Thorn Group posts $26 million loss
21 November 2019, Written by Business News Australia
A class action and a strategic review have weighed heavily on the operator of Radio Rentals with Thorn Group (ASX: TGA) posting a $25.6 million first half loss.
At the same time in 2018 Thorn Group posted a $2.4 million profit.
The group was hit with $27.6 million in costs relating to a class action settlement, associated legal costs, and a strategic review.
In September the group settled a class action relating to Radio Rentals' controversial 'Rent, Buy, $1 Buy' scheme, with Thorn Group coming short of admitting guilt over the issue.
The claim alleged the company continued to charge customers well beyond the retail value of the goods - including via Centrepay deductions - with the consumer never getting ownership of the goods.
"The first half of 2019 remained challenging as we continued to work through the Strategic Review while defending the Class Action, remediating customers under an Enforceable Undertaking, and with capital constraints," says CEO and managing director of Thorn Group Tim Luce.
"I'm pleased that we've been able to work through each of the legacy issues, enabling the business to focus on improving experiences for our customers in the second half."
The Radio Rentals business continued to perform at a lower level than in the past, reflecting the reduction in installation volumes over the past three years.
Thorn Group says that installation volumes have gradually stabilised, with installation volumes for the first half year at 39,813 units compared to 40,690 in the half year to March 2019 and 42,609 units in the corresponding half year to September 2018.
The company's Business Finance business continued to face capital constraints in the period, with originations down from $84.6 million to $78.6 million.
Following its strategic review the company says it is looking forward to the future; it has a new CEO and a "more sustainable capital position after the rights issue".
The company's directors anticipate a return to profitability with a small net profit after tax at the trading level for the full year.
Business News Australia
Author: Business News Australia