Steinhoff Investment Holdings, a wholly owned subsidiary of Steinhoff International, reported a first-half profit and said it will continue with its proposed global settlement with litigants claiming damages from it regarding an accounting scandal in which the group's former CEO Markus Jooste has been charged by German prosecutors.
The company said revenue from continuing operations increased 8% to R36.5bn in the six months to end-March and operating profit from continuing operations, after other material expenses, improved 149% to R5.2bn.
Steinhoff also increased its litigation settlement proposal provision by R1.2bn to R10.6bn for the interim period as it continues to fend off claimants opposed to its global litigation settlement proposal.
The group is involved in multiple multijurisdictional legal claims and regulatory investigations regarding the December 2017 accounting irregularities. Though it has reached an agreement with Conservatorium, a company that pursues litigation for profit, and certain entities linked to Christo Wiese, it still faces challenges from other litigants such as Ireland-based Hamilton.
Steinhoff said on Friday the Amsterdam district court on June 16 refused to grant Hamilton, which is seeking R16bn in damages from Steinhoff, additional requests for interim measures regarding its proposed Dutch settlement of payments. Since the ruling cannot be appealed, Steinhoff hopes this will pave the way for it to continue with its goal of achieving a global settlement.
“Litigation remains a significant outstanding challenge for the wider group and has been a major focus for management,” Steinhoff said in its interim results on Friday.
“A key assumption in the group’s cash flow forecasts is that no material judgments or fines are issued against the Steinhoff Group that will become payable during the next 12 months. However, there remains a material uncertainty as to the ultimate impact of litigation and regulatory enforcement on the liquidity of the group.”
Steinhoff also faces litigation from entities affiliated to the former shareholders of Tekkie Town, which filed an application for provisional liquidation of Steinhoff in the high court in Cape Town in May. While the Tekkie Town claimants had wanted the matter heard on an urgent basis on May 24, the court will hear the matter from September 1-3.
The retail group also said on Friday that Deloitte has agreed to support its proposed global litigation settlement proposal by making additional compensation available to certain claimants in exchange for certain waivers and releases. The agreement depends on Steinhoff successfully completing its planned Dutch settlement of payment and the statutory compromise process outlined under SA law.
“Deloitte does not in any way admit liability for the losses incurred by Steinhoff and its stakeholders as a result of the accounting irregularities at Steinhoff,” the retail group said in its interim results statement.
Steinhoff said that in February it paid the R13.5m fine imposed on it by the JSE regarding disclosure irregularities related to the accounting irregularities. The fine was first imposed in October 2020.
Correction: June 21 2021
A previous version of this story said Steinhoff International had reported a first-half profit. It was in fact a subsidiary of Steinhoff International, Steinhoff Investment Holdings, that reported a first-half profit.
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