May 8, 2015 / 11:35 AM / in 3 years

Toshiba cancels dividend, pulls outlook in accounting scandal

TOKYO (Reuters) - Japanese industrial conglomerate Toshiba Corp cancelled a dividend payment and withdrew its earnings outlook as it expanded an investigation into accounting irregularities which began last month.

The logo of Toshiba Corp is seen as people are reflected on a window at the company's Hydrogen Energy R&D Center after its opening ceremony in Tokyo April 6, 2015. REUTERS/Toru Hanai

The announcement on Friday of the widened probe into its book-keeping, the company’s second accounting scandal in less than two years, came after the Tokyo market was closed. Toshiba’s Frankfurt-listed shares tumbled 15 percent.

Toshiba said in a statement an internal probe launched a month ago has so far discovered cases in which building costs for infrastructure projects were under-reported and losses from construction work were inadequately booked.

The company said it had decided more investigation was needed, and would set up a third-party committee to ensure impartiality.

A spokeswoman declined to comment on which infrastructure projects were related to the probe, while confirming there was more than one. Toshiba’s infrastructure operations include nuclear power plants as well as industrial and railway projects.

As a result of the extended probe, Toshiba said it would not be able to announce financial results for the latest fiscal year, ended March, until June or later. The firm would normally have released earnings around this week.

It apologised to shareholders for being unable to pay an annual dividend, as it was missing its book-closing date. It paid an annual dividend of 8 yen last year.

In Tokyo, a stock exchange official said companies are normally required to disclose performance details within three months of a quarter ending, but can request extensions from the government.

A Toshiba spokeswoman said it had not yet made such a request, as it could not yet estimate how much more time it needed.

The latest scandal follows Toshiba’s October 2013 announcement that it found its medical subsidiary, Toshiba Medical information Systems, had overstated results for several years.

For the 2013 business year, Toshiba’s energy and infrastructure unit reported sales of 1.8 trillion yen, up 11 pct year-on-year, and operating income of 32.3 billion yen, down 62 percent.

Reporting by Ritsuko Ando and Chris Gallagher; Editing by Kenneth Maxwell and Elaine Hardcastle

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