Download 15 March 2017 ThinkSmart Limited (“ThinkSmart” or “the Company

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 2017.
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 NPAT1 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$0.382 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
•
Appointment of David Adams and Roger McDowell as new Independent NonExecutive Directors and Peter Gammell who continues as an Independent NonExecutive 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 2021. 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
Via Instinctif Partners
Canaccord Genuity (Nominated Adviser,
Financial Adviser and Joint Broker)
Sunil Duggal
David Tyrrell
Andrew Buchanan
Richard Andrews
+44 (0)20 7523 8350
Peel Hunt LLP (Joint Broker)
Charles Batten
Guy Wiehahn
Rishi Shah
+44 (0) 20 7418 8900
Instinctif Partners
Giles Stewart/Mike Davies
+44 (0)20 7457 2020
Cannings Corporate Communications (for
Australian enquiries)
Michael Mullane
+61 (0)2 8284 9993
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 2016. 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.
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 NPAT1 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 -1.03 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.
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.
Key Performance Indicators:
6 Months to
31 December 2016
6 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%
£44k
£1.7m
-97%
£(1.1m)
£0.8m
-226%
(1.03)
1.05
-198%
As at
31 December 2016
As at
30 June 2016
Lease Receivables Under Management (Closing)
£23m
£25m
-10%
Active Customer Contracts (,000)
52.9
57.2
-8%
ATV
£819
£784
+4%
Cash and Cash Equivalents
£5.5m
£4.9m
+14%
Net Assets
£19.2m
£17.9m
Group Operating NPAT
1
Statutory (Loss) / Profit After Tax
Basic EPS (pence)
1
Group Operating NPAT excludes non-operating strategic review and advisory expenses
+8%
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the six months ended 31 December 2016
Revenue
6 months to
31 December
2016
6 months to
31 December
2015
£,000
£,000
4,842
6,188
Other revenue
574
712
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)
(518)
(286)
Depreciation and amortisation
Impairment losses
(276)
(181)
Non-operating strategic review and advisory expenses
(1,097)
(874)
(Loss)/Profit before tax
(1,086)
1,003
33
(165)
(1,053)
838
(26)
58
(26)
58
(26)
58
(1,079)
896
Basic (pence per share)
(1.03)
1.05
Diluted (pence per share)
(1.03)
1.03
Income tax credit/(expense)
(Loss)/Profit after tax
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
Total items that may be reclassified subsequently to profit or loss,
net of income tax
Other comprehensive (loss)/income for the period, net of
income tax
Total comprehensive (loss)/income for the period, net of
income tax
Earnings per share (pence)
The attached notes form an integral part of these consolidated financial statements.
Consolidated Statement of Financial Position
as at 31 December 2016
31 December
2016
30 June
2016
£,000
£,000
5,530
4,854
240
295
Finance lease receivables
2,713
2,796
Other current assets
2,390
2,623
10,873
10,568
1,572
1,525
248
263
Intangible assets
7,440
7,213
Goodwill
2,332
2,332
88
-
277
53
3,007
3,309
Total Non-Current Assets
14,964
14,695
Total Assets
25,837
25,263
Trade and other payables
1,622
1,717
Deferred service income
1,167
1,297
Other interest bearing liabilities
1,602
2,182
258
192
4,649
5,388
722
819
13
14
Other interest bearing liabilities
1,205
1,190
Total Non-Current Liabilities
1,940
2,023
Total Liabilities
6,589
7,411
19,248
17,852
Current Assets
Cash and cash equivalents
Trade receivables
Total Current Assets
Non-Current Assets
Finance lease receivables
Plant and equipment
Deferred tax assets
Tax receivable
Other non-current assets
Current Liabilities
Provisions
Total Current Liabilities
Non-Current Liabilities
Deferred service income
Deferred tax liabilities
Net Assets
Equity
Issued Capital
17,332
14,376
Reserves
(2,506)
(2,480)
4,422
5,956
19,248
17,852
Accumulated profits
The attached notes form an integral part of these consolidated financial statements.
Consolidated Statement of Changes in Equity
for the six months ended 31 December 2016
Balance at 1 July 2015
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
Recognition of share-based payments
Balance at 31 December 2015
Balance at 1 July 2016
Loss 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
Issue of ordinary shares
Share buyback
Costs associated to capital raising and buyback
Dividends paid
Recognition of share-based payments
Balance at 31 December 2016
The attached notes form an integral part of these consolidated financial statements.
Fully paid
ordinary
shares
£,000
14,376
Foreign
currency
translation
reserve
£,000
(2,826)
Accumulated
Profit
£,000
7,750
Attributable
to equity
holders of
the parent
£,000
19,300
-
58
58
838
838
838
58
896
14,376
(2,768)
(1,546)
50
7,092
(1,546)
50
18,700
14,376
-
(2,480)
(26)
(26)
5,956
(1,053)
(1,053)
17,852
(1,053)
(26)
(1,079)
5,000
(1,721)
(323)
17,332
(2,506)
(531)
50
4,422
5,000
(1,721)
(323)
(531)
50
19,248
Consolidated Statement of Cash Flows
for the six months ended 31 December 2016
6 months to
31 December
2016
6 months to
31 December
2015
£,000
£,000
5,198
7,260
Payments to suppliers and employees
(4,366)
(5,671)
Payments relating to strategic review and advisory expenses
(1,097)
-
561
(1,214)
(264)
1,516
50
79
Interest and finance charges
(162)
(144)
Income tax paid
(110)
(339)
Net cash provided by operating activities
(190)
1,487
(67)
(111)
(1,164)
(771)
(117)
(56)
(1,348)
(938)
Proceeds from share issue net of costs
4,747
-
Payment for establishing financing facilities
(180)
-
Dividends paid
(531)
(1,546)
(1,791)
-
2,245
(1,546)
Net (decrease) / increase in cash and cash equivalents
707
(997)
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents from continuing operations at beginning of
the financial period
(33)
(38)
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
Net available cash and cash equivalents at the end of the financial
period
(124)
(120)
5,406
7,067
Cash Flows from Operating Activities
Receipts from customers
Receipts/(payments) in respect of lease receivables
(Payments)/proceeds from other interest bearing liabilities, inclusive of
related costs
Interest received
Cash Flows from Investing Activities
Payments for plant and equipment
Payments for intangible assets – Software
Payments for intangible assets – Contract rights
Net cash from investing activities
Cash Flows from Financing Activities
Share buyback net of costs
Net cash used in financing activities
The attached notes form an integral part of these consolidated financial statements.
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 www.thinksmartworld.com.
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 2016. 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:
0.5905 – average rate for period 1 July 2016 to 31 December 2016
0.5892 – spot rate for 31 December 2016
0.5549 – spot rate for 30 June 2016
0.4713 – 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 2017.
3. 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 2012-2014 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.