ThinkSmart Limited. ( ThinkSmart or the Company which together with its subsidiaries is the Group )

Transcription

1 15 March 2017 ThinkSmart Limited ( ThinkSmart or the Company which together with its subsidiaries is the Group ) Interim Results for the six month period ended 31 December 2016 (the Relevant Period ) ThinkSmart Limited (AIM: TSL), a leading provider in the UK of retail point-of-sale lease finance for high-volume small-ticket electronic and commercial equipment, today announces its interim results for the Relevant Period. These interim results constitute the first interim period in a twelve month accounting period to 30 June Highlights Revenues of 5.4m, 1.5m below the six month period ended 31 December 2015 ( 1H 16 ) due to lower new business volumes as stated in the Admission Document Ongoing investment in the technology platform leaves the business well positioned for growth Group Operating NPAT 1 was 0.04m (this was 1.7m in 1H 16) on the back of lower revenues and higher investment depreciation charge Cash and cash equivalents of 5.5m at 31 December 2016 up 13.9% on 30 June 2016 Successful completion of 5m placement with Henderson Global Investors, buyback of c.10m shares at A$ per share ( 2.3m in total) and migration of the Company s listing from the Australian Securities Exchange ( ASX ) to AIM of the London Stock Exchange Five year exclusive contract with Carphone Warehouse signed with point-of-sale integration developed and rolled out across approximately 1,000 stores in November 2016 in readiness for the anticipated launch of new premium smartphone handsets in the second half of the calendar year Entered into an additional financing facility of up to 20m with Secure Trust Bank to fund business volumes originated through the new Carphone Warehouse contract FCA consumer credit approval achieved and completion of the development of the customer account and online basket integration initiatives

2 Appointment of David Adams and Roger McDowell as new Independent Non- Executive Directors and Peter Gammell who continues as an Independent Non- Executive Director having been appointed to the Board in May 2016 prior to Admission. Keith Jones became a Non-Executive Director (having previously been an Executive Director of the Company) and Gary Halton was appointed as Chief Financial Officer. We are delighted to have attracted such high calibre individuals to the ThinkSmart Board Commenting on the results Ned Montarello, Executive Chairman said: During the period we continued to invest for growth and to build on our position as a leading provider in the UK of retail point-of-sale lease finance for high-volume smallticket electronic and commercial equipment. We successfully migrated our stock market listing from the ASX to AIM, whilst continuing to invest in our people, operations and technology. New business volumes in the period were in-line with the current trading update published in the Admission Document. New product launch timing delays are expected to unwind in the second half of the calendar year. Whilst these timing issues are frustrating, the Board believe that the longer term potential of our business remains exciting. In 2016 we were delighted to extend our 14 year relationship with Dixons Carphone through to We believe there is a growing trend to lease rather than buy and our SmartCheck leasing platform, in which we have invested significantly, makes us well placed to benefit from this market trend. In particular we are focused on exploiting our position in the high-value smartphone market. We are focused on delivering shareholder value. We are well positioned to scale the business, through opportunities with existing partners and diversifying into new sectors and categories. We look forward with confidence in our ability to deliver on our clear growth strategy. For further information please contact: ThinkSmart Limited Ned Montarello Canaccord Genuity (Nominated Adviser, Financial Adviser and Joint Broker) Sunil Duggal David Tyrrell Andrew Buchanan Richard Andrews Via Instinctif Partners +44 (0) Peel Hunt LLP (Joint Broker) +44 (0) Charles Batten Guy Wiehahn Rishi Shah

3 Instinctif Partners +44 (0) Giles Stewart/Mike Davies Cannings Corporate Communications (for Australian enquiries) Michael Mullane +61 (0) Key: 1 Group Operating NPAT excludes non-operating strategic review and advisory expenses 2 Equivalent to 23 pence per share Notes to Editors About ThinkSmart Limited ThinkSmart Limited is a leading provider in the UK of retail point-of-sale lease finance for high-volume small-ticket electronic and commercial equipment. The Group provides both B2B and B2C point-of-sale lease finance, primarily through its longstanding relationship with Dixons Retail and its new relationship with Carphone Warehouse. The Group's product offering is underpinned by a proprietary, innovative and scalable technology platform, SmartCheck. Since it commenced operations in the UK in 2003, the Group has processed in excess of 350,000 individual applications. The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Chairman s Statement Introduction and move to AIM This is the Company s maiden set of interim results as an AIM listed company following its successful Admission to trading on AIM in December The move to AIM was timely and made strategic sense; we are now more closely aligned across our operations, trading market and listing venue. As a Board we have placed great emphasis on ensuring that our shareholders have not been disadvantaged as a result of this move. We committed A$3.8m ( 2.3m) to buying back shares in an off market tender and have implemented an arrangement with Computershare for shareholders to trade their shares in London by converting their ordinary shares into depositary interests. As we move forward in this next step of our journey the Board s priority is to build on the Company s digital retail point-of-sale leasing proposition and its strong commercial relationships, and to broaden its distribution channels, funding and balance sheet to grow shareholder value and returns.

4 Performance Whilst the structural growth drivers underpinning our demand outlook remain firmly in place, performance in the Relevant Period was in-line with the current trading update published in the Admission Document. Revenues were 5.4m compared to 6.9m in the first half of FY16. This reduction in revenue was principally due to constrained new business volumes across both SmartPlan and Upgrade Anytime products, lower by 33%. ThinkSmart Business Leasing ( TBL ) on the other hand demonstrated a 46% increase to 0.3m albeit from a low base. Volumes were impacted by a number of factors including the timing of product launches and partner operational activity. The business will now look to leverage its digital point-of-sale footprint in existing relationships and diversify into new sectors and categories. Group Operating NPAT 1 fell from 1.7m to 0.04m, largely reflecting the drop in revenues. Operating cost levels reflect the significant investment made in people, processes and systems. This investment provides the foundation for our future growth. Statutory earnings per share fell to pence, down from 1.05 pence during the equivalent prior year period. Statutory EPS reflects the impact of 1.1m of non-recurring non-operating strategic review and advisory expenses relating to inter alia, the admission to AIM. Position At the end of the Relevant Period we had lease receivables under management of approximately 23m with approximately 52,900 active customer contracts (at 30 June 2016 this was 25m and 57,200, respectively). During the Relevant Period we entered into a finance facility agreement for up to 20m with Secure Trust Bank, one of our existing funding partners. This facility is earmarked for business volumes originated through our contract with Carphone Warehouse in relation to the lease of selected premium smartphones. At the end of the Relevant Period, we had funding of up to 90 million available to support our business activities, of which approximately 23 million was drawn. Cash and cash equivalents stood at 5.5m at the end of the Relevant Period, increasing by 0.7m in the Relevant Period. The business raised 5m through a placing of shares with Henderson, with c.a$3.8m being returned to certain shareholders who participated in the buyback. Partners The Group has a 14 year exclusive relationship with one of the UK s leading electrical and mobile phone retailers, Dixons Carphone, in relation to the leasing of equipment including computers, laptops, tablets and televisions. During the Relevant Period we expanded on this relationship and signed an exclusive agreement with Carphone Warehouse through to 2021 in relation to the lease of selected premium smartphones. We continue to work closely with our retail partner to broaden the offer and expect volumes to start to build during the second half of the calendar year, with the launch of new premium smartphone handsets.

5 Regulatory Progress RentSmart Limited, one of the Company s indirect subsidiaries, obtained full FCA authorisation in July 2015 for activities relating to entering into hire agreements and credit related activities. In June 2016 RentSmart Limited received FCA approval to enter into regulated credit agreements as a lender. The Group intends to offer restricted use, fixed sum loans to customers alongside its existing leasing products. This will enable ThinkSmart to offer both lease and credit point-of-sale finance to both consumers and businesses alike. Investment in the business Over the past two years the Company has invested approximately 3.5m in developing its digital solutions, including its SmartCheck platform. Online basket technology has been further developed following the successful integration on the PC World Business website in July 2016 and our new mobile app is set to launch this year. This new app will facilitate the Group s customer account facility (which is live with Dixons Retail), allowing customers to make a single credit application to obtain a pre-approved credit limit which they can use to lease multiple pieces of equipment without the need to make additional credit applications. Growth Strategy We have a clear and executable growth strategy in place. We will look to continue to develop our relationships with existing retail partners whilst seeking to diversify through new partner relationships and customer acquisitions. Our technology platform is sector neutral and its application has been designed to enable an offering which integrates cross-sector and cross-retailer. As a result, we are well placed to build on our achievements to date. Board Appointments David Adams and Roger McDowell were appointed as new Independent Non-Executive Directors during the Period, joining Peter Gammell who continues as an Independent Non-Executive Director having been appointed to the Board in May 2016 prior to Admission. Keith Jones became a Non-Executive Director (having previously been an Executive Director of the Company) and Gary Halton was appointed as Chief Financial Officer. We are delighted to have attracted such high calibre individuals to the ThinkSmart Board. Current Trading Update Current trading including volumes remain in-line with the Relevant Period. New product launch timing delays are expected to unwind in the second half of the calendar year. Whilst these delays are frustrating, the Board believe that the longer term potential of our business remains exciting.

6 Key Performance Indicators: 6 Months to 31 December Months to 31 December 2015 Business Volumes SmartPlan/Upgrade Anytime 6.2m 9.3m -33% TBL 0.3m 0.2m +46% Total 6.5m 9.5m -31% Revenue (Total) 5.4m 6.9m -22% Group Operating NPAT 1 44k 1.7m -97% Statutory (Loss) / Profit After Tax (1.1m) 0.8m -226% Basic EPS (pence) (1.03) % As at 31 December 2016 As at 30 June 2016 Lease Receivables Under Management (Closing) 23m 25m -10% Active Customer Contracts (,000) % ATV % Cash and Cash Equivalents 5.5m 4.9m +14% Net Assets 19.2m 17.9m +8% 1 Group Operating NPAT excludes non-operating strategic review and advisory expenses

7 Consolidated Statement of Profit or Loss and Other Comprehensive Income for the six months ended 31 December months to 31 December months to 31 December 2015,000,000 Revenue 4,842 6,188 Other revenue Total revenue 5,416 6,900 Customer acquisition costs (672) (771) Cost of inertia asset sold (1,078) (1,045) Other operating expenses (2,861) (2,740) Depreciation and amortisation (518) (286) Impairment losses (276) (181) Non-operating strategic review and advisory expenses (1,097) (874) (Loss)/Profit before tax (1,086) 1,003 Income tax credit/(expense) 33 (165) (Loss)/Profit after tax (1,053) 838 Other comprehensive (loss)/income Items that may be reclassified subsequently to profit or loss (net of income tax): Foreign currency translation differences for foreign operations (26) 58 Total items that may be reclassified subsequently to profit or loss, net of income tax (26) 58 Other comprehensive (loss)/income for the period, net of income tax (26) 58 Total comprehensive (loss)/income for the period, net of income tax (1,079) 896 Earnings per share (pence) Basic (pence per share) (1.03) 1.05 Diluted (pence per share) (1.03) 1.03 The attached notes form an integral part of these consolidated financial statements.

8 Consolidated Statement of Financial Position as at 31 December 2016 Current Assets 31 December June 2016,000,000 Cash and cash equivalents 5,530 4,854 Trade receivables Finance lease receivables 2,713 2,796 Other current assets 2,390 2,623 Total Current Assets 10,873 10,568 Non-Current Assets Finance lease receivables 1,572 1,525 Plant and equipment Intangible assets 7,440 7,213 Goodwill 2,332 2,332 Deferred tax assets 88 - Tax receivable Other non-current assets 3,007 3,309 Total Non-Current Assets 14,964 14,695 Total Assets 25,837 25,263 Current Liabilities Trade and other payables 1,622 1,717 Deferred service income 1,167 1,297 Other interest bearing liabilities 1,602 2,182 Provisions Total Current Liabilities 4,649 5,388 Non-Current Liabilities Deferred service income Deferred tax liabilities Other interest bearing liabilities 1,205 1,190 Total Non-Current Liabilities 1,940 2,023 Total Liabilities 6,589 7,411 Net Assets 19,248 17,852 Equity Issued Capital 17,332 14,376 Reserves (2,506) (2,480) Accumulated profits 4,422 5,956 19,248 17,852 The attached notes form an integral part of these consolidated financial statements.

9 Consolidated Statement of Changes in Equity for the six months ended 31 December 2016 Fully paid ordinary shares Foreign currency translation reserve Attributable to equity holders of the parent Accumulated Profit,000,000,000,000 Balance at 1 July ,376 (2,826) 7,750 19,300 Profit for the period Exchange differences arising on translation of foreign operations, net of tax Total comprehensive income for the period Transactions with owners of the Company, recognised directly in equity Contributions by and distributions to owners of the Company Dividends paid - - (1,546) (1,546) Recognition of share-based payments Balance at 31 December ,376 (2,768) 7,092 18,700 Balance at 1 July ,376 (2,480) 5,956 17,852 Loss for the period - - (1,053) (1,053) Exchange differences arising on translation of foreign operations, net of tax - (26) (26) Total comprehensive income for the period - (26) (1,053) (1,079) Transactions with owners of the Company, recognised directly in equity Contributions by and distributions to owners of the Company Issue of ordinary shares 5, ,000 Share buyback (1,721) - - (1,721) Costs associated to capital raising and buyback (323) - - (323) Dividends paid - - (531) (531) Recognition of share-based payments Balance at 31 December ,332 (2,506) 4,422 19,248 The attached notes form an integral part of these consolidated financial statements.

10 Consolidated Statement of Cash Flows for the six months ended 31 December 2016 Cash Flows from Operating Activities 6 months to 31 December months to 31 December 2015,000,000 Receipts from customers 5,198 7,260 Payments to suppliers and employees (4,366) (5,671) Payments relating to strategic review and advisory expenses (1,097) - Receipts/(payments) in respect of lease receivables 561 (1,214) (Payments)/proceeds from other interest bearing liabilities, inclusive of related costs (264) 1,516 Interest received Interest and finance charges (162) (144) Income tax paid (110) (339) Net cash provided by operating activities (190) 1,487 Cash Flows from Investing Activities Payments for plant and equipment (67) (111) Payments for intangible assets Software (1,164) (771) Payments for intangible assets Contract rights (117) (56) Net cash from investing activities (1,348) (938) Cash Flows from Financing Activities Proceeds from share issue net of costs 4,747 - Payment for establishing financing facilities (180) - Dividends paid (531) (1,546) Share buyback net of costs (1,791) - Net cash used in financing activities 2,245 (1,546) Net (decrease) / increase in cash and cash equivalents 707 (997) Effect of exchange rate fluctuations on cash held (33) (38) Cash and cash equivalents from continuing operations at beginning of the financial period 4,856 8,222 Total cash and cash equivalents at the end of the financial period 5,530 7,187 Restricted cash and cash equivalents at the end of the financial period (124) (120) Net available cash and cash equivalents at the end of the financial period 5,406 7,067 The attached notes form an integral part of these consolidated financial statements.

11 1. Reporting entity ThinkSmart Limited (the Company ) is a company domiciled in Australia. The interim financial report of the Company as at and for the six months ended 31 December 2016 comprises the Company and its subsidiaries (together referred to as the consolidated entity or the Group ). The Group is a for profit entity and its principal activity during the six months was the provision of lease and rental financing services in the UK. The annual financial report of the consolidated entity as at and for the period ended 30 June 2016 is available upon request from the Company s registered office at Suite 5, 531 Hay Street, Subiaco, West Perth, WA 6008 or at The consolidated interim financial statements are prepared on a going concern basis, as the Directors are satisfied that the Group has the resources to continue in business for the foreseeable future (which has been taken as 12 months from the date of approval of these consolidated interim financial statements). In making this assessment, the Directors have considered a wide range of information relating to present and future conditions, including the current state of the balance sheet, future projections of profitability, cash flows and resources and the longer term strategy of the business. 2. Statement of compliance The Company listed on the AIM of the London Stock Exchange, from 2 December 2016 and delisted from the Australian Stock Exchange on 6 December The Group financial information consolidates those of the Company and its subsidiaries which operate in the UK and Europe. The condensed set of consolidated interim financial statements for the interim accounting period ended 31 December 2016 has been prepared and approved by the Directors in accordance with AASB143 Interim Financial reporting and Corporations Act 2001 and with International Financial Reporting Standards (IAS 34) as adopted by the EU ( Adopted IFRSs ). They do not include all of the information required for a full annual financial statements, and should be read in conjunction with the consolidated annual financial report for the period ended 30 June 2016 and the Historical Financial Information prepared and published ahead of the AIM listing. The Company is of a kind referred to in ASIC Corporations (Rounding in the Financial and Directors report) Instrument 2016 / 191 and in accordance with the instrument, amounts in the interim financial report have been rounded to the to the nearest thousand pounds, unless otherwise stated. These consolidated financial statements are presented in Pounds, which is the Group s functional currency. Previous to the AIM listing the financial statements were presented in Australian Dollars. The following AUD/GBP exchange rates were used in these consolidated interim financial statements: average rate for period 1 July 2016 to 31 December spot rate for 31 December spot rate for 30 June average rate for period 1 July 2015 to 31 December 2015 This interim financial report was approved by the Board of Directors on 14 March Adoption of new standards The following new standards and interpretations are mandatory for the year beginning 1 January 2016: Accounting for acquisitions of interests in joint operations (amendments to IFRS 11) Clarification of acceptable methods of depreciation and amortisation (amendments to IAS 16 and IAS 38) Equity method in separate financial statements (amendments to IAS 27) Annual improvements to IFRSs cycle Disclosure initiative (amendments to IAS 1) These standards and interpretations are not deemed to have a material impact on the results of the Company. 4. Significant accounting policies The accounting policies applied by the consolidated entity in this interim financial report are consistent with those applied by the Historical Financial Information prepared and published ahead of the AIM listing and with that disclosed in the consolidated annual financial report for the year ended 30 June 2016 as amended for the change in presentation currency to Pounds as referenced above. 5. Accounting estimates and judgements The preparation of interim financial reports requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing the consolidated interim financial report, the significant judgements made by management in applying the Group s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the Historical Financial Information prepared and published ahead of the AIM listing and with that disclosed in the consolidated annual financial report for the year ended 30 June 2016.