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Poundland owner Steinhoff warns accounting scandal stretches back before 2015

Jack Torrance
Steinhoff, which owns Poundland, said it is

Scandal-hit South African retail giant Steinhoff, which owns Britain’s Poundland, has warned its financial irregularities stretch back before 2015, meaning it will have to restate more of its accounts.

The Johannesburg-listed group has seen its shares plummet around 90pc over the past month after it announced a probe into its books.

Today it said its 2017 accounts would be accompanied by restated financials for 2015 and 2016, and that previous figures for those years can “no longer be relied upon”. It also warned accounts for years before 2015 were "likely" to need restating.

But its shares climbed as much as 24pc after it said the restatements would not need to include its Steinhoff Services business. Bloomberg Intelligence analyst Charles Allan said that “should be seen as positive as it builds on the impression that the accounting difficulties are confined to some European operations”.

Steinhoff's largest shareholder Christo Wiese stood down as interim chief executive last month

Long-hailed as one of South Africa’s biggest international business successes, Steinhoff owns Harvey’s, Benson’s for Beds and Pep&Co in the UK, as well as France’s Conforama and Mattress Firm in the US.

Its chief executive Markus Jooste stood down at the beginning of last month as the firm revealed an investigation into its accounts. He was temporarily replaced by billionaire tycoon Christo Wiese, Steinhoff’s largest shareholder.

But on December 19 Mr Wiese made way for Danie van der Merwe, previously Steinhoff’s chief operating officer, and also stepped down as chairman of its supervisory board  to “reinforce the independent governance of the company”.

Last week Moody’s downgraded the credit rating of three parts of Steinhoff to CAA1, indicating a very high risk. The ratings agency said Steinhoff’s problems were exacerbated by its operating companies relying on the mothership to support their working capital.

It said: “Moody’s notes the operating companies have experienced a reduction or cancellation of credit insurance lines in recent weeks, with credit facilities increasingly being suspended or withdrawn.

“Consequently, Steinhoff's liquidity levels could prove insufficient to sustain its European operations in the near term if it is unable to shore up its cash balances or other sources of liquidity.”