Cnova N.V. – Update on Internal Review at Cnova Brazil

Amsterdam – April 26, 2016; 07:45 CET — Cnova N.V. (NASDAQ and Euronext Paris: CNV) (“Cnova” or the “Company”) today announced a new update of its internal review at Cnova Brazil.

On December 18, 2015, Cnova’s board announced that it had hired external legal and forensic consultants to help review issues, including alleged employee misconduct related to inventory management at its Brazilian subsidiary distribution centers (DCs). The Company also identified discrepancies related to accounts payable due to suppliers and in accounts receivable/products in-transit with delivery companies.

On February 24, 2016, Cnova provided an estimated quantification of the overstatement of net sales and accounts receivable, the over-valuation of inventory as well as the incorrect accounting entries primarily related to accounts payable. The combined impact on operating EBIT of these adjustments was estimated at that time to be approximately R$ 177 million. This was recorded in its entirety in the 4th quarter 2015 accounts pending the determination to which specific accounting periods covering 2013 through 2015 they should be apportioned.

The internal review is continuing. As of the date of this press release:

  • The combined impact on operating EBIT of the above listed adjustments has been revised up to R$ 219million primarily due to unintentional reporting errors related to returned items in-transit as well as their shipping costs.
  • The ongoing review in Cnova Brazil has recently identified other issues (related to intangible assets and possible improperly deferred operating expenses) that are currently the subject of further review. It is not possible at this time to: i) evaluate the impact that these issues may have on 2015 and prior periods, ii) determine how such an impact would be apportioned to the various quarters of those accounting periods, and iii) know whether those apportionments could ultimately also impact the first quarter 2016 financial results.

In view of the above, the Company now expects to file its 2015 annual report on Form 20-F, including restated financial statements, by no sooner than June 2016. As such, the Company will file a Form 12b-25 with the US Securities and Exchange Commission before April 30, 2016.