Insolvent Hess to quit stock exchange

German architectural luminaire maker Hess has begun insolvency proceedings in the German courts.

The outdoor lighting specialist has also applied to leave the Frankfurt stock market after a humiliating fall from grace in which company profits were allegedly overstated to ensure a successful flotation last October.

CEO Christoph Hess (pictured), who is the grandson of the company's founder Willy Hess, and CFO Peter Ziegler, who have both been sacked, deny fraud. They are being investigated by German regulators over ‘ficticious invoices’ which overstated company revenues by tens of millions of Euros.
Last month it emerged that Hess couldn’t afford to hold an extraordinary shareholders’ meeting to discuss the financial situation– because it couldn’t afford to.

However, sources expect the company to be sold as a going concern as soon as formalities at the District Court of Villingen-Schwenningen are completed. Thorn is continuing to distribute its acclaimed luminaires in the UK.

In March, the company admitted that the reported profit for 2012 of US$12 million (€9 million) was, in fact, a loss of ‘at least’ US$20 million (€15 million). The results for 2011 were also similarly overstated by US$8 million (€6 million). The overstatements in both years were due to ‘fictitious invoices’.

An internal investigation revealed that the company ‘has probably been, with the knowledge of the management board, in continuous breach of accounting rules for a remarkable period of time’.

The company suspects it has been accounting for non-existent revenue and income ‘at least since the year 2011’.

 As a result, it says that the sales figures it reported in 2011 and 2012 were probably not achieved and that its financial situation is likely to have been presented 'too positively'.

Hess reported revenue of US$88 million (€68 million) in 2011 and US$75 million (€58 million) in the first nine months of 2012. The company is one of Germany's biggest and best known lighting brands.

Hess employs 360 people. As well as its headquarters near Freiburg in southern Germany, it has a manufacturing facility near Dresden and a subsidiary in the United States. Its products are distributed in the UK and Ireland by Thorn.

Photo: Stoph Meinschaefer

 

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