NEWS

Credit insurers desert Poundland owner Steinhoff as accounting scandal deepens

Published on: 21st December 2017

The embattled South African retail group said the position of its companies, including Poundland, was “evolving daily”.

It acknowledged that credit insurance was being cancelled or reduced and said that credit facilities were being suspended.

This has put further pressure on the group’s already plummeting shares, The Guardian reported.

The group said it was still unable to determine the scale of accounting irregularities, which have wiped more than $10b off its market value over the past two weeks.

The emergence of the accounting crisis prompted the departure of chief executive Markus Jooste and billionaire chairman Christo Wiese, the company’s largest shareholder, and triggered an 85% plunge in the share price.

The group said on Tuesday it could not provide further detail on the magnitude of the problem or when it could produce audited accounts for 2017 and restated accounts for last year.

The company said others years’ accounts might also need to be restated.

PWC has been investigating the accounting irregularities, linked to Steinhoff’s assets outside South Africa.

However, Poundland boss Andy Bond did tell creditors that the business was trading well with sales at established stores increasing by 4% in the period since the end of March compared to last year.

Poundland has sent a statement to reassure its employees, insisting that despite its credit cover being downgraded it expects “no impact on the business in terms of supply”.

According to an internal document, sent by Pepkor Europe chief operating officer Sean Cardinaal, and Poundland managing director Barry Williams, to the staff, Poundland has continued to trade strongly despite the accounting scandal and subsequent share price slump. The retailer said that “in just 12 months we’ve established a robust, profitable business generating cash and [are] trading more strongly than we have in many years”.

The retailer, which was bought by Steinhoff last year for £610m, said last week marked its 34th consecutive week of like-for-like sales growth, adding that “not even the appalling weather at the beginning of the week could put a stop to our underlying momentum.”

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