SBS growth continues
Warehouse Group financial arm bought for $18m
SBS Bank is set to continue its unprecedented growth of the past five years after announcing it has conditionally bought The Warehouse Group Finance Services for $18 million.
Chairman of the Invercargillbased bank, John Ward, said in an interview SBS, through its Finance Now subsidiary, had been closely involved with Financial Services for several years.
‘‘It is an opportunity that has come our way but there are restrictions on what we can say as it is a conditional agreement.’’
However, he did confirm SBS saw the purchase as a growth opportunity and a chance for Finance Now to grow its base, something which would be good for the overall group.
Finance Now had a significant business in the North Island and The Warehouse Group Financial Services would improve the national spread, Mr Ward said.
In a statement, SBS said Finance Now had been conduct ing due diligence over the past few weeks and, subject to the finalisation of formal documentation, the sale was expected to be completed within the next five weeks.
The purchase did not include Diners Club New Zealand. More details would be provided at the time of the settlement of the transaction.
The Warehouse chairwoman Joan Withers said the group would continue to offer branded financial services to its customers, supported by Finance Now.
‘‘This transaction will enable the group to focus its capital and people resources on the transformation of its retail business which is our current top priority and will remain so over the next few years.’’
The $18 million purchase price was subject to assetbased adjustments and expected to result in a noncash impairment of software assets of about $16 million in the 2017 financial year results, she said.
The Warehouse bought 100% of the financial services business in September 2015, buying out joint venture partner Westpac Banking for $7.3 million, only to face a weakerthanexpected transition and belowtarget card spending.
In March, the company reported a 76% drop in firsthalf profit to $13.6 million after it took a $22.7 million impairment charge against the financial services unit, recognised restructuring costs and earned less from its Red Shed department stores.
Financial services recorded an operating loss of $5.2 million in the halfyear ended January 29, up from a loss of $2.7 million a year earlier.
The unit’s sales in the first half rose to $10.3 million from $8.1 million.