Thorn Group Ltd Strong growth expected in Business Finance while overall FY18 outlook is subdued

Strong growth expected in Business Finance while overall FY18 outlook is subdued:Thorn Group Ltd (ASX: TGA) has reported improvement in revenue, earnings and net profit for FY17. The group has signaled that its Business Finance segment is expected to enjoy robust growth; however, Consumer Leasing is facing a period of transition with some short-term challenges from adverse publicity, weaker retail market conditions, the deferral of returning customers due to the launch of the 4-year contract and significant business changes that are expected to impact the FY18 financials.For FY17 (ended March 31, 2017), revenue grew by 3% year on year (yoy) to $299m, while EBIT and NPAT reported 25% and 26% yoy growth at $47.1m and $25.3m, respectively. Notably during FY17, Radio Rentals segment witnessed a combination of business and regulatory issues, and posted a marginal 2.0% yoy growth in revenue and 17% yoy decline in EBIT, while Business Finance segment posted a revenue and EBIT growth of 23% yoy and 40% yoy, respectively. Further, the results were impacted by several significant items in 2017, as Radio Rentals made a further provision for the anticipated remediation costs and penalties from the ASIC regulatory review of $6.1m after tax leading to an adjusted NPAT of $31.4m.During FY17, the company sold its NCML receivables management business and is in the process of running off its TFS Consumer loan book. Although the overall revenue is steady for Radio Rentals, higher marketing and selling costs, lower prices (under proposed caps) and the regulatory provision impacted profits.   

 

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