A mixture of different business models has driven growth for appliance rental company.
Radio Rentals experienced growth for the six months ended 30 September 2015, although it was off-set by a one-off $2.8 million charge as Centrelink and direct debiting customers continued to be charged for goods after they were fully paid off due to a computer malfunction. The company will refund $1 million to customers on government benefits and another $1.8 million from numerous small amounts left on its books going back 20 years.
Despite this, Radio Rentals remains the largest contributor to Thorn Group earnings, with revenue increasing 1.9% from $128.5 million to $131 million for the six months ended 30 September 2015.
Thorn Group revenue was up 7.4% to $161 million, while net profit after tax (NPAT) increased by 1.5% to $15.4 million. The group’s diversification strategy produced higher revenue and strong receivables growth. The fastest growing component of earnings was from the commercial finance business, with Cash Resources Australia (CRA), acquired in 2014, contributing for the full year period, with revenue up threefold.
Customer retention remained consistently strong with nearly 50% of customers completing a Rent Try $1 Buy agreement taking a subsequent agreement for another item. The brand evolution pilot and second rental brand under the name Rentlo, offering a “no lock-in” contract and flexible rental solutions, are continuing.
Thorn Group managing director, James Marshall (pictured) said, “Thorn’s continuing investment in growth and strategic focus on each part of the business has led to solid results. The rapid growth of the commercial finance business demonstrates a positive outcome from Thorn’s business diversification strategy. In consumer leasing, we have had continued positive feedback from customers, while management has focused on developing a wide ranging governance program to achieve the highest standards of compliance.”