NV Group, continues to evaluate the merits and responses to these claims and provide comments to relevant regulatory bodies, “the report reads. The group added that it had already filed several initial defenses in these court proceedings.
The group’s management believes it is a going concern and does not intend to liquidate the entity. It plans to “recover its assets and pay off its debt in the normal course of business,” the report read.
Steinhoff received a qualified audit opinion from Mazars; The audit firm also reported two irregularities to the Independent Regulatory Council of Auditors. This includes non-compliance with the Income Tax Law; the group did not file its annual income tax returns as its annual financial statements had not been finalized for prior years. Mazars also reported non-compliance with JSE Listing Requirements related to the release of unrevised interim results for the six months ended March 31, 2020.
The report noted the group’s R13.5 million fine by the JSE, due to its failure to meet listing requirements with respect to previous years’ financial statements. This occurred after the group’s reporting period.
Impact of Covid-19
The group regrets that the Covid-19 pandemic has had a “material impact” on its retail business, since March 23, 2020, when the lockdown restrictions were implemented. “These measures resulted in the temporary closure of many of Steinhoff Investments Group’s general merchandise stores and headquarters and warehousing facilities,” the report read.
The group said its response measure remains under constant review, given that the pandemic situation is “swift and uncertain.”
