Toshiba posts net loss, revamps board as it seeks to put scandal behind it

Toshiba posts net loss, revamps board as it seeks to put scandal behind it

By Ritsuko Ando and Makiko Yamazaki

TOKYO, Sept 7 (Reuters) – Japan’s Toshiba Corp  6502.Tbooked a net loss for the past financial year and pledged to improve governance with a revamped board of directors, raising hopes it was finally moving beyond a $1.3 billion accounting scandal.

The submission of its books, twice postponed due to its accounting woes, helped to allay concerns among some investors that the laptops-to-nuclear power conglomerate risked a delisting if it had missed its latest filing deadline.

Shares in Toshiba jumped 4.9 percent by the end of morning trade, but they have lost nearly 30 percent since its accounting issues were disclosed in early April. Analysts also noted the company still had to tackle deeply rooted problems.

“Toshiba is still facing a number of daunting issues, such as what to do with its unprofitable PC and TV businesses,” said Hiroyasu Nishikawa, a senior analyst at IwaiCosmo Securities Co, adding that its accounting woes were set to drag on due to shareholder lawsuits.

For the past financial year, it reported a 37.8 billion yen ($318 million) net loss. It had at one time expected a 120 billion yen net profit before pulling that estimate in May when it announced the accounting probe was being expanded.

All in all, Toshiba said it had overstated profits going back to fiscal 2008/09 by 155 billion yen ($1.3 billion).

The accounting probe found in July that Toshiba suffered from dysfunctions in governance and a culture of discouraging employees from questioning their superiors, prompting the company’s CEO and several other board members to step down.

Toshiba announced on Monday that former Shiseido president Shinzo Maeda would be the head of a revamped 11-member board, the majority of which are external directors, pending approval at an extraordinary shareholders’ meeting on Sept. 30.

Shiseido is widely regarded as an early adopter of improved corporate governance practices in Japan. Under Maeda’s watch, it brought in external directors to its board for the first time.

The accounting scandal is Japan’s biggest since 2011 when camera and medical device maker Olympus Corp  7733.T was found to have been involved in a $1.7 billion scheme to conceal two decades of investment losses. Olympus was subsequently fined 700 million yen and some former executives were handed suspended jail sentences.

The Nikkei business daily reported earlier that the bourse is expected to fine Toshiba 91.2 million yen for undermining investor confidence. Financial regulators are considering a fine, sources have said.