Commercial finance lender Thorn Group [ASX:TGA] revealed that its net profit has taken a heavy fall year-on-year when it provided its half year results earlier on Wednesday morning.
The finance group reported a net profit of $600,000 for the half year to 30 September, against a net profit of $13.3 million reported the prior year.
TGA shares have also more than halved over the past year, a 53% cut-back over the last 12 months.
By early afternoon, Thorn’s stock price slid more than 7% in the day’s trade.
Source: tradingview.com
Thorn Group’s unaudited 1H FY23 results
Today Thorn Group released unaudited results for the half year ending 30 September 2022.
The biggest news was that the group reported a net profit after tax (NPAT) of $600,000 for the half, which was compared with an NPAT of $13.3 million reported in the previous half year.
Revenue from business operations came to $7.1 million for the half year, a 31.2% drop on 1H22 ($10.3 million).
The company reported a loss of $1.7 million in operational costs and made 53.9% less profit on discontinued operations (Consumer Finance division, and Radio Rentals, now sold to Credit Corp) with $2.3 million.
Corporate EBIT decreased from $3.7 million to $1.2 million due to ‘continued cost reductions in line with the reduction in the revenue of the business’.
The company’s cash balance has not moved much, recording $73 million at half year-end compared with $72.9 million in September 2021. However, including its Trust account, the company’s balance decreased from $91.6 million to $86.7 million.
Asset finance was $65.6 million across the six-month period, and invoice finance drawdowns were $14.7 million.
During the half year, Thorn had its warehousing facility restructured and secured a funding facility of $200 million.
The company’s directors also declared that a fully franked special dividend of $0.03 cash for each ordinary share be distributed, totalling around $10.4 million. Shareholder capital returns would receive $0.12 cash per ordinary share, equating to around $41.7 million.
Pete Lirantzis, Thorn’s CEO, commented on the half year results by saying:
‘We have delivered our first half year results in challenging times and achieved an important milestone with the re-opening of our warehouse facility. This ensures our business is well positioned to support our SME customers as we enter a difficult period with inflationary pressures and rising interest rates. Looking ahead, we remain excited about the growth opportunities in SME lending.’
TGA talks risks and fintech
The financial services provider says it will continue to implement its business strategy as a small-to-medium business focussed group, as well as build on rebranding its business finance division.
TGA painted the picture of a risky environment in which it operates, listing such risks as businesses’ credit and payments returns, legal, regulatory and compliance risks, loss of customers, rates, technology issues and, of course, the growing concern of cyber risks.
Thorn’s board mentioned attractive investment opportunities in the fintech market and will be looking into equity positions within the fintech genre.
Thorn’s on-market share buy-back program is still running to the end of February next year, and from 1 April to the half year end, the company bought back 1,521,851 fully paid ordinary shares for a total cost of $383,583.
The company did not provide any profit guidance for its ‘interim’ report.
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Kind regards,
Mahlia Stewart,
For Money Morning
