Toshiba submits delayed financial results, avoids delisting from TSE for now

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Toshiba's massive losses and accounting problems in the last financial year have primarily stemmed from the indebtedness of its nuclear power plant division, Westinghouse Electric, in the U.S., which declared bankruptcy in March, and also caused the Japanese group to be demoted to the second section at the Tokyo Stock Exchange last week. That means the auditor broadly vouched for Toshiba's book-keeping.

Toshiba Corp. (TOSYY) closed at a six-week high Thursday after the troubled conglomerate had its delayed annual report signed-off by auditors in a move that will, for the moment at least, keep the group's shares listed on the Tokyo Stock Exchange.

Reactors that Westinghouse was building in the USA were behind schedule, partly because of beefed-up safety regulations following the 2011 Fukushima nuclear disaster.

PwC said that some Westinghouse-related losses booked in the business year through March 2017 were supposed to have been recorded in the previous year, although Toshiba disputed this point. Toshiba said it disagreed.

Reporting negative net worth - liabilities exceeding assets - for the second year running would likely prompt a delisting from the Tokyo Stock Exchange.

The bourse is now reviewing Toshiba's governance to decide whether the firm can stay listed.

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Even with the reprieve, however, analysts have said Toshiba's long-term prospects were still bleak.

The Japanese conglomerate reported its earnings results for the April-June period for fiscal 2017, posting a group operating profit of 96.69 billion yen, a record for the quarter and up by almost six-fold from a year earlier. The result represented a leap from the 16.3 billion yen of a year earlier, allowing Toshiba to raise its full-year earnings outlook.

Toshiba plans to spin off its chip business to help mitigate its debt woes and losses of some 6.3 billion US dollars related to Westinghouse.

Toshiba's joint venture partner Western Digital, which has said any sale would require its consent, has opposed the auction and has taken Toshiba to court in addition to lodging its own offer for the chip business.

A state-led consortium including the Innovation Network Corp. of Japan, the Development Bank of Japan, Bain Capital and SK Hynix Inc. has been selected by Toshiba as the preferred bidder for Toshiba Memory Corp., its prized chip business.

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