Thorn Group shareholders have voted in favour of a share consolidation and a return of capital – the latest in a series of capital management initiatives the company has made this year as it rebuilds after a tough couple of years.

At an extraordinary general meeting on Friday, shareholders supported a proposal to consolidate every 10 shares into one share and a proposal to return A$41.7 million to shareholders.

The return of capital follows a special dividend of $23.8 million in February, a final dividend of $3.4 million in July and a further special dividend of $10.4 million in September.

Thorn has exited the retail finance market and it is returning excess capital to shareholders.

Thorn ran into problems in April 2020, when it responded to COVID by closing all 62 Radio Rentals stores. A few weeks later it made the closures permanent and retrenched 300 staff.

The company said it would revitalise Radio Rentals as a “digital pure play” but struggled to make headway.

Last December, it sold Radio Rentals to Credit Corp for a cash consideration of $43.9 million plus deferred payments. The profit on the sale was $11.7 million. 

It also had problems in its asset finance division. In 2020, it suffered a blowout in arrears that put it in breach of its warehouse finance parameters and which meant that it was unable to sell originations into the warehouse. The problem persisted into this year.

Thorn finally resolved its warehouse funding problems in August, when its funders (a major domestic bank and an ASX-listed investment management firm) agreed to a restructure and re-commencement of the warehouse. The funding limit is $200 million. 

Thorn reported a net profit of $32.3 million for the year to March 2022, a big increase from profit of $8.4 million in 2021. The turnaround was largely due to a $19.9 million release of COVID provisions.

Revenue fell from $33.4 million in 2020/21 to $17.3 million in the year to March. Receivables (pre-provision) fell from $192.5 million to $110 million.