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Last updated: December 14, 2011 1:06 pm
Olympus, the scandal-hit Japanese optical equipment maker, has cleared a crucial hurdle in its campaign to retain its listing on the Tokyo Stock Exchange after it managed to meet the Wednesday deadline to file postponed quarterly results.
The filing means the company will avoid automatic delisting under TSE rules, and the damage to its reputation and financing ability that would have entailed.
In the end, Olympus completed its filing with about two hours to spare. It won unqualified approval from its external auditors for its financial statements for the quarter to September 30, which showed a Y32.3bn ($414m) net loss as well as significant but not catastrophic deterioration in the value of its assets.
The stock fell as much as 19 per cent as the evening deadline loomed on Wednesday, before rebounding to close at Y1,314, down 4 per cent. That was still well below the Y2,482 at which it traded on October 13, the day before Olympus’ problems first emerged in allegations by former chief executive Michael Woodford.
The risk of delisting has not receded completely, however: Olympus could still be kicked off as a result of a separate TSE inquiry into the extent of its accounting deception and the damage it inflicted on shareholders. Such inquiries usually conclude after a month or two, but in complex case they have taken as long as six.
The company also submitted revised statements for the five years to March 2010, for which it obtained only qualified approval from the auditors. Olympus has acknowledged hiding more than Y100bn in investment-related losses over at least 13 years, but the law required only that it correct its accounts for the most recent five.
Its new statements showed that it had remained solvent throughout the period even after adjusting for its then hidden losses – a finding that could bolster its chances in the TSE inquiry.
However, KPMG Azsa, the auditor responsible for the company’s accounts for the years through March 2009, withheld its full blessing from the accounts, choosing to certify them with reservations. “Information on the investment funds that were used to conceal losses has not been properly kept,” it said. “Therefore, we could not obtain evidence to support the value of assets held by those funds.”
In the corrected accounts, Olympus reduced the value of the intangible goodwill assets on its books to Y145bn as of March 2010, from Y196bn in previous statements. While the company remains solvent, cleaning up its losses has taken a toll, which some say leave it needing fresh capital: as of September 30 it had net assets of Y46bn, down from a corrected Y225bn in 2007.
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