Retail and financial services company Thorn Group Ltd (ASX: TGA) has reported a 38 per cent lift in net profit for the six months to September 30, 2010 to $11 million (2009: $8M).

The company said its performance has been underpinned by the growth in customer numbers and the strength of its business model which combines retail and financial services to produce long-term recurring revenue streams.

According to Thorn Managing Director, John Hughes, the core consumer rental business continued to perform strongly while the impact of investment in strategic initiatives such as Cashfirst and BigBrownBox.com.au was reduced.

Customers numbers in its key business, Radio Rentals/Rentlo, have grown 6.7 per cent with demand steady across all product categories for its 'Rent, Try, $1 buy" offer.

Continued low levels of customer arrears and write-offs plus high levels of repeat business also contributed to performance.

Thorn has introduced two initiatives to underpin growth in the Radio Rentals/Rentlo business - one and two person branches targeting unserviced or underserviced regional markets and a kiosk trial for increasing its presence in metropolitan markets.

Interim dividend has been increased from 2.56 cents to 3.54 cents a share fully franked, to be paid on 20 January 2011 to shareholders registered on 29 December 2010.

The company upgraded its profit after tax guidance from $19m to between $21m to $22m for the full year ending 31 March 2011, an increase of some 28 per cent to 34 per cent on a 'normalised basis'. This excludes the $3.1m one-off favourable tax effect of investment allowances in the prior period.