Shares of consumer goods leasing company Thorn Group Ltd (ASX: TGA) fell by more than 4% early in today's session, hitting a low of $2.78 following the release of its full-year earnings results.
Thorn Group operates in Australia's household goods rental market, offering products such as computers, televisions and furniture through its Radio Rentals brand, whilst also providing financial services through various other business lines such as Cashfirst and Thorn Equipment Finance.
For the 12-month period ended 31 March 2015, Thorn Group reported an impressive 25.1% lift in revenue to $293.8 million which helped generate an underlying net profit of $34.2 million, up 13.6% on the prior year. However, the group's actual net profit after tax (NPAT) was $30.6 million (up 8.5%) due primarily to one-off costs relating to the acquisition of Cash Resources Australia (CRA).
Although Radio Rentals/Rentlo remains the company's largest contributor to earnings, Thorn has undertaken a diversification strategy to drive stronger growth in its various other divisions. Today's update showed that the company is on the right track with the Thorn Equipment leasing book having grown by 65% to $104.8 million, while various other business units also contributed to the strong figures.
Commenting on the results, Thorn's Managing Director, Mr James Marshall said, "While our core business continues to deliver good results, it is pleasing to see other parts of the business gaining scale, especially Commercial Finance (i.e. Thorn Equipment), which delivered strong revenue growth and receivables above the $100 million mark."
He added that: "Thorn's organic and acquisition growth strategy is starting to produce results and as we expect ongoing growth in receivables, we see sustainable growth ahead."
Thorn will pay a final dividend of 6.75 cents per share (fully franked), taking its full-year dividend to 11.75 cents, or a fully franked yield of 4.2%.
