Thorn’s loss up amid restructures

Thorn Group, having shut its Radio Rentals network of stores, has posted a net loss of $81.1m for 2019-20.

The closure of the 62 Radio Rentals’ stores affected the carrying value of certain assets and liabilities in that division, including inventory and further provisions to reduce the valuation of assets. Picture: Tony Martin

Thorn Group, which recently decided to permanently shut its Radio Rentals network of bricks and mortar stores, has posted a net loss of $81.1m for 2019-20 compared with a loss of $14.9m in the previous corresponding ­period.

The company also has a leasing and finance business but has been struggling for years and seen itsshare price fall by more than 95 per cent.

It is now shifting its consumer goods rental business to a digital platform in the latest of a long line of restructures.

The company said on Friday that revenue from continuing operations fell 7.9 per cent, from $221.9m to $204.3m, for the 12 months to the end of March.

Thorn said there would be provisions totalling $35.6m for the expected impact of COVID-19 and the Radio Rentals’ store closures. In April Thorn announced that its 62 Radio Rentals stores would close permanently with the loss of more than 300 jobs.

On Friday Thorn said its provisions for the financial year would include $13.5m for the Radio Rentals business and $22.1m for the business finance division.

It said the latest financial result was affected by significant events including a charge of $26m for the class action settlement and an additional $12.8m of debts being written off or fully provided for in the business finance division.

The closure of the 62 Radio Rentals’ stores affected the carrying value of certain assets and liabilities in that division, including inventory and further provisions to reduce the valuation of assets.

“Thorn’s revised business strategy is predicated upon the intention to continue to operate the consumer leasing business, based exclusively on a digital customer onboarding process, and to continue to operate the business finance activity with a selective customer and broker model and enhanced credit policies and collection processes,’’ the company said.

“These initiatives, combined with cost cuts across all divisions and head office and a current cash balance in excess of $40m are aimed at having the company remain sustainable during the current challenging circumstances and best position the company to achieve longer term growth.”

In March Thorn warned of a deterioration in its lending business as debts outstanding for more than 30 days had increased from about 5 per cent to about 8 per cent, partly as a result of Thorn transitioning collections activities for the expected future growth in Thorn’s ­receivables.

Its shares closed down 3.9 per cent on Friday to 12c each.