Steinhoff International forked out more than R1.2bn in advisory fees in only six months as it tried to restructure a business wounded by "accounting irregularities", its half-year results revealed on Friday.
The global retailer, once the seventh-largest company on the JSE, reported a loss for the half-year to end-March of €571m (nearly R9bn) - still narrower than the restated loss of €609m a year earlier.
The loss is the latest reality check for investors, many through their pension funds, who still had hope that the company could recoup the more than R200bn in destroyed shareholder value.
Two years ago, when Markus Jooste was still CEO and Ben la Grange CFO, the company reported what it called a "solid set of results" with an after-tax profit of €711m.
Steinhoff, which is now suing Jooste and La Grange for a total of more than R1bn in bonuses and salaries, has had to absorb massive write-offs on the foreign assets that the company bought in 2015 and 2016. It also revealed that a forensic investigation by PwC uncovered that profits had been overstated by around R100bn over nine years.
Normalising communications with the financial markets, after nearly two years of disruption, has a hefty price tag.
Advisory fees for the six months were€82m, an amount the company had to account for in this set of results even though it started pulling in advisers shortly after Jooste's resignation in December 2017.
"While every effort is made to limit costs, we expect this to remain our reality for some time," the company said in the report accompanying the latest set of results.
In addition, it had to pay €11m relating to PwC's investigation and technical accounting support, and €30m in creditor adviser fees, Steinhoff added.
PwC compiled a forensic report of more than 3,000 pages without which Steinhoff would not have been able to publish the full-year results it postponed upon Jooste's departure. In the week following the postponement, 90% was wiped off Steinhoff's share price. This brought about massive losses for several large investors, including Christo Wiese and the Public Investment Corporation.
And Steinhoff has been in talks with its creditors ever since, trying to herd them into a deal that would buy it enough time to trade itself into a better position.
"There is value within the group and, during the first half, we took the first steps on the long journey to restoring it," the company said.
The best performances in the group were by Pepkor, the business Wiese sold to Steinhoff nearly five years ago for more than R60bn.
Net sales inched 3% higher in the half-year, supported by a 13% increase by Pepkor Europe and a 2% improvement by Pepkor Africa. Pepkor owns, among other brands, Pep, Russells and Timbercity.
"At the operating company level, the group retains significant strengths as a well-
diversified global retail business with a number of strong local brands and leading positions in attractive growth markets," Steinhoff said.
While the Pepkor assets are performing "robustly", according to Steinhoff, others such as European retailer Conforama and US bed seller Mattress Firm are still in turnaround mode.
Management will take questions at the results presentation on August 13.
