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Softbank, the Japanese communications conglomerate, has responded to a critical analyst report that identified “warning flags” in its accounts.

Softbank’s statement rejects doubts raised by Kieran Calder, telecoms analyst at CLSA Asia-Pacific and author of the report, over accounting at the group.

In a point by point rebuttal of the report, Softbank also says it is “considering legal action, including a claim in damages, in respect of false and misleading statements” which it says were subsequently repeated in the Financial Times. The
company appointed Deloitte Touche Tohmatsu as temporary auditor last year, replacing ChuoAoyama PwC, an accountancy firm whose reputation was tarnished after other clients became involved in accounting scandals.

Softbank says Tohmatsu had already validated Softbank’s consolidated and non-consolidated interim financial statements, for the period ending September 2006.

“If there were any problems with the accounting
methods, as the analyst
indicates, then this validating opinion could not have been obtained,” it says.

Two other sections of Softbank’s seven-part refutation attack Mr Calder’s suggestions that there may be hidden debt within the Softbank group.

The company says that non-consolidated subsidiaries’ debt – an area focused on in Mr Calder’s report – is extremely low. The statement also takes issue with his definition of debt, which is broader than Softbank’s.

Countering Mr Calder’s reference to a “vast difference between cash flow and net income”, the document says this is partly because Softbank “is not only an operating company but is also active as an investment company”.

An apparent inconsistency, according to the CLSA report, between figures for capital expenditure in different parts of the accounts, “is mainly due to the difference of the timing of payment,” Softbank said.

The company also responded to the CLSA criticism that “Softbank uses frequent accounting changes which always improve the treatment of earnings”.

Softbank said that the examples of changes highlighted by Mr Calder were made “due to valid reasons”. The company did not elaborate.

CLSA declined to comment on Softbank’s statement.

Copyright The Financial Times Limited 2017. All rights reserved.
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