TIDMTSL
RNS Number : 8967E
ThinkSmart Limited
11 November 2020
11 November 2020
ThinkSmart Limited
("ThinkSmart" or the "Company" which together with its
subsidiaries is the "Group")
2020 AGM Statement and Business Update
ThinkSmart Limited (AIM: TSL), a specialist digital payments
platform business, will hold its Annual General Meeting at 8.30am
(GMT) today Wednesday 11 November 2020 at which the Chairman of the
meeting will make the following statement:
"Ladies and Gentlemen, I am very pleased to report that our
financial year ended 30 June 2020 has been one marked by
significant value accretion to our shareholders.
Our decision in 2018 to sell 90% of our Clearpay business to
Australian listed Afterpay Ltd, a highly capitalised, well-funded
global financial technology business, has delivered - and I'm
confident will continue to deliver - material value for
shareholders. This was undoubtedly a pivotal moment for the Company
and you, its shareholders.
The Clearpay business allows leading retailers to offer a 'buy
now, receive now, pay later' service that does not require
customers to enter into a traditional loan or pay any upfront fees
or interest to Clearpay.
The Buy Now Pay Later sector has witnessed very significant
rates of consumer acceptance and merchant growth in recent years.
The procession toward online consumerism favours the sector and
indeed the impact of the global pandemic has accelerated the
trend.
Afterpay is one of the pioneers and global leaders in the Buy
Now Pay Later space. Its growth potential has been reflected in its
share price performance. As at 10 November its market
capitalisation was A$27b and its share price increased by 53% since
the start of the financial year.
ThinkSmart's 10% shareholding in Afterpay's UK operations,
inclusive of up to 3.5% of the share capital of Clearpay which is
being made available to the Afterpay UK employee share ownership
scheme, is a valuable asset for shareholders. The UK forms a
substantial part of the Afterpay total business, representing in
excess of 10% of its global active customer base and 7% of its
underlying sales in the 3 months to 30 September 2020, a percentage
we would expect to continue to increase as the business matures and
repeat business flows through.
In addition, the Clearpay business is demonstrating outstanding
trading momentum. In the 3 months to 30 September 2020, Clearpay
transacted A$0.3bn of underlying sales, growing its active customer
base to 1.2m. These numbers are very encouraging and importantly,
growth in average frequency per customer is outperforming
Afterpay's US and Australian businesses at similar stage of
development.
ThinkSmart is carrying the Clearpay shareholding on its balance
sheet at a value of GBP53.7m as at 30 June 2020. This asset
valuation, carried out by an independent leading global accounting
firm, is informed by the market valuation of the Afterpay business.
At 30 June 2020 the Afterpay share price was A$60.99. That price
has since increased by 53% to A$93.18 as at close of trading on 10
November 2020.
As a result we are confident that our holding in Clearpay will
continue to deliver for shareholders. To 30 June 2020, the sale of
90% of the Clearpay subsidiary has generated cumulative accounting
profit of GBP63.8 million (including a GBP53.7m million non-cash
fair value gain). In addition, during the year we delivered to
shareholders a special dividend and capital return of A$5.96
million (5.6 cents per share), equivalent to GBP3.2 million, paid
in December 2019. Subject to shareholder approval, we will return a
further A$6.5m this December.
ThinkSmart's remaining shareholding in Clearpay provides
shareholders with future upside profit potential through an agreed
call option for Afterpay to purchase ThinkSmart's remaining holding
in Clearpay any time after August 2023 at a price calculated on
agreed principles and based on market valuations at the time of
option exercise. ThinkSmart has a reciprocal put option six months
later to sell its remaining holding in Clearpay to Afterpay on the
same valuation principles. Clearly, ongoing growth in Clearpay is
beneficial for ThinkSmart shareholders.
Turning to our legacy retail consumer and business finance
offerings, shareholders will be aware that this is in managed
wind-down, reflecting our strategic focus on delivering value to
holders via the Clearpay asset, together with providing the
outsourced call centre customer support service for Clearpay. As
announced on 10 August 2020 we reached a settlement with Carphone
Warehouse for GBP1.45 million and, as a result, will now cease
writing any new business. We are managing the wind-down via
adjusting the cost base accordingly and in order to continue to
deliver net positive cash flows. We expect our cash reserves to
continue to build over the next few years, before capital return
and dividend payments to shareholders. With net cash of
approximately A$18 million at 15 October 2020, which includes the
GBP1.45m settlement amount, the Group has a robust financing
position
We do see tangible value in the investment made in our
proprietary, highly robust credit origination and decision engine,
SmartCheck, which powers point-of-sale lease finance payments
solutions. The Board continues to consider how best to optimise the
value of this asset.
We thank our Board, management and employees for their continued
hard work and commitment to the business. Most of all, we thank our
shareholders for their sustained support. Our share price has grown
by over 250% in the 12 months to 10 November 2020, and we
fundamentally believe further value will accrue as we execute on
our strategy both this year, and in the years to come."
For further information please contact:
ThinkSmart Limited Via Buchanan
Ned Montarello
Canaccord Genuity Ltd (Nominated Adviser
and Broker)
Sunil Duggal
David Tyrrell
Andrew Potts
Tom Diehl +44 (0)20 7523 8350
Buchanan
Giles Stewart
Toto Berger +44 20 7466 5000
Notes to Editors
About ThinkSmart Limited
ThinkSmart is a specialist digital payments platform business.
It offers investors unique exposure to the UK 'Buy Now Pay Later'
payments sector undergoing exponential growth, driven by ongoing
digital transformation of consumer shopping habits and financial
services.
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