Thorn investors get cash back

Thorn, the rentals group that split from music business EMI last year, yesterday became the latest in a string of companies to return cash to shareholders. The owner of the Radio Rentals brand announced it would give back pounds 87m, 14 per cent of its market capitalisation, to shareholders just a day after EMI hatched a similar plan.

The news will cheer investors who have watched Thorn's share price more than halve from the 408p level it traded at when the company split with EMI last August.

The return, which will be finalised after July's annual meeting, involves the issue of one new B share for every existing ordinary share, which Thorn will offer to buy back. Mike Metcalf, chief executive, said the buyback would enhance earnings per share on a pro forma basis by 12 per cent over 12 months.

Profit before tax of pounds 171m was virtually unchanged from last year. Current trading difficulties were largely due to weaker-than-expected trading in the US rental-purchase business and Radio Rentals in the UK, Mr Metcalf said.

Steps have been taken to improve profits with the closure of 90 Radio Rentals stores and promises that action will be taken on marginal businesses in continental Europe, following talks with employee representatives. In addition, Mr Metcalf said he had received approaches for the Danish retail chain Fona.

Although Thorn is seeking ways of cutting costs in Europe, it is to continue investing in the roll out of Crazy George's, the rentals shop aimed at "the more financially constrained". Mr Metcalf said the UK would eventually support more than 275 outlets, and up to 25 shops would open this year.

Investment column, page 25

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