Toshiba's market reprieve could be fleeting

File Toshiba still needs to get itself out of a negative net worth by March 2018 to avoid being delisted

The company said it had a net loss of 965.7 billion yen (US$8.8 billion) for the fiscal year ended March 31 but said it would swing back to profitability in the current fiscal year. That means the auditor broadly vouched for Toshiba´s book-keeping. Auditor PriceWaterhouseCoopers Aarata gave a "qualified opinion" on the results and a rare "adverse opinion" on the company's internal controls, Reuters reported, citing a filing.

"It's still hard to say that Toshiba has taken a huge step forward", said Masahiko Ishino, an analyst at Tokai Tokyo Research Center.

Toshiba had repeatedly delayed the release of its financial statements, saying it needed more time to gauge the impact of Westinghouse on its balance sheet.

The auditor, PricewaterhouseCoopers Aarata, however, issued an "adverse opinion" on Toshiba's internal controls as the 142-year-old Japanese company overlooked huge losses linked to the now-defunct USA nuclear power unit Westinghouse Electric.

The earnings report greatly reduced the chance of an embarrassing delisting of the company from the Tokyo Stock Exchange.

Japanese conglomerate Toshiba has received a signoff from auditors on its earnings in the last fiscal year.

Toshiba has struggled to recover from a 2015 accounting scandal.

On the other hand, the spokeswoman said that an adverse opinion for Toshiba's corporate governance or even for its financial statement will not necessarily lead to delisting, either.

Following PwC's sign-off, the Tokyo Stock Exchange is now reviewing Toshiba's governance to decide whether the firm can stay listed. "This could still go either way".

What have the auditors said?

Toshiba had been debating with PwC Arata over when the Japanese company realized massive losses on a USA nuclear power unit. If the losses were booked as per PwC's opinion, Toshiba would have recorded negative net worth - liabilities exceeding assets - for two consecutive years. Toshiba has a history of being in existence for more than 140 years and this delisting would have worsened the condition for the company to raise cash for their memory chip business which is now suffering a huge cash crunch.

That has unnerved Toshiba's preferred bidder group, a consortium including Japanese government-backed funds, private equity firm Bain Capital LP and South Korean chip maker SK Hynix Inc.

But talks have stalled, causing Toshiba to miss a self-imposed deadline around the end of June to seal a deal after SK Hynix started demanding voting rights instead of providing loans.

"The biggest risk is still going to be what happens to the sale of the memory business", the senior technology analyst said. PwC and Toshiba declined to comment.

"In the meantime nobody can make a clean, unconditional bid", said Stephen Givens, a corporate lawyer based in Tokyo.

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