Poundland’s value has been written down by £642 million by its South African owner which says the discount chain is facing numerous headwinds that have been exacerbated by the government's recent tax hikes.
Pepco said the book value impairment charge reflected a tougher environment, increasing competition in the UK and the higher costs on the business resulting from the Budget.
Poundland employs around 15,000 staff and will have to pay higher national insurance and wages following the Chancellor’s £25 billion tax raid.
In a statement, the group said: "As a result of the material underperformance in Poundland, along with slower growth prospects and a higher cost outlook in the UK following the recent budget.
"We have assessed the carrying value of that investment and recognised a non-cash impairment of the goodwill and brand asset related to Poundland of €775m, which has driven a reported net loss for the year for the Group of €662m.
"On an underlying basis, group net profit for FY24 was €179m, up 14.0% on the prior year."
Stephan Borchert, chief executive, added that Poundland had been hit by declines in clothing and general merchandise following the transition to Pepco-sourced product ranges.
"We are taking swift action to get Poundland's performance back on track, focusing on a return to Poundland's strengths.
"We will also closely evaluate Poundland's overall competitive positioning and requirements for future success,” he added.
Stripping out the impairment, Pepco said profits fell by 63% with record performances at other operations such as Dealz, the central European version of Poundland.