Japan's Toshiba will make every effort to avoid being delisted by the Tokyo Stock Exchange, the company's chief executive said on Tuesday, after releasing delayed third-quarter results with a disclaimer from its auditor.
"The decision on any delisting is for the stock exchange to make," Satoshi Tsunakawa said at a press briefing in Tokyo. "We will do our utmost to avoid it."
The results filing for the three months to end-December carried a disclaimer from auditor PricewaterhouseCoopers (PwC) that it was unable to form an opinion of the results.
Such a disclaimer is one of several criteria the TSE can use to justify removing companies from the bourse. The 142-year-old conglomerate warned it may not be able to continue as a going concern as it grapples with billions of dollars in losses from its Westinghouse Electric nuclear business.
It reported earnings for the third quarter after missing two previous deadlines for financial results. Toshiba posted an operating loss of 576.3 billion yen (€4.9 billion) for the nine months ended December 31st and said it had negative shareholders equity of 225.6 billion yen (€1.9 billion).
Toshiba has been at odds with its auditors over Westinghouse, which filed for bankruptcy in the US last month. The auditing firm submitted an independent review with Toshiba’s results that emphasised the risks to its future because of losses in the Westinghouse unit responsible for atomic projects and breach of covenants on 284 billion yen in loans.
Toshiba has done everything in its power to gain the understanding of the auditors, Tsunakawa said at a briefing with about 200 reporters in Tokyo. “Without clear prospects for auditor approval, we could no longer inconvenience and worry our investors and other stakeholders, and decided on this very unusual way of releasing results.”
"How the TSE will take this is anyone's guess now," said Hideki Yasuda, an analyst at Ace Research Institute. "This is just quarterly earnings. Now the question is whether the company can release the full-year statement in time." The TSE kept Toshiba on its list of securities on alert in a December announcement, after originally being included for overstating profits from 2008 through 2014. The company last month submitted a report detailing plans to improve internal controls. If deemed insufficient, the company will face delisting.
"The situation at Toshiba continues to make a mockery of TSE listing rules, as authorities have done their best to allow it as much time as possible for its auditors to approve its third-quarter results," Amir Anvarzadeh, head of Japanese equity sales at BGC Partners in Singapore, wrote in a note prior to the announcement. "We think TSE will continue to remain supportive."
Toshiba has responded by putting its prized memory chip unit up for sale and is narrowing down a list of bidders. – (Reuters/Bloomberg)