Steinhoff’s local arm brushes off parent’s woes
Retail group Steinhoff Asia Pacific’s latest accounts highlight the challenges facing management, which is attempting to refinance almost A$500 million (NZ$538m) of debt while reportedly seeking funding for a A$1.3 billion buyout.
The Australasian holding company owns furniture chains Freedom, Fantastic Furniture and Snooze, clothing chain Best & Less and department store Harris Scarfe, and Postie+ in New Zealand.
Its parent, South African-based Steinhoff International, is considered close to collapse after a 90 per cent fall in its shares and the discovery of accounting irregularities forced the global clothing and homewares retailer to restate its accounts and sell non-core assets.
However, Steinhoff Asia Pacific chief executive Michael Ford said the 2017 results and buoyant recent trading demonstrated the local business was capable of operating independently of its parent.
Revenue soared to A$2.29 billion in the 15 months to October 1 last year and earnings before interest tax depreciation and amortisation (EBITDA) reached A$93.4m, taking bottom-line net profit to A$60.8m.
That offset losses of A$19.6m from the closure of budget furniture chain Poco.
The books show Steinhoff Asia Pacific Group Holdings had A$478.3 million in borrowings in October 2017, including A$333.8m owed to its global parent and A$137.8 million owed to banks.
The group is now in negotiations to refinance the debt.
Auditor PwC said there was material uncertainty about the company’s ability to continue as a going concern.
Ford said the company had a strong future in Australia and continued to trade profitably with positive operating cash flows, he said.
Steinhoff declined to comment on reports that several directors are attempting to raise funds for a management buyout.