Toshiba warns its future is in doubt

Toshiba has warned that its survival is in doubt as it filed its twice-delayed financial results without the sign-off of its auditor, PWC Aarata.

The Japanese conglomerate said that there was “substantial doubt about the company’s ability to continue as a going concern” after booking huge losses related to Westinghouse, its US nuclear unit, which filed for Chapter 11 bankruptcy protection in the US last month.

PWC Aarata’s refusal to approve Toshiba’s accounts raises the possibility that the group could be delisted from the Tokyo Stock Exchange.

The losses at Toshiba have wiped out its shareholder equity and led to downgrades by credit rating agencies that have put the company in breach of its debt covenants. Failure to improve its financial position could result in it losing a licence from the Japanese government with an “extremely negative impact” on the business, Toshiba warned.

It reported a 576.3 billion yen loss for the nine months to December and reiterated warnings that its full-year results could fall to a loss of 1.01 trillion yen, or more than £7 billion.

Depending on the Westinghouse recovery plan, “there is a possibility that the amounts to be reported may change significantly”, it said.

PWC said it was unable to complete its review of the accounts while it was evaluating the results of an investigation into Westinghouse’s disastrous acquisition of CB&I Stone & Webster, the US nuclear construction business that caused the losses.

Toshiba is taking a series of measures to try to restore its financial health, including the sale of all or a majority of its memory business. Taiwan’s Foxconn is said to be considering bidding up to $27 billion for the business.