TIDMTSL
RNS Number : 5140Z
ThinkSmart Limited
15 September 2022
15 September 2022
ThinkSmart Limited
("ThinkSmart" or the "Company" which together with its
subsidiaries is the "Group")
Final results for the year ended 30 June 2022
ThinkSmart Limited (AIM: TSL), the specialist digital payments
business with a shareholding of 618,750 shares in NYSE listed
Block, Inc (NYSE: SQ) ("Block"), today announces its results for
the year ended 30 June 2022 (the "year" or "FY22").
Financial highlights:
-- Proven history of shareholder return with capital return and
special dividend of A$5.6 million (5.2 cents per share), equivalent
to GBP3.0 million, paid in December 2021 together with a further
capital return and special dividend of A$4.4 million (4.1398
cents per share) paid shortly after the year end on 15 July 2022
-- Valuation of the Group's shareholding in Block of GBP31.3 million
at 30 June 2022 reflects 75% fall in Block's share price (from
US$243.80 on 30 June 2021 to US$61.46 at 30 June 2022)(1) caused
by challenging market sector valuations for listed technology
companies and drives GBP93.7 million non-cash fair value loss
resulting in loss after tax for the year of GBP94.1 million (FY
2021: GBP71.7 million profit)
-- Net assets at year end of GBP37.0 million (FY 2021: GBP134.5
million) prior to 15 July 2022 capital return and including GBP31.3
million valuation of Block shares based on 30 June 2022 Block
share price of US$61.46 and 1.2148 USD: 1 GBP
-- Cash and cash equivalents of GBP5.5 million at 30 June 2022 (FY
2021: GBP7.1 million) prior to capital return and special dividend
payment on 15 July 2022 which reduced cash to approximately GBP3
million
-- Increase in value of Block share price since 30 June 2022 to
13 September 2022 of 13% per cent (from US$61.46 to US$69.58)
(1)
Value creation from initial 10% equity shareholding in Clearpay
Finance Ltd ("Clearpay") through to holding of 618,750 shares in
Block
-- Disposal of 10%(2) stake in Clearpay in exchange for 1,650,000
Afterpay shares announced on 20 December 2021, which was after
Afterpay's shareholder approval for t he share for share sale
to Block
-- Afterpay sale to Block completed, on 1 February 2022, and the
Group's 1,650,000 Afterpay shares were exchanged for 618,750
Block shares
-- Sale of 90% shareholding in Clearpay to Afterpay in 2018 and
exchange of 10%(2) retained shareholding for 618,750 shares in
Block has generated cumulative accounting profit of GBP41.4 million
to 30 June 2022 (including GBP31.2 million of non-cash fair value
gains)
Block trading performance for the second quarter to 30 June
2022
Figures are as announced to the market by Block on 4 August 2022
in its Q2 2022 Results and the following is extracted from that
announcement. All currency figures are in US dollars unless
otherwise stated. ThinkSmart owns 618,750 shares in Block.
Therefore, ThinkSmart places emphasis on the public market
disclosures, financial results, share price, and general overall
operational performance of Block.
-- For Q2 2022, total net revenue was $4.40 billion, down 6% year
over year driven by a decrease in bitcoin revenue. Excluding
bitcoin, total net revenue in the second quarter was $2.62 billion,
up 34% year over year
-- For Q2 2022, gross profit was $1.47 billion, up 29% year over
year and up 47% on a three year CAGR basis, and included $18
million in amortization of acquired technology assets
-- In Q2 2022 Cash App generated $2.62 billion of revenue and $705
million of gross profit, down 21% and up 29% respectively year
over year, and up 116% and 88% respectively on a three-year CAGR
basis
-- In Q2 2022 the Square ecosystem generated $1.73 billion of revenue
and $755 million of gross profit, up 32% and 29% respectively
year over year and 26% and 30% respectively on a three-year CAGR
basis
-- For Q2 2022 the net loss attributable to common stockholders
was $208 million (Q2 2021 net income of GBP204 million)
-- As of 30 June 2022, the fair value of Block's investment in bitcoin
was $160 million based on observable market prices, which is
$47 million greater than the carrying value of the investment
after impairment charges
Operational highlights:
Continued managed wind down of legacy operations generated
positive cash flow
-- ThinkSmart's operating business generated positive cashflow through
its ongoing managed wind down of its leasing business and the
provision of an outsourced call centre customer support service
to Clearpay
-- Total revenue of GBP3.5 million (FY 2021: GBP4.3 million) includes
GBP0.8 million (FY 2021: GBP0.9 million) from the provision of
the outsourced call centre customer support service for Clearpay
-- Optimised cash management with GBP1.6 million net cash generated
from operating activities (FY 2021: GBP2.2 million - including
GBP1.45 million from settlement agreement in relation to legal
proceedings)
-- Operating costs further reduced to GBP2.7 million (FY 2021: GBP3.4
million) and remain controlled, aligned to current volume performance
-- As announced on 3 February 2022, the Group terminated its Operating
Agreement with STB Leasing Ltd ("STB") and purchased the portfolio
of leases, funded under the Operating Agreement, from STB for
GBP1.2m. In return STB refunded the GBP2m Credit Support Balance
deposit which has resulted in a net GBP0.8m increase in the Group's
cash in February 2022
Post period end highlights:
ThinkSmart entered into a scheme implementation deed (the
"Scheme") on 29 July 2022
-- The Scheme, which has been unanimously recommended by the
Independent Board Committee ("IBC") of ThinkSmart, will address the
discount that ThinkSmart's share price has traded relative to the
value of its shareholding in Block
-- ThinkSmart shareholders will receive cash consideration equal
to the proceeds realised from the post-Scheme implementation sale
on the NYSE of the Block shares, paid to shareholders following the
Scheme implementation, anticipated to be during November 2022
-- Whilst this will result in ThinkSmart selling certain of its
shareholding in Block in order to satisfy the payment of the Scheme
consideration, ThinkSmart shareholders can choose to purchase
shares in Block on-market thereby enabling them to have a direct
exposure to Block shares rather than an indirect exposure through a
shareholding in ThinkSmart
-- Shareholders in ThinkSmart will be able to continue to trade
ThinkSmart shares on the London Stock Exchange up until the Scheme
is implemented
-- The IBC believes that the value within ThinkSmart today is
its shareholding in Block. Thus, the benefits of maintaining a
listing on AIM, such as accessing equity capital markets, are no
longer relevant
Commenting on the results , Ned Montarello, Executive Chairman
of ThinkSmart, said:
"ThinkSmart has created significant shareholder value, resulting
in a cumulative profit of over GBP40 million to 30 June 2022,
through a series of transactions that have ultimately led to the
Group owning shares in Block. At the same time, the Board has
continued to deliver capital to shareholders and, during the year,
completed a special dividend and capital return of c. GBP3 million,
which was shortly followed by an additional return of c. GBP2.5m
post year end.
From an operational perspective, we will continue to service our
existing customer base during the orderly wind-down of our legacy
leasing business. However, the Board believes that the costs of
maintaining ThinkSmart as a listed entity until completion of the
wind down would likely exceed the cash generated from the wind down
of its business operations."
For further information please contact:
ThinkSmart Limited Via Buchanan
Ned Montarello
Canaccord Genuity Limited (Nominated
Adviser and Broker)
Emma Gabriel
Andrew Potts
Tom Diehl +44 (0)20 7523 8350
Buchanan
Giles Stewart
Chris Lane
Toto Berger +44 20 7466 5000
(1) Source: www.finance.yahoo.com/quote/SQ/history?p=SQ
(2) A proportion of the 10% retained shareholding (up to 3.5% of
the total share capital of Clearpay) was to be made available to
employees of Clearpay under an employee share ownership plan.
Notes to Editors
About ThinkSmart Limited
ThinkSmart's roots are as a specialist digital payments platform
business. Following the sale of its remaining 10% shareholding in
Clearpay in January 2022, the Group now holds shares in NYSE listed
Block, Inc (NYSE: SQ). The Group also provides an outsourced call
centre customer service and support service to Clearpay and is
managing the wind-down of its leasing business.
This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation (EU) 596/2014 as
amended by regulation 11 of the Market Abuse (Amendment) (EU Exit)
Regulations 2019/310. With the publication of this announcement,
this information is now considered to be in the public domain.
Chairman's Statement
Clearpay shareholding exchanged for 618,750 shares in Block
The year to 30 June 2022 was a challenging time for the market
valuations of global technology stocks, depressing the share price
of both Afterpay and Block. This coincided with a change of control
in Afterpay following the takeover by Block, which completed on 1
February 2022, in turn enabling Block to choose to effect the early
exercise of Afterpay's call option to acquire ThinkSmart's
remaining minority shareholding in Clearpay at a price calculated
on agreed principles based on market valuations at the time of
exercise.
Given the depressed valuation of Afterpay and continued market
volatility, the Board was keen to retain its ability to negotiate
the disposal of its 10% stake in Clearpay ahead of the Block
takeover of Afterpay completing, from when the Board would have had
no power to negotiate the value of the 10% shareholding in Clearpay
as the value of the 10% holding would have been determined by the
pre-agreed, and therefore non-negotiable, principles as set out in
the put and call option in the August 2018 Clearpay sale &
purchase agreement with Afterpay. Therefore, following an approach
by Afterpay, we proactively engaged in negotiations and agreed to
dispose of our remaining holding in Clearpay in exchange for
1,650,000 shares in Afterpay, which were valued at GBP78.1 million
based on the Block closing share price on 17 December 2021 of
US$167.06, and the agreed ratio of 0.375 Block shares for every
Afterpay share (and using 1.3239 USD:1 GBP).
The Directors believe that this represented a compelling
outcome, particularly in the circumstances of a volatile market,
and this ongoing volatility has certainly proved to be the case
given the ongoing market nervousness driven by the unstable
macro-economic environment and resultant reduction in valuations of
many technology stocks including Block, where its share price has
fallen from a peak of US$282. ThinkSmart's shareholders approved
the disposal on 14 January 2022. Subsequent to this, on 1 February
2022 and following the completion of the Block takeover of
Afterpay, the 1,650,000 Afterpay shares were exchanged for 618,750
shares in Block.
The Board has consistently sought to return capital to
shareholders where appropriate and is mindful of maintaining a
prudent level of cash reserves in the business. In line with this,
the business paid a special dividend and capital return of A$5.6
million (5.2 cents per share), equivalent to GBP3.0 million (2.8
pence per share), in December 2021. Subsequent to the year end, on
15 July 2022 the business paid a further special dividend and
capital return of A$4.4 million (4.1398 cents per share),
equivalent to GBP2.5 million, reducing the Group's cash to
approximately GBP3 million.
Operating Business Performance
The Board is also focused on ThinkSmart's legacy retail consumer
and business finance offerings, which have been in managed
wind-down, together with providing the outsourced call centre
customer support service for Clearpay. As previously reported, the
Group ceased writing any new business in February 2021 in its
legacy retail consumer and business finance offerings, and is
managing the wind-down by adjusting the cost base accordingly.
As such, leasing volumes were nil (FY 2021: GBP0.5 million) in
the year and revenues were consequently 20% lower at GBP3.5 million
(FY 2021: GBP4.3 million), including GBP0.8 million (FY 2021:
GBP0.9 million) of revenue from the provision of the outsourced
call centre customer support service for Clearpay, reflecting the
wind down of the legacy leasing business.
The Group will continue to service its existing customer base
ensuring the fair treatment of customers during the orderly winding
down of its legacy leasing business and will continue to manage its
costs accordingly.
As announced on 3 February 2022, the Group terminated its
Operating Agreement with STB Leasing Ltd ("STB") and purchased the
portfolio of leases, funded under the Operating Agreement, from STB
for GBP1.2m. In return STB refunded the GBP2m Credit Support
Balance deposit which has resulted in a net GBP0.8m increase in the
Group's cash in February 2022.
The lease portfolio purchased has a minimum term gross
receivable balance of GBP1.25m and an average term outstanding of
10 months. ThinkSmart will continue to be entitled to all rental
income and revenue from sales of leased equipment following the end
of the initial term of the leases, and is managing its cost base
accordingly.
The Group now services predominantly small business customers
and therefore its future revenue may be adversely impacted should
the UK economy, as expected, go into a recession. However, as at 30
June 2022, lease receivables under management have reduced to
GBP1.0m million, spread across approximately 3,500 active customer
contracts, which should help to mitigate any such impact.
Operating costs, including costs relating to the provision of
the outsourced call centre customer support service for Clearpay,
decreased further to GBP2.7 million (FY 2021: GBP3.4 million) over
the year and remain controlled, aligned to the volume performance
of the business.
Group Financial Position
At 30 June 2022 the Group had net assets of GBP37.0 million (FY
2021: GBP134.5 million) including the accrued GBP0.4 million
special dividend paid on 15 July 2022 but excluding the GBP2.1
million capital return paid on 15 July 2022. The net asset
position, adjusted for the July 2022 GBP2.1 million capital return,
which equated to GBP34.9 million with GBP31.3 million of this being
attributable to the market value of the Block shares.
The Group held cash and cash equivalents of GBP5.5 million at 30
June 2022 (GBP7.1m at 30 June 2021), after the GBP3.0 million
payment of the special dividend/capital return in December 2021 but
before the GBP2.5 million special dividend/capital return paid on
15 July 2022 which reduced cash to approximately GBP3 million. It
is expected that the costs of maintaining ThinkSmart as a listed
entity until completion of the wind down would likely exceed the
cash generated from the wind down of its business operations.
Current Trading Update and Binding Scheme Implementation Deed
with Tuscan Equity Pty Ltd
ThinkSmart anticipates its cash reserves will reduce going
forwards as the costs of maintaining ThinkSmart as a listed entity
until completion of the wind down of its operations would likely
exceed the cash generated from the wind down of its business
operations. Accordingly, the Directors believe that the future
performance of ThinkSmart will be predominantly determined by the
movement in the market value of the Company's shareholding in
Block.
On 29 July 2022 ThinkSmart announced that it has entered into a
binding Scheme Implementation Deed with Tuscan Equity Pty Ltd
("Bidco") under which Bidco would acquire the entire issued share
capital of ThinkSmart pursuant to a scheme of arrangement under the
Australian Corporations Act 2001 (Cth) ("the Scheme").
Tuscan Equity is a company limited by shares that was
incorporated in Australia for the purposes of the Scheme and is
wholly owned and controlled by Ned Montarello, ThinkSmart's
Executive Chairman, CEO, founder and current 29.4% shareholder
(29.94% on a fully diluted basis including all vested but currently
unexercised share options). As such, an Independent Board Committee
("IBC"), comprising all of the directors of ThinkSmart other than
Mr Montarello, was established to consider the proposal for the
Scheme on behalf of ThinkSmart.
Under the Scheme, Tuscan Equity will acquire 100% of
ThinkSmart's issued shares, including the shares owned and/or
controlled by Mr Montarello. In exchange, ThinkSmart shareholders,
other than Mr Montarello and entities he controls ("ThinkSmart
Independent Shareholders"), will be entitled to receive cash
consideration equal to the proceeds realised from the post-Scheme
implementation sale on the New York Stock Exchange ("NYSE") of the
proportion of the 618,750 shares in Block Inc ("Block") held by
ThinkSmart attributable to their shareholding in ThinkSmart (net of
their proportion of sale fees, which are expected to be
approximately 0.5% of the gross proceeds from the sale of the Block
shares held by ThinkSmart and after conversion into Pounds Sterling
or Australian dollars (as applicable)).
Under the Scheme, Tuscan Equity will also acquire all of the
ThinkSmart shares held by Mr Montarello and entities he controls in
exchange for shares in Tuscan Equity, or if Mr Montarello so
elects, part or all of Mr Montarello's shares in ThinkSmart may be
acquired by Tuscan Equity for cash consideration, in which case he
will receive the same cash consideration as the ThinkSmart
Independent Shareholders funded by a proportionate increase in the
number of Block shares that will be sold by ThinkSmart post-Scheme
implementation.
The cash consideration to be paid under the Scheme will be
determined shortly following implementation of the Scheme when the
relevant number of Block shares owned by ThinkSmart are sold on the
NYSE. The number of Block shares sold will be that percentage of
ThinkSmart's 618,750 Block shares that is equal to the percentage
of shares in ThinkSmart held by ThinkSmart Independent Shareholders
together with any shares Mr Montarello elects to sell to Tuscan
Equity for cash consideration, rounded to the nearest whole number
of Block shares.
The actual cash consideration received by ThinkSmart Independent
Shareholders for their ThinkSmart shares (and Mr Montarello for any
ThinkSmart shares he owns or controls and which he elects to sell
to Tuscan Equity for cash consideration) will be determined based
on the actual sale price achieved for the relevant number of Block
shares sold by ThinkSmart on the day they are sold (net of sale
fees and after currency conversion) and will therefore not be known
until after the Scheme has been implemented. By way of example, the
Block closing share price on the NYSE on 21 July 2022 was US$74.76.
If the Block shares were sold for US$74.76 per share and the sale
fees equated to 0.5% of the proceeds, ThinkSmart shareholders who
receive the Scheme consideration in Pounds Sterling (being holders
of depositary interests and holders of ThinkSmart shares who elect
to receive Pounds Sterling) would receive approximately 36.01 pence
per ThinkSmart share (assuming 1.1992 USD: 1 GBP). This compares to
the ThinkSmart closing share price on AIM on 21 July 2022 of 25.00
pence and would represent a 44.0% premium to that closing price of
ThinkSmart shares.
Holders of ThinkSmart Depositary Interests will be paid the
Scheme consideration in Pounds Sterling, while holders of
ThinkSmart shares who do not hold via Depositary Interests will
receive the Scheme consideration in Australian dollars but can make
an election to receive Pounds Sterling.
Holders of the 1,679,532 ThinkSmart employee share options,
which include Mr Montarello, Mr Halton and another member of
ThinkSmart's executive team, will be able to exercise their options
prior to the Scheme taking effect (these options all being
currently vested and free of any conditions to their exercise). Any
shares issued on exercise of share options will also be acquired by
Tuscan Equity under the Scheme.
Following implementation of the Scheme, ThinkSmart will be
controlled by Mr Montarello and will be delisted by cancellation of
its admission to trading on the AIM Market. Following the
subsequent payment of the Scheme consideration by Tuscan Equity to
satisfy its obligations under the Scheme, Tuscan Equity, via its
100 % ownership of ThinkSmart, will hold the remainder of the Block
shares that are not sold, as well as ThinkSmart's remaining
business operations which comprise ThinkSmart's legacy leasing
business, which is undergoing a managed wind down, and the
provision of an outsourced call centre customer support service to
support the Clearpay business that was previously owned by
ThinkSmart.
The implementation of the Scheme is subject to shareholder,
regulatory and Court approval and the IBC unanimously recommends
that ThinkSmart shareholders vote in favour of the Scheme in the
absence of a superior proposal and subject to an independent expert
opining that the Scheme is in the best interests of ThinkSmart
shareholders. Further details about the Scheme will be contained in
a Scheme Booklet that will be sent to shareholders in due
course.
Key Performance Indicators:
12 Months to
12 Months 30 June 2021
to
30 June 2022
Revenue (Total) GBP3.5m GBP4.3m -20%
--------------- -------------- ------
Net (loss)/profit after
tax GBP(94.1)m GBP71.7m -231%
--------------- -------------- ------
Basic EPS in pence (88.27) 67.28 -231%
--------------- -------------- ------
As at As at
30 June 2022 30 June 2021
--------------- -------------- ------
Lease Receivables Under
Management (Closing) GBP1.0m GBP2.6m -62%
--------------- -------------- ------
Active Customer Contracts
(000) 3.5 6.9 -49%
--------------- -------------- ------
Cash and Cash Equivalents GBP5.5m GBP7.1m -22%
--------------- -------------- ------
Net Assets GBP37.0m GBP134.5m -72%
--------------- -------------- ------
The following results have been extracted from the audited
financial statements
Consolidated Statement of Profit & Loss and Other
Comprehensive Income
For the Financial Year Ended 30 June 2022
12 Months
12 Months to June
to June 2022 2021
Notes GBP,000 GBP,000
Continuing operations
Revenue 6(a) 3,269 4,286
Other revenue 6(b) 207 62
-------------- ----------
Total revenue 3,476 4,348
Customer acquisition cost 6(c) (74) (258)
Cost of inertia assets sold 6(d) (166) (335)
Other operating expenses 6(e) (2,704) (3,431)
Depreciation and amortisation 6(f) (802) (1,401)
Impairment (losses)/gains 6(g) (103) 41
(Loss)/gain on Financial Instruments 6(h) (93,696) 71,267
Other gains 6(i) - 1,450
-------------- ----------
(Loss)/profit before tax (94,069) 71,681
Income tax charge 7 (11) (17)
-------------- ----------
Net (loss)/profit after tax - attributable
to owners of the Company (94,080) 71,664
Other comprehensive income/(loss)
Items that may be reclassified subsequently
to profit or loss, net of income tax:
Foreign currency translation differences
for foreign operations (13) (43)
Total items that may be reclassified subsequently
to profit or loss net of income tax (13) (43)
-------------- ----------
Other comprehensive income/(loss) for the
year, net of income tax (13) (43)
-------------- ----------
Total comprehensive (loss)/income for the
year attributable to owners of the Company (94,093) 71,621
-------------- ----------
Earnings per share
Basic Earnings per share (pence) 27 (88.27) 67.28
Diluted Earnings per share (pence) 27 (88.27) 66.21
The attached notes form an integral part of these consolidated
financial statements.
Consolidated Statement of Financial Position
As at 30 June 2022
June 2022 June 2021
Notes GBP,000 GBP,000
Current assets
Cash and cash equivalents 20(a) 5,536 7,067
Trade receivables 24(c) 17 55
Finance lease receivables 8 866 38
Financial assets at fair value through profit
or loss 10 31,304 -
Other current assets 9 231 380
Total current assets 37,954 7,540
---------- ----------
Non-current assets
Finance lease receivables 8 46 -
Plant and equipment 13 98 302
Intangible assets 14 188 590
Financial assets at fair value through profit
or loss 10 - 125,000
Contract assets 11 - 777
Other non-current assets 12 3 2,069
Total non-current assets 335 128,738
---------- ----------
Total assets 38,289 136,278
---------- ----------
Current liabilities
Trade and other payables 16 (1,043) (728)
Lease liabilities 17 (46) (103)
Contract liabilities 18 (39) (410)
Provisions 16 (167) (202)
Total current liabilities (1,295) (1,443)
---------- ----------
Non-current liabilities
Lease liabilities 17 - (46)
Contract liabilities 18 - (332)
Total non-current liabilities - (378)
---------- ----------
Total liabilities (1,295) (1,821)
---------- ----------
Net assets 36,994 134,457
---------- ----------
Equity
Issued capital 19(a) 7,862 10,413
Reserves (2,888) (2,875)
Accumulated profits 32,020 126,919
---------- ----------
Total equity 36,994 134,457
---------- ----------
The attached notes form an integral part of these consolidated
financial statements.
Consolidated Statement of Changes in Equity
For the Financial Year Ended 30 June 2022
Foreign Attributable
Fully currency to equity
paid ordinary translation Accumulated holders
Consolidated shares reserve Profit of the parent
GBP,000 GBP,000 GBP,000 GBP,000
--------------- ------------- ------------ ---------------
Balance at 1 July 2020 13,164 (2,832) 56,156 66,488
Profit for the year - - 71,664 71,664
Exchange differences arising on translation
of foreign operations, net of tax - (43) - (43)
--------------- ------------- ------------ ---------------
Total comprehensive income for the year - (43) 71,664 71,621
--------------- ------------- ------------ ---------------
Transactions with owners of the Company,
recognised directly in equity
Contributions by and distributions to owners
of the Company
Capital return paid (2,757) - - (2,757)
Dividends paid - - (901) (901)
Share options exercised 6 - - 6
--------------- ------------- ------------ ---------------
Balance at 30 June 2021 10,413 (2,875) 126,919 134,457
--------------- ------------- ------------ ---------------
Balance at 1 July 2021 10,413 (2,875) 126,919 134,457
Loss for the year - - (94,080) (94,080)
Exchange differences arising on translation
of foreign operations, net of tax - (13) - (13)
Total comprehensive income for the year - (13) (94,080) (94,093)
-------- -------- --------- ---------
Transactions with owners of the Company,
recognised directly in equity
Contributions by and distributions to owners
of the Company
Capital return paid (2,559) - - (2,559)
Dividends paid and accrued - - (819) (819)
Share options exercised 8 - - 8
-------- -------- --------- ---------
Balance at 30 June 2022 7,862 (2,888) 32,020 36,994
-------- -------- --------- ---------
The attached notes form an integral part of these consolidated
financial statements.
Consolidated Statement of Cash Flows
For the Financial Year Ended 30 June 2022
12 Months 12 Months
to June to June
2022 2021
Notes GBP,000 GBP,000
Cash Flows from Operating Activities
Receipts from customers 3,152 4,033
Payments to suppliers and employees (2,832) (3,796)
(Payments)/receipts in respect of lease
receivables (746) 511
Interest received 61 65
Interest and finance charges paid (10) (92)
Receipts from security guarantee 2,021 35
Income tax paid (11) (17)
Other gains receipts - 1,450
Net cash from operating activities 20(b) 1,635 2,189
---------- ----------
Cash Flows from Investing Activities
Payments for plant and equipment (41) (17)
Payment for intangible assets - software
& contract rights - (122)
Net cash used in investing activities (41) (139)
---------- ----------
Cash Flows from Financing Activities
Payment of lease liabilities (103) (93)
Dividends paid (458) (901)
Proceeds from share issue net of costs 8 6
Return of capital net of costs (2,559) (2,757)
Net cash used in financing activities (3,112) (3,745)
---------- ----------
Net decrease in cash and cash equivalents (1,518) (1,695)
Effect of exchange rate fluctuations on
cash held (13) (43)
Cash and cash equivalents at beginning
of the financial year 7,067 8,805
Total cash and cash equivalents at the
end of the financial period 20(a) 5,536 7,067
---------- ----------
Restricted cash and cash equivalents at
the end of the financial period 20(a) (62) (60)
---------- ----------
Net available cash and cash equivalents
at the end of the financial period 5,474 7,007
---------- ----------
The attached notes form an integral part of these consolidated
financial statements.
Notes to the Consolidated Financial Statements
1. General Information
ThinkSmart Limited (the "Company" or "ThinkSmart") is a limited
liability company incorporated in Australia. The consolidated
financial statements of the Company comprise the Company and its
subsidiaries (the "Group"). The Group is a for profit entity and
its principal activity during the year was the provision of lease
and rental financing services in the UK and the holding of a
financial asset. The address of the Company's registered office is
Suite 5, 531 Hay Street Subiaco, WA 6008, Australia and further
information can be found at www.thinksmartworld.com .
2. Basis of Preparation
(a) Statement of compliance
The Company is listed on the Alternative Investment Market
("AIM"), a sub-market of the London Stock Exchange. The financial
information has been prepared in accordance with the AIM Rules for
Companies and in accordance with this basis of preparation,
including the significant accounting policies set out below.
The consolidated financial statements are general purpose
financial statements which have been prepared and approved by the
Directors in accordance with Australian Accounting Standards
(AASBs) adopted by the Australian Accounting Standards Board (AASB)
and the Corporations Act 2001. The consolidated financial
statements comply with International Financial Reporting Standards
(IFRS) adopted by the International Accounting Standards Board
(IASB) as well as International Financial Reporting Standards as
adopted by the UK ("Adopted IFRSs"). The consolidated financial
statements were authorised for issue by the Board of Directors on
14 September 2022.
(b) Basis of measurement
The financial report has been prepared on the basis of
historical cost, except for financial instruments measured at fair
value. Cost is based on the fair values of the consideration given
in exchange for assets. All amounts are presented in British Pounds
("GBP") unless otherwise noted.
(c) Functional and presentation currency
These consolidated financial statements are presented in British
Pounds, which is the Company's functional currency. The Group is of
a kind referred to in ASIC Corporations (Rounding in Financial/
Directors' Reports) Instrument 2016/191 and in accordance with that
instrument, amounts in the consolidated financial statements and
Directors' report have been rounded off to the nearest thousand
pounds, unless otherwise stated.
(d) Going Concern
The consolidated 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 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 statement of financial position, future
projections of profitability, cash flows and resources and the
longer term strategy of the business. The Directors have assessed
the impact of COVID-19 and the economic uncertainty associated with
the conflict in Ukraine on the current and forecast position of the
Group. As the Group has only been minimally impacted the Directors
are satisfied that the Group has more than adequate resources to
meet its liabilities as they fall due even when stressed to
reasonable worst case scenarios.
3. Significant Accounting Policies
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated
financial statements, and have been applied consistently by Group
entities.
(a) Basis of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries). The Group controls an entity when it is exposed
to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its
power over the entity. The results of subsidiaries acquired or
disposed of during the year are included in the consolidated
statement of profit and loss from the effective date of acquisition
or up to the effective date of disposal, as appropriate. The
accounting policies of subsidiaries have been changed when
necessary to align them with the policies adopted by the Group.
(ii) Transactions eliminated on consolidation
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies in
line with those applied by other members of the Group. All
intra-group balances, transactions, income and expenses are
eliminated in full on consolidation.
(b) Business combinations
For every business combination, the Group identifies the
acquirer, which is the combining entity that obtains control of the
other combining entities or businesses. The acquisition date is the
date on which control is transferred to the acquirer. Judgement is
applied in determining the acquisition date and determining whether
control is transferred from one party to another.
(c) Revenue recognition
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the
consideration to which the Group is expected to be entitled in
exchange for transferring goods or services to a customer. For each
contract with a customer, the Group: identifies the contract with a
customer; identifies the performance obligations in the contract;
determines the transaction price which takes into account estimates
of variable consideration and the time value of money; allocates
the transaction price to the separate performance obligations on
the basis of the relative stand-alone selling price of each
distinct good or service to be delivered; and recognises revenue
when or as each performance obligation is satisfied in a manner
that depicts the transfer to the customer of the goods or services
promised.
Variable consideration within the transaction price, if any,
reflects concessions provided to the customer such as discounts,
rebates and refunds, any potential bonuses receivable from the
customer and any other contingent events. Such estimates are
determined using either the 'expected value' or 'most likely
amount' method. The measurement of variable consideration is
subject to a constraining principle whereby revenue will only be
recognised to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised
will not occur. The measurement constraint continues until the
uncertainty associated with the variable consideration is
subsequently resolved. Amounts received that are subject to the
constraining principle are recognised as a contract liability.
Some forms of revenue fall outside the scope of AASB 15 -
Revenue from Contracts with Customers, of relevance to ThinkSmart
this includes revenue under AASB 16 Leases and AASB 9 Financial
Instruments.
Up to 31 January 2022 financing for lease products was obtained
by the Group from third party funding partners. Depending on the
nature of the agreements with those funders, these contracts
resulted in the Group acting as a lessor or as the agent of the
funder (who is then the lessor). Following the termination of the
Operating Agreement with STB on 31 January 2022 the Group acts as a
lessor in respect of the remaining portfolio of leases.
Where the Group is acting as the lessor it follows the treatment
outlined in AASB 16. In accordance with AASB 16 nearly all the
contracts are considered to be finance leases and the only source
of revenue is Finance Lease Income. This Finance Lease Income is
recognised on the effective interest rate method at the constant
rate of return. This method amortises the lease asset over its
economic life down to the estimate of any unguaranteed residual
value that is expected to be accrued to the Group at the end of the
lease.
Where the Group was acting as agent prior to the purchase of the
STB lease portfolio on 31 January 2022, and where the Group
continues to service leases acquired under the operating agreement,
it receives the following revenue streams:
Commission income
This includes the upfront cash transaction fee receivable from
the funder together with the non-cash consideration between the
funder and the end customer (for the contract or inertia asset)
which is allocated under AASB 15 between the inception/brokerage of
the lease arrangement, a financial guarantee contract premium over
the lease term, a contract liability reflecting the reversal
constraint for the potential refund of the transaction fee, and the
non-cash consideration contract asset accruing over the lease
term.
Extended rental income
Once the contract between the funder and the end customer
expires the asset becomes the property of the Group and any
extended rental income is payable to the Group, being recognised
when receivable.
Income earned from sale of inertia assets
At the end of the extended rental period any proceeds on
disposal of the asset are recognised at the point of disposal.
Services revenue - insurance
Lease customers of hire agreements originated by the Group are
required to have suitable insurance in respect of the leased
equipment. If these customers do not make independent insurance
arrangements the Group arranges insurance and collects the premiums
on their behalf, receiving a commission from the insurer for doing
so.
Outsourced services
The Group generates revenue through the provision of outsourced
services. The Group is a B2B provider of call centre customer
services. The provision of call centre services comprise the whole
and single contractual obligation and all revenue is recognised at
the same time as this is fulfilled. There is no variable income
attached to the services provided and all costs are expensed as
incurred.
(d) Cash and cash equivalents
Cash comprises cash on hand and demand deposits with an original
maturity of less than 3 months. Cash equivalents are short-term,
highly liquid investments that are readily converted to known
amounts of cash which are subject to an insignificant risk of
change in value. Restricted cash comprises amounts held in trust in
relation to dividends paid on employee loan funded shares.
(e) Plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less
accumulated depreciation and accumulated impairment losses. Cost
includes expenditure that is directly attributable to the
acquisition of the asset. Purchased software that is integral to
the functionality of the related equipment is capitalised as part
of that equipment. When parts of an item of property, plant and
equipment have different useful lives they are accounted for as
separate items (major components) of property, plant and equipment.
The gain or loss on disposal of an item of property, plant and
equipment is determined by comparing the proceeds from disposal
with the carrying amount of the property, plant and equipment, and
is recognised net within other income/other expenses in profit or
loss.
Depreciation
Depreciation is based on the cost of an asset less its residual
value. Significant components of individual assets are assessed and
if a component has a useful life that is different from the
remainder of the asset, that component is depreciated separately.
Depreciation is recognised in profit or loss on a straight-line
basis over the estimated useful lives of each component of an item
of property, plant and equipment. The following estimated useful
lives are used in the calculation of depreciation:
-- Office furniture, fittings, equipment and computers 3 to 5 years
-- Leasehold improvements the lease term
Depreciation methods, useful lives and residual values are
reviewed at each reporting date. If on review the remaining useful
life of any asset is found to be shorter than its useful life at
recognition then the depreciation schedule is accelerated to
reflect the shorter remaining useful life with any adjustment
charged to depreciation cost.
(f) Customer acquisition costs
Customer acquisition costs are capitalised as an asset where
such costs are incremental to obtaining a contract between the
funder and the end customer, for which the Group receives
commission under the funder contract, and are expected to be
recovered. Customer acquisition costs are amortised on a
straight-line basis over the term of the contract.
Costs to obtain a contract that would have been incurred
regardless of whether the contract was obtained or which are not
otherwise recoverable from a customer are expensed as incurred to
profit or loss. Incremental costs of obtaining a contract where the
contract term is less than one year is immediately expensed to
profit or loss.
(g) Trade and other payables
Trade payables are recognised when the consolidated entity
becomes obliged to make future payments resulting from the purchase
of goods and services and measured at fair value.
(h) Financial instruments
The financial instruments held by the Group are the financial
assets and financial liabilities reflected in the statement of
financial position. As at 30 June 2022 the financial instruments
held by the Group comprised the holding of 618,750 shares in Block
Inc ("Block"). Other assets and liabilities held by the Group
excluded from financial instruments include lease contracts which
are accounted for under AASB 16, property, plant and equipment,
intangible assets, prepayments, provisions, tax liabilities and
investments in subsidiaries.
(i) Non-derivative financial assets
The Group classifies financial assets as subsequently measured
at amortised cost, fair value through other comprehensive income or
fair value through profit or loss on the basis of both:
-- The Group's business model for managing the financial assets; and
-- The contractual cash flow characteristics of the financial asset.
The Group measures a financial asset at fair value through
profit or loss unless it is measured at amortised cost or fair
value through other comprehensive income having met the criteria
specified in AASB 9 - Financial Instruments in respect of business
model and cash flows that are solely payments of principal and
interest.
The Group initially recognises loans and receivables and
deposits on the date that they are originated. All other financial
assets (including assets designated at fair value through profit or
loss) are recognised initially on the trade date at which the Group
becomes a party to the contractual provisions of the
instrument.
The Group derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or it transfers the
right to receive the contractual cash flows on the financial asset
in a transaction in which substantially all the risks and rewards
of ownership of the financial asset are transferred. Any interest
in transferred financial assets that is created or retained by the
Group is recognised as a separate asset or liability. Financial
assets and liabilities are offset and the net amount presented in
the statement of financial position when, and only when, the Group
has a legal right to offset the amounts and intends either to
settle on a net basis or to realise the asset and settle the
liability simultaneously.
Effective interest method
The effective interest method is a method of calculating the
amortised cost of a financial asset and allocating interest income
over the relevant period. The effective interest rate is the rate
that exactly discounts estimated future cash receipts through the
expected life of the financial asset or, where appropriate, a
shorter period.
Insurance prepayment
In relation to business customers who do not already have
insurance, a policy is set up through a third party insurance
provider. The Group pays for the insurance cover upfront and also
recognises its income upfront which creates an insurance prepayment
on the statement of financial position. The Group subsequently
collects the insurance premium from the customer on a monthly basis
over the life of the rental agreement, which reduces the
prepayment. Where a policy is cancelled, the unexpired premiums are
refunded to the Group.
Other financial assets
Other financial assets are initially valued at fair value.
Transaction costs are included as part of the initial measurement,
except for financial assets at fair value through profit or loss.
Such assets are subsequently measured at either amortised cost or
fair value depending on their classification. Classification is
determined based on both the business model within which assets are
held and the contractual cash flow characteristics of the financial
asset.
(ii) Non-derivative financial liabilities
The Group initially recognises financial liabilities on the date
they are originated. The Group derecognises a financial liability
when its contractual obligations are discharged or cancelled or
expire.
Financial liabilities are recognised initially at fair value
plus any directly attributable transaction costs. Subsequent to
initial recognition, these financial liabilities are measured at
amortised cost using the effective interest rate method.
Transaction costs consist of legal and other costs that are
incurred in connection with the borrowing of funds. These costs are
capitalised and then amortised over the life of the loan.
Financial guarantee contracts
Financial guarantees issued by the Group are recognised as
financial liabilities at the date the guarantee is issued.
Liabilities arising from financial guarantee contracts, are
initially recognised at fair value and subsequently at the higher
of the amount of expected credit losses determined under AASB 9 and
the amount initially recognised less cumulative amortisation.
The fair value of the financial guarantee is determined by way
of calculating the present value of the difference in net cash
flows between the contractual payments under the debt instrument
and the payments that would be required without the guarantee, or
the estimated amount that would be payable to a third party for
assuming the obligation. Any increase in the liability relating to
financial guarantees is recognised. Any liability remaining is
derecognised in profit or loss when the guarantee is discharged,
cancelled or expires.
(iii) Impairment of assets
Financial assets, including finance lease receivables and loan
receivables
The Group recognises a loss allowance for expected credit losses
on financial assets which are either measured at amortised cost or
fair value through profit or loss. The measurement of the loss
allowance depends upon the Group's assessment at the end of each
reporting period as to whether the financial instrument's credit
risk has increased significantly since initial recognition, based
on reasonable and supportable information that is available,
without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to
credit risk since initial recognition, a 12-month expected credit
loss allowance is estimated. This represents a portion of the
asset's lifetime expected credit losses that is attributable to a
default event that is possible within the next 12 months. Where a
financial asset has become credit impaired or where it is
determined that credit risk has increased significantly, the loss
allowance is based on the asset's lifetime expected credit losses.
The amount of expected credit loss recognised is measured on the
basis of the probability weighted present value of anticipated cash
shortfalls over the life of the instrument discounted at the
original effective interest rate. For lease receivables the Group
applies the simplified approach as such the loss allowance is based
on the asset's lifetime expected credit losses.
For financial assets measured at fair value through other
comprehensive income, gains or losses are recognised in other
comprehensive income, except for impairment gains of losses and
foreign exchange gains or losses, until the asset is derecognised
or reclassified. In all other cases, the loss allowance in excess
of amounts previously recognised is recognised in profit or
loss.
Non-financial assets
The carrying amounts of the Group's non-financial assets, other
than deferred tax assets, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any
such indication exists then the asset's recoverable amount is
estimated. For goodwill and intangible assets that have indefinite
lives or that are not yet available for use, the recoverable amount
is estimated at each reporting date.
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a discount rate that
reflects current market assessments of the time value of money and
the risks specific to the asset. For the purpose of impairment
testing, assets are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or Group of
assets (the "cash-generating unit"). The goodwill acquired in a
business combination, for the purpose of impairment testing, is
allocated to cash-generating units that are expected to benefit
from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an
asset or its cash-generating unit exceeds its recoverable amount.
Impairment losses are recognised in profit or loss. Impairment
losses recognised in respect of cash-generating units are allocated
first to reduce the carrying amount of the other assets in the unit
(Group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses recognised in the prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment loss
is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been
recognised.
(i) Intangible assets
Intellectual property
Intellectual property is recorded at the cost of acquisition and
is amortised on a straight line basis over 20 years.
Software development
Software development costs are capitalised only up to the point
when the software has been tested and is ready for use in the
manner intended by management. Software development expenditure is
capitalised only if the development costs can be measured reliably,
the product process is technically and commercially feasible,
future economic benefits are probable, and the Group intends to and
has sufficient resources to complete development and to use or sell
the asset. The expenditure capitalised includes the cost of direct
labour and overhead costs that are directly attributable to
preparing the asset for its intended use. The intangible asset is
amortised on a straight line basis over its estimated useful life,
which is between 3 and 5 years. Capitalised software development
expenditure is measured at cost less accumulated amortisation and
accumulated impairment losses.
(j) Employee benefits
A liability is recognised for benefits accruing to employees in
respect of wages and salaries and annual leave when it is probable
that settlement will be required and they are capable of being
measured reliably.
The Group pays defined contributions for post-employment benefit
into a separate entity. Obligations for contributions to defined
contribution pension plans are recognised as an employee benefit
expense in profit or loss in the period during which services are
rendered by employees. Termination benefits are recognised as an
expense when the Group is committed, it is probable that settlement
will be required, and they are capable of being reliably
measured.
Share-based payments
The grant date fair value of share-based payment awards granted
to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the
employees unconditionally become entitled to the awards. The amount
recognised as an expense is adjusted to reflect the number of
awards for which the related service and non-market vesting
conditions are expected to be met, such that the amount ultimately
recognised as an expense is based on the number of awards that do
meet the related service and non-market performance conditions at
the vesting date. For share-based payment awards with non-vesting
conditions, the grant date fair value of the share-based payment is
measured to reflect such conditions and there is no true-up for
differences between expected and actual outcomes.
(k) Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to issue of ordinary shares and share options
are recognised as a deduction from equity, net of any tax
effects.
(l) Income tax
Current tax
Current tax is calculated by reference to the amount of income
taxes payable or recoverable in respect of the taxable profit or
tax loss for the period. It is calculated using tax rates and tax
laws that have been enacted or substantively enacted by reporting
date. Current tax payable for current and prior periods is
recognised as a liability to the extent that it is unpaid. Carried
forward tax recoverable on tax losses is recognised as a deferred
tax asset where it is probable that future taxable profit will be
available to offset in future periods.
Deferred tax
Deferred tax is accounted for using the balance sheet method in
respect of temporary differences arising from differences between
the carrying amount of assets and liabilities in the consolidated
financial statements and the corresponding tax base of those
items.
In principle, deferred tax liabilities are recognised for all
taxable temporary differences. Deferred tax assets are recognised
to the extent that it is probable that sufficient taxable amounts
will be available against which deductible temporary differences or
unused tax losses and tax offsets can be utilised. However,
deferred tax assets and liabilities are not recognised if the
temporary differences giving rise to them arise from the initial
recognition of assets and liabilities (other than as a result of a
business combination) which affects neither taxable income nor
accounting profit. Furthermore, a deferred tax liability is not
recognised in relation to taxable temporary differences arising
from the initial recognition of goodwill.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and joint
ventures except where the Group is able to control the reversal of
the temporary differences and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred tax assets arising from deductible temporary
differences associated with these investments and interests are
only recognised to the extent that it is probable that there will
be sufficient taxable profits against which to utilise the benefits
of the temporary differences and they are expected to reverse in
the foreseeable future.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the period(s) when the asset
and liability giving rise to them are realised or settled, based on
tax rates (and tax laws) that have been enacted or substantively
enacted by reporting date. The measurement of deferred tax
liabilities and assets reflects the tax consequences that would
follow from the manner in which the Consolidated Entity expects, at
the reporting date, to recover or settle the carrying amount of its
assets and liabilities.
Deferred tax assets and liabilities are offset when they relate
to income taxes levied by the same taxation authority and the
Company/Group intends to settle its current tax assets and
liabilities on a net basis.
Current and deferred tax for the year
Current and deferred tax is recognised as an expense or income
in profit or loss, except when it relates to items credited or
debited directly to equity, in which case the deferred tax is also
recognised directly in equity, or where it arises from the initial
accounting for a business combination, in which case it is taken
into account in the determination of goodwill or excess purchase
consideration.
(m) Goods and services tax
Revenues, expenses and assets are recognised net of the amount
of goods and services tax (VAT/GST) except:
(i) where the amount of VAT/GST incurred is not recoverable from
the taxation authority, it is recognised as part of the cost of
acquisition of an asset or as part of an item of expense; and
(ii) receivables and payables which are recognised inclusive of VAT/GST.
The net amount of VAT/GST recoverable from, or payable to, the
taxation authority is included as part of receivables or
payables.
Cash flows are included in the statement of cash flows on a
gross basis. The VAT/GST component of cash flows arising from
investing and financing activities which is recoverable from, or
payable to, the taxation authority is classified as operating cash
flows.
(n) Foreign currency transactions
Transactions in foreign currencies are translated to the
respective functional currencies of Group entities at exchange
rates prevailing at the dates of the transactions. Monetary assets
and liabilities denominated in foreign currencies at the reporting
date are retranslated to the functional currency at the exchange
rate at that date. The foreign currency gain or loss on monetary
items is the difference between amortised cost in the functional
currency at the beginning of the period, adjusted for effective
interest and payments during the period, and the amortised cost in
foreign currency translated at the exchange rate at the end of the
period.
Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are retranslated to the
functional currency at the exchange rate at the date that the fair
value was determined. Non-monetary items in a foreign currency that
are measured at historical cost are translated using the exchange
rate at the date of the transaction. Foreign currency differences
arising on retranslation are presented in profit or loss on a net
basis, except for differences arising on the retranslation of a
financial liability designated as a hedge of the net investment in
a foreign operation that is effective, which are recognised in
other comprehensive income.
(o) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the Company, excluding any costs
of servicing equity other than ordinary shares, by the weighted
average number of ordinary shares outstanding during the
period.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary
shares.
(p) Provisions
A provision is recognised if, as a result of a past event, the
Group has a present legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligations. Provisions are
determined by discounting the expected future cash flows at a rate
that reflects current market assessments of the time value of money
and the risks specific to the liability.
(q) Measurement of fair values
A number of the Group's accounting policies and disclosures
require the measurement of fair values, for both financial and
non-financial assets and liabilities. When measuring the fair value
of an asset or a liability, the Group uses market observable data
as far as possible. Fair values are categorised into different
levels in a fair value hierarchy based on the inputs used in the
valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities;
Level 2: inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a
liability might be categorised in different levels of the fair
value hierarchy, then the fair value measurement is categorised in
its entirety in the same level of the fair value hierarchy as the
highest level input that is significant to the entire
measurement.
The Group recognises transfers between levels of the fair value
hierarchy at the end of the reporting period during which the
change has occurred.
Further information about the assumptions made in measuring fair
values is included in the following notes:
Note 10 - financial assets at fair value through profit or
loss;
Note 19(b) - share based payment transactions; and
Note 24(b) - financial instruments.
(r) Government Grants
In the current year the Group has applied for and received
government support through the UK government Coronavirus Job
Retention Scheme (CJRS). The Group recognises government grants
only where it is reasonably certain that the Group will comply with
the conditions attached to the grant and it is reasonably likely
that the grant will be received. The CJRS is designed to compensate
for staff costs so the Group recognises grant funding in the period
necessary to match it with the corresponding staff costs. A grant
receivable as compensation for expenses already incurred is
recognised when it becomes receivable. The Group presents the
relevant expenses net of any grant income received (note 6(e)).
(s) Leases where the Group acts as lessee
The Group recognises assets and liabilities for all leases with
a term of more than 12 months, unless the underlying asset is of
low value. On entering a lease contract the Group recognises a
right-of-use asset representing its right to use the underlying
leased asset and a lease liability representing its obligation to
make lease payments. The right of use asset is measured as being
equal to the value of the lease liability at the inception of the
lease, plus the initial direct costs incurred and the estimated
costs for restoring the property to its original condition.
Depreciation on the right of use asset is charged on a
straight-line basis over the ten year period of the lease.
The lease liability in respect of the lease payments due to the
lessor is measured at each reporting date as the present value of
all future lease payments due. As the interest rate implicit in the
lease is not readily determinable the discount rate of 9.14% used
is the Group's incremental borrowing rate being the STB cost of
funds using an estimated 10 year interest rate swap at February
2013. The only lease held by the Group which is relevant to AASB 16
is for its office space at Oakland House, Manchester.
(t) New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Australian
Accounting Standards that are mandatory for the current reporting
period. Any new or amended Accounting Standards or Interpretations
that are not yet mandatory have not been early adopted. The
following Accounting Standards and Interpretations have been
adopted in the annual financial statements for the year ended 30
June 2022, but have not had a material effect on the Group:
Interest Rate Benchmark Reform - IBOR 'phase 2' (Amendments to
AASB 9, AASB 139, AASB 7, AASB 4 and AASB 16)
These amendments to various AASB standards are mandatorily
effective for reporting periods beginning on or after 1 January
2021. As the Group has no loans whose contractual terms are
affected by interest benchmark reform there was no impact on the
Group from the adoption of these amendments.
(u) Accounting policies available for early adoption not yet adopted
A number of new and revised standards issued by the AASB have
not yet come into effect. Below are those which are effective in
future accounting periods that the group has decided not to adopt
early.
The following amendments are effective for accounting periods
beginning on or after 1 January 2022:
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to AASB 137);
-- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to AASB 116);
-- Insurance Contracts - In June 2020, the AASB issued
amendments to AASB 17, including a deferral of its effective date
to 1 January 2023;
-- Annual Improvements to IFRS Standards 2018-2020 (Amendments
to AASB 1, AASB 9, AASB 16 and AASB 141); and
-- References to Conceptual Framework (Amendments to AASB 3).
In January 2020, the AASB issued amendments to AASB 101, which
clarify the criteria used to determine whether liabilities are
classified as current or non-current. These amendments clarify that
current or non-current classification is based on whether an entity
has a right at the end of the reporting period to defer settlement
of the liability for at least twelve months after the reporting
period. The amendments also clarify that 'settlement' includes the
transfer of cash, goods, services, or equity instruments unless the
obligation to transfer equity instruments arises from a conversion
feature classified as an equity instrument separately from the
liability component of a compound financial instrument. The
amendments were originally effective for annual reporting periods
beginning on or after 1 January 2022. However, in May 2020, the
effective date was deferred to annual reporting periods beginning
on or after 1 January 2023.
4. Critical accounting estimates and judgements
The preparation of the financial statements requires management
to make judgements, estimates and assumptions that affect the
reported amounts in the financial statements. Management
continually evaluates its judgements and estimates in relation to
assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements, estimates and assumptions on
historical experience and on other various factors, including
expectations of future events, management believes to be reasonable
under the circumstances. The resulting accounting judgements and
estimates will seldom equal the related actual results.
The judgements, estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are discussed below.
Revenue from contracts with customers
When recognising revenue in relation to the provision of
services to customers, the key performance obligation of the
consolidated entity is considered to be the point of delivery of
the service to the customer, as this is deemed to be the time that
the customer obtains the benefits and control of the service.
Principal vs agent
Judgement is exercised in relation to certain services that the
group was providing in relation to leases entered in to by an end
customer with the lessor (Secure Trust Bank ("STB")) as to whether
the group was acting as principal in the arrangement or as agent.
Up to the Group's purchase of the STB portfolio of leases on 31
January 2022, management have determined that having regard to the
contractual conditions with STB and the rights attaching to
consumer contracts for the leases entered in to by the end customer
with STB that the group was acting as agent and recorded commission
income from STB.
Financial guarantee contract
Financial guarantee contracts are initially recognised at fair
value and subsequently at the higher of the amount of expected
credit losses determined under AASB 9 and the amount initially
recognised less cumulative amortisation. The fair value of the
financial guarantee is a key estimate and is determined by way of
calculating the present value of the difference in net cash flows
between the contractual payments under the debt instrument and the
payments that would be required without the guarantee, or the
estimated amount that would be payable to a third party for
assuming the obligation. This has been determined from historic
data and forward looking estimates to determine expected default
rates. This fair value determines a financial guarantee premium
which is recognised as revenue over the term of the lease between
the end customer and STB. The financial guarantee contract with STB
was terminated on 31 January 2022.
Determination of variable consideration
Up to 31 January 2022 judgement was exercised in estimating
variable consideration which was determined having regard to past
experience with respect to the expected default rates where the
customer (STB) had the right to clawback from the Group's
commission income any amount of default on lease payments due from
the end customer under the financial guarantee contract. Revenue in
respect of this amount of commission income was only recognised to
the extent that it is highly probable that a significant reversal
in the amount of cumulative revenue recognised under the contract
will not occur when the uncertainty associated with the variable
consideration is subsequently resolved. On termination of the STB
Operating Agreement it became highly probable that a reversal of
any commission income recognised under the contract will not
occur.
Contract right income
A contract asset was recognised where the Group acted as agent
for the lessor (STB) during an end customer's minimum lease term
with STB and the Group have a contractual right to an inertia asset
at the end of this minimum lease term. Contract assets were
recognised as revenue accruing over the minimum lease term up to
the fair value of the inertia asset at the end of that minimum
lease term. The fair value is determined based on available market
data regarding expected returns for a similar risk asset and
discounted using a credit risk rate. On termination of the STB
Operating Agreement and purchase of the STB portfolio of leases the
Group derecognised the accrued contract right income and recognised
a finance lease receivable, including residual value, in respect of
the portfolio of leases acquired.
Estimation of useful lives of assets
The consolidated entity determines the estimated useful lives
and related depreciation and amortisation charges for its property,
plant and equipment and finite life intangible assets. The useful
lives could change significantly as a result of technical
innovations or some other event. The depreciation and amortisation
charge will increase where the useful lives are less than
previously estimated lives, or technically obsolete or
non-strategic assets that have been abandoned or sold will be
written off or written down.
A. Judgements
Information about judgements made in applying accounting
policies that have the most significant effects on the amounts
recognised in the consolidated financial statements is included in
the following notes:
Note 6 - commission income: whether the Group acts as an agent
in the transaction rather than as principal; and
Note 8 - leases: whether an arrangement contains a finance
lease.
B. Assumptions and estimation uncertainties
The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amount of assets and
liabilities within the next financial period are discussed
below:
Note 3(c) - Determination of consideration of separate performance obligation; and
Note 19(b) - measurement of share-based payments.
Fair Value of Investments
The Group's holding of 618,750 shares in Block is a Level 1
financial instrument with the publicly available share price giving
a transparent and reliable fair value.
5. Financial Risk Management
Overview
The Group has exposure to the following risks from the use of
financial instruments:
-- Credit risk;
-- Liquidity risk;
-- Market risk; and
-- Operational risk.
This note presents information about the Group's exposure to
each of the above risks, the objectives, policies and processes for
measuring and managing financial risks, and the management of
capital. Further quantitative disclosures are included throughout
this financial report.
The Board of Directors has overall responsibility for the
establishment and oversight of the risk management framework. The
Board has established the Audit and Risk Committee, which is
responsible for developing and monitoring risk management policies.
The Committee reports to the Board of Directors on its
activities.
Risk management policies are established to identify and analyse
the risks faced by the Group, to set appropriate limits and
controls, and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed to reflect the changes
in market conditions and the Group's activities. The Audit and Risk
Committee oversees how management monitors compliance with the
Group's risk management policies and procedures and reviews the
adequacy of the risk management framework in relation to the risks
faced by the Group.
Credit Risk
Credit risk refers to the risk that a counterparty or customer
will default on its contractual obligations resulting in financial
loss to the Group. The Group has adopted a policy of only dealing
with credit worthy counterparties as a means of mitigating the risk
of financial loss from defaults. The Chief Financial Officer and
Financial Controller have day to day responsibility for managing
credit risk within the risk appetite of the Board. Appropriate
oversight occurs via monthly credit performance reporting to
management and the Board.
Up to 31 January 2022 the trading subsidiaries had an obligation
to meet the cost of future bad debts incurred by its funders. The
funder deposits discussed below represented security for that
credit exposure. Following the purchase of the portfolio of leases
from STB on 31 January 2022 all leases are self-funded by the
Group. Further information is provided in Note 24(c).
To manage credit risk in relation to the origination of leases,
there was a credit assessment and fraud minimisation process
delivered through its patented SmartCheck system. The credit
underwriting system used a combination of credit scoring and credit
bureau reports as well as electronic identity verification and a
review of an applicant's details against a fraud database. The
Chief Financial Officer and Financial Controller monitor ongoing
credit performance on different cohorts of customer contracts. In
addition there exists a specialist collections function to manage
any delinquent accounts.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's
approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the
Group's reputation. The consolidated entity manages liquidity risk
by maintaining adequate reserve facilities by continuously
reviewing its facilities and cash flows. The Group ensures that it
has sufficient cash on demand to meet expected operational expenses
and financing subordination requirements.
Market risk
Market risk is the risk that changes in market prices, such as
foreign exchange rates, interest rates and equity prices will
affect the Group's income or the value of its holdings of financial
instruments. The objective of market risk management is to manage
and control market risk exposures within acceptable parameters,
while optimising return.
Currency risk
The Group's exposure to foreign currency risk is limited to the
cash balances held by the Australian parent ThinkSmart denominated
in Australian Dollars.
Interest rate risk
Exposure to interest rate risk on any corporate borrowings will
be assessed by the Board and, where appropriate, the exposure to
movement in interest rates may be hedged by entering into interest
rate swaps, when considered appropriate by management and the
Board.
Operational risk
Operational risk is the risk of direct or indirect loss arising
from a wide variety of causes associated with the Group's
processes, personnel, technology and infrastructure, and from
external factors other than credit, market and liquidity risks such
as those arising from legal and regulatory requirements and
generally accepted standards of corporate behaviour. Operational
risks arise from all of the Group's operations.
The primary responsibility for the development and
implementation of controls to address operational risk is assigned
to senior management within each business unit. This responsibility
is supported by the development of overall group standards for the
management of operational risk in the following areas:
-- Requirements for appropriate segregation of duties, including
the independent authorisation of transactions;
-- Requirements for the reconciliation and monitoring of transactions;
-- Compliance with regulatory and other legal requirements;
-- Documentation of controls and procedures;
-- Requirements for the periodic assessment of operational risks
faced, and the adequacy of controls and procedures to address the
risks identified;
-- Ethical and business standards; and
-- Risk mitigation, including insurance where this is effective.
Capital management
The Board's policy is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and to sustain
future development of the business. Management aims to maintain a
capital structure that ensures the lowest cost of capital available
to the Group. Management constantly reviews the capital structure
to ensure it achieves this objective.
For the purposes of capital management, capital consists of
share capital, reserves and retained earnings.
The Board assesses the Group's ability to pay dividends on a
periodic basis. At the AGM on 10 November 2021 shareholders
approved a return of capital of AUD $5,595,008 to shareholders (the
'Distribution') in two parts:
1. a capital reduction, pursuant to which the Company will
return 4.4618 cents per share (or depositary interest) to
shareholders (or depositary interest holders) ('Return of
Capital'); and
2. a special unfranked dividend of 0.7874 cents per ordinary
share (or depositary interest) - declared as attaching conduit
foreign income ('Dividend').
The return of capital and dividend had a record date of 10
November 2021 and were paid on 9 December 2021.
At the GM on 29 June 2022 shareholders approved a return of
capital of AUD $4,412,523 to shareholders (the 'Distribution') in
two parts:
1. a capital reduction, pursuant to which the Company will
return 3.5188 cents per share (or depositary interest) to
shareholders (or depositary interest holders) ('Return of
Capital'); and
2. a special unfranked dividend of 0.6210 cents per ordinary
share (or depositary interest) ('Dividend').
The return of capital and dividend had a record date of 1 July
2022 and were paid on 15 July 2022. Having been approved by
shareholders on 29 June 2022 the dividend has been accrued in the
financial statements for the year ending 30 June 2022.
6. Consolidated Statement of Profit and Loss
12 Months 12 Months
to to
30 June 30 June
2022 2021
GBP,000 GBP,000
Profit is arrived at after crediting/(charging)
the following items:
a) Revenue
Commission income 594 851
Extended rental income 1,284 1,566
Income earned from sale of inertia equipment 396 698
Outsourced services 843 863
Services revenue - insurance commission 82 226
Interest revenue - other entities 61 65
Fee revenue - customers 9 17
---------- ----------
3,269 4,286
---------- ----------
b) Other revenue
Finance lease income 207 62
---------- ----------
207 62
---------- ----------
Total revenue 3,476 4,348
---------- ----------
All revenue is generated in the UK from
the following products:
SmartPlan 2,496 3,205
Upgrade Anytime 69 147
Flexible Leasing 9 68
Other/non-product specific 902 928
---------- ----------
3,476 4,348
---------- ----------
c) Customer acquisition costs
Customer acquisition costs relate to commissions paid to our retail
partners together with sales and marketing expenses incurred during
the promotion of finance contracts to existing customers.
d) Cost of inertia assets sold
Cost of inertia assets sold is the write-off of inertia assets,
including that transferred from PPE Operating Lease assets when
the end customer terminates their lease agreement during secondary
period, upon sale of inertia equipment.
30 June 30 June
2022 2021
GBP,000 GBP,000
e) Other operating expenses
Employee benefits expense:
- Payments to employees (i) (1,448) (1,725)
- Employee superannuation costs (111) (109)
(1,559) (1,834)
Occupancy costs (174) (171)
Lease interest charge (10) (19)
Professional services (552) (758)
Finance charges (10) (92)
Losses arising from financial guarantee
contract (14) (104)
Other costs (385) (453)
--------- ---------
(2,704) (3,431)
--------- ---------
(i) Payments to employees are presented net of government grants
received through the UK government CJRS. In the year the Group
received payments of GBP478 (FY21: GBP30,629).
30 June 30 June
2022 2021
GBP,000 GBP,000
f) Depreciation and amortisation
Depreciation (400) (437)
Amortisation (402) (964)
--------- ---------
(802) (1,401)
--------- ---------
g) Impairment (losses)/gains
Impairment gains/(losses) finance leases
and receivables 13 (16)
Movement in provision for expected credit
losses (116) 57
(103) 41
--------- ---------
(h) Fair value (losses)/gains on financial
instruments
Fair value (loss)/gain (93,696) 71,267
(93,696) 71,267
--------- -------
In the year to 30 June 2022 fair value losses arose from the
Group's investment in 10% of Clearpay Finance Limited ("Cleapay").
On 14 January 2022 the Group exchanged its 10% holding in Clearpay
for 1,650,000 shares in Afterpay Limited ("Afterpay"). The shares
in Afterpay were subsequently exchanged for 618,750 shares in Block
on 1 February 2022 as a result of the acquisition of Afterpay by
Block.
In the year to 30 June 2021 fair value gains arose from the
revaluation of the Group's investment in 10% of Clearpay (see note
10.
(i) Other gains
Fair value gain on financial asset through
profit and loss - 1,450
- 1,450
------------------------------------------------------ ------
In the year to 30 June 2021 other gains arose on the settlement
of legal claims against Dixons as announced on 10 August 2020.
7. Income Tax
30 June 30 June
2022 2021
GBP,000 GBP,000
Amounts recognised in profit and loss
The major components of income tax expense are:
Current income tax expense (11) (17)
Total income tax expense (11) (17)
--------- ---------
A reconciliation between tax expense and the product of
accounting profit before income tax from continuing operations
multiplied by the applicable income tax rate is as follows:
Accounting (loss)/profit before tax (94,069) 71,681
--------- -----------
At the statutory income tax rate of 30% 28,221 (21,504)
Effect of tax rates in foreign jurisdictions (10,348) 7,885
Non-deductible expenses (1) (3)
Non-deductible (loss)/non-taxable gain (18,716) 13,541
Reversal of unrecognised deferred tax asset 844 81
Irrecoverable withholding tax (11) (17)
Income tax charge (11) (17)
--------- -----------
Tax receivable/(payable)
Current - -
The current tax asset/(liability) is recognised for income tax
receivable/(payable) in respect of all periods to date. The Group
has an unrecognised deferred tax asset of GBP0.1m at 30 June 2022
(30 June 2021: GBP1.1m) being mainly in respect of the estimated
GBP0.2m (30 June 2021: GBP4.4m) of tax losses carried forward at
the substantively enacted UK corporation tax rate of 25% (30 June
2021: 25%).
8. Finance lease receivables
30 June 30 June
2022 2021
GBP,000 GBP,000
Current
Gross investment in finance lease receivables 664 29
Unguaranteed residuals 522 24
Unearned future finance lease income (202) (6)
--------- ---------
Net lease receivable 984 47
Allowance for expected credit losses (118) (9)
--------- ---------
866 38
--------- ---------
Non-Current
Gross investment in finance lease receivables 35 -
Unguaranteed residuals 27 -
Unearned future finance lease income (10) -
-----
Net lease receivable 52 -
Allowance for expected credit losses (6) -
-----
46 -
-----
Balance at 1 July 38 446
Additions 1,516 -
Receipts in respect of lease receivable (746) (511)
Finance lease income 207 62
Impairment (loss)/gain (103) 41
------ ------
912 38
------ ------
All finance leases detailed above have a minimum lease term of 2
years, see note 3(h)(i) for further information on the accounting
policy for these finance leases and note 5 for further information
on financial risk management. See note 24(c) for detailed analysis
of the ageing of lease receivables and expected credit losses
recognised.
9. Other Current Assets
30 June 30 June
2022 2021
GBP,000 GBP,000
Prepayments 176 222
Insurance prepayments - 4
Accrued income - insurance commission (see
Note 12(i)) 55 154
Sundry debtors - -
231 380
--------- ---------
10. Financial assets at fair value through profit or loss
30 June 30 June
2022 2021
GBP,000 GBP,000
Investment in Clearpay Finance Limited - 125,000
Investment in Block Inc 31,304 -
31,304 125,000
--------- ---------
On 23 August 2018 the Group sold 90% of Clearpay to Afterpay.
The Group retained a 10% shareholding in Clearpay which was held as
an investment at fair value through profit or loss under AASB 9.
The investment in Clearpay was a level 3 financial instrument. The
Group engaged a third party global professional services firm to
value its retained shareholding in Clearpay at 30 June 2021 for
accounting purposes under AASB 9 in accordance with AASB 13 (Fair
Value Measurement). On 14 January 2022 Shareholders approved the
sale of the 10% shareholding in Clearpay in exchange for 1,650,000
shares in Afterpay. In August 2021 Block previously known as Square
Inc ("Square") and Afterpay announced the intention for Block to
acquire Afterpay in a deal which valued Afterpay at US$29 billion
(AU$39 billion). On 1 February 2022 Block completed the acquisition
of Afterpay resulting in the 1,650,000 Afterpay shares held by the
Group being exchanged for 618,750 shares in Block. Block is listed
on the New York Stock Exchange ("NYSE") and the Group's
shareholding is a level 1 financial instrument. At 30 June 2022
Block's share price was USD $61.46 per share.
11. Contract assets
30 June 30 June
2022 2021
GBP,000 GBP,000
Balance at 1 July 777 1,430
Recognised as revenue in period (i) 221 370
Recognised as customer acquisition cost
(ii) (169) (110)
Transferred to Plant & Equipment Operating
lease additions (338) (913)
Disposals (iii) (491) -
--------- ---------
- 777
--------- ---------
Contract asset revenue to be recognised
less than 1 year - 215
Contract asset revenue to be recognised
between 1 and 2 years - 71
Contract asset revenue to be recognised
between 2 and 3 years - 10
Contract asset revenue to be recognised
between 3 and 4 years - -
----
- 296
--------------------------------------------- ----
i) A contract asset is recognised where the Group act as agent
for the lessor (STB) during the minimum lease term and have a
contractual right to the inertia asset at the end of the minimum
lease term. Contract assets are recognised as revenue accruing over
the minimum lease term building up inertia asset (non-cash
consideration) over the minimum lease term.
ii) Customer acquisition costs are capitalised as an asset where
such costs are incremental to obtaining a contract between the
funder and the end customer, for which the Group receives
commission under the funder contract, and are expected to be
recovered. Customer acquisition costs are amortised on a
straight-line basis over the term of the contract.
iii) On 31 January 2022 the Group terminated the Operating
Agreement with STB including the transfer of the related lease
portfolio to the Group. On completion of the termination the
contractual conditions giving rise to the Contract Assets ceased to
exist and the balance of these assets were de-recognised by the
Group.
12. Other Non-Current Assets
30 June 30 June
2022 2021
GBP,000 GBP,000
Accrued income - insurance commission (i) 3 48
Deposits held by funders (ii) - 2,021
--------- ---------
3 2,069
--------- ---------
(i) Accrued income reflects brokerage commission earned from
making insurance arrangements on behalf of lessee's and is net of a
clawback provision. The clawback provision for each reporting year
has been estimated to be 30% based on historical experience and is
calculated on the gross commission receivable.
(ii) Up to 31 January 2022 deposits held by funders for the
servicing and management of their portfolios in the event of
default. On 8 February 2022, following termination of the Operating
Agreement the deposits were repaid to the Group net of
consideration for the purchase of the STB lease portfolio.
13. Plant and Equipment
Plant &
Plant & Office Equipment
Equipment Lease Right Operating
(UK) of Use Asset Lease Total
GBP,000 GBP,000 GBP,000 GBP,000
----------- -------------- ----------- ---------
Gross Carrying Amount
Cost or deemed cost
Balance at 30 June 2020 152 690 360 1,202
Transferred from contract
assets - - 917 917
Transferred to cost of inertia
assets sold - - (655) (655)
Additions 17 - - 17
Disposals (78) - (339) (417)
Balance at 30 June 2021 91 690 283 1,064
----------- -------------- ----------- ---------
Transferred from contract
assets - - 339 339
Transferred to cost of inertia - - - -
assets sold
Additions 41 - - 41
Disposals (49) - (567) (616)
Balance at 30 June 2022 83 690 55 828
Accumulated Depreciation
Balance at 30 June 2020 (102) (506) (134) (742)
Depreciation expense (35) (69) (333) (437)
Disposals 78 - 339 417
Balance at 30 June 2021 (59) (575) (128) (762)
----------- -------------- ----------- ---------
Depreciation expense (33) (69) (298) (400)
Disposals 49 - 383 432
Balance at 30 June 2022 (43) (644) (43) (730)
----------- -------------- ----------- ---------
Net Book Value
At 30 June 2021 32 115 155 302
----------- -------------- ----------- ---------
At 30 June 2022 40 46 12 98
----------- -------------- ----------- ---------
14. Intangible Assets
Contract Software Intellectual Total
rights Property
GBP,000 GBP,000 GBP,000 GBP,000
--------- --------- ------------- ---------
Gross carrying amount
At cost
Balance at 30 June 2020 441 4,369 359 5,169
Effect of movement in exchange
rate - - (11) (11)
Additions 8 115 - 123
Disposals (41) (2,755) - (2,796)
Balance at 30 June 2021 408 1,729 348 2,485
--------- --------- ------------- ---------
Disposals (15) (1,152) - (1,167)
Balance at 30 June 2022 393 577 348 1,318
--------- --------- ------------- ---------
Contract Software Intellectual Total
rights Property
GBP,000 GBP,000 GBP,000 GBP,000
--------- --------- ------------- ---------
Accumulated amortisation
and impairment
Balance at 30 June 2020 (75) (3,303) (358) (3,736)
Effect of movement in exchange
rate - - 9 9
Amortisation expense (139) (826) 1 (964)
Disposals 41 2,755 - 2,796
Balance at 30 June 2021 (173) (1,374) (348) (1,895)
--------- --------- ------------- ---------
Amortisation expense (142) (260) - (402)
Disposals 15 1,152 - 1,167
Balance at 30 June 2022 (300) (482) (348) (1,130)
--------- --------- ------------- ---------
Net book value
At 30 June 2021 235 355 - 590
--------- --------- ------------- ---------
At 30 June 2022 93 95 - 188
--------- --------- ------------- ---------
15. Interest in Subsidiaries
% of Equity
30 June 30 June
Interest in Subsidiaries Country of Incorporation 2022 2021
RentSmart Limited UK 100 100
ThinkSmart Insurance Services
Administration Ltd UK 100 100
ThinkSmart Financial Services
Ltd UK 100 100
ThinkSmart Europe Ltd UK 100 100
ThinkSmart UK Ltd UK 100 100
ThinkSmart Finance Group
Ltd UK 100 100
ThinkSmart Employee Share
Trust Australia 100 100
ThinkSmart LTI Pty Limited Australia 100 100
16. Trade and Other Payables, and Provisions
30 June 30 June
2022 2021
GBP,000 GBP,000
Trade and other payables 161 79
GST/VAT Payable 135 132
Accrued dividend payable 361 -
Other accrued expenses 386 517
--------- ---------
1,043 728
--------- ---------
Provisions
Annual leave 70 111
Long service leave 93 86
Risk Transfer cancellation and claims 4 5
--------- ---------
167 202
--------- ---------
Annual and long service leave
Balance at 1 July 197 245
Effect of exchange rate movement 9 (7)
Additional provisions made in the year 3 3
Amounts used during the year (46) (44)
--------- ---------
Balance at 30 June 163 197
--------- ---------
Risk Transfer cancellation and claims
Balance at 1 July 5 10
Additional provisions made in the year - -
Amounts used during the year (1) (5)
--------- ---------
Balance at 30 June 4 5
--------- ---------
17. Lease liabilities
30 June 30 June
2022 2021
GBP,000 GBP,000
Balance brought forward 149 242
Rental paid in period (113) (112)
Interest charged 10 19
--------- ---------
46 149
--------- ---------
30 June 30 June
2022 2021
GBP,000 GBP,000
Lease liabilities due within 12 months 46 103
Lease liabilities due greater than 12
months - 46
--------- ---------
46 149
--------- ---------
Undiscounted maturity analysis
Lease liabilities due up to 1 year 47 113
Lease liabilities due between 1 and 2
years - 47
Lease liabilities due between 3 and 5
years - -
Lease liabilities due over 5 years - -
--- ----
47 160
--- ----
18. Contract liabilities
30 June 30 June
2022 2021
GBP,000 GBP,000
Balance brought forward 742 1,327
Recognised as revenue in period (703) (585)
--------- ---------
39 742
--------- ---------
Contract liabilities to be recognised
as revenue within 12 months 39 410
Contract liabilities to be recognised
as revenue greater than 12 months - 332
--------- ---------
39 742
--------- ---------
19. Issued Capital and reserves
(a) Issued and paid up capital
30 June
30 June 2022 2021
GBP,000 GBP,000
106,587,814 Ordinary Shares fully paid (2021:
106,542,814) 7,862 10,413
------------- ---------
2022 2022 2021 2021
Number GBP000 Number GBP000
Fully Paid Ordinary Shares
Balance at beginning of the financial
year 106,542,814 10,413 106,509,994 13,164
Issue of ordinary shares 45,000 8 32,820 6
Return of capital to shareholders - (2,559) - (2,757)
Balance at end of the financial
period 106,587,814 7,862 106,542,814 10,413
------------ -------- ------------ --------
Ordinary Shares entitle the holder to participate in dividends
and the proceeds on winding up the Company in proportion to the
number of and amount paid on the Shares held. On a show of hands,
every holder of Ordinary Shares present in the meeting in person or
by proxy is entitled to one vote, and upon a poll each Share is
entitled to one vote. The Company does not have authorised capital
or par value in respect to its issued shares.
At the AGM on 10 November 2021 shareholders approved a return of
capital to shareholders. The return of capital had a record date of
12 November 2021 and was paid on 8 December 2021. The following
return of capital was paid by the Group for the year:
12 months 12 months
to to
30 June 30 June
2022 2021
GBP,000 GBP,000
2.40 pence per ordinary share (2021: 2.59) 2,559 2,757
---------- ----------
2,559 2,757
---------- ----------
(b) Share options - employee options
The Company has an ownership-based remuneration scheme for
Executives and senior employees. Each employee share option
converts to one ordinary share of ThinkSmart Limited on exercise
and payment of the exercise price. The options carry neither rights
to dividends nor voting rights.
Options issued in previous years and vested but not yet
exercised as at 30 June 2022:
1,679,532 options over ordinary shares were issued 21 December
2016 and exercisable at GBP0.1508, vested and exercisable on 21
December 2019 until 21 December 2026. The fair value of these
options at grant date was GBP0.0371. The value of these options has
been expensed over the vesting period in accordance with AASB
2.
The following reconciles the outstanding share
options/loan-funded shares granted under the employee share option
plan and loan-funded shares at the beginning and end of the
financial period:
Year ended 30 June Year ended 30 June
2022 2021
Weighted Weighted
average Number average
Number of exercise of options/loan exercise
options/loan price funded price
funded shares GBP shares GBP
Balance at beginning of the
financial year 1,724,532 0.1745 1,757,352 0.2200
Exercised during the financial
year (45,000) 0.1745 (32,820) 0.1745
Balance at the end of financial
year 1,679,532 0.1508 1,724,532 0.1745
--------------- ---------- ----------------- ----------
Exercisable at end of the
financial year 1,679,532 0.1508 1,724,532 0.1745
--------------- ---------- ----------------- ----------
The options and loan-funded shares outstanding at 30 June 2022
have an exercise price of GBP0.1508 (30 June 2021: GBP0.1745) and a
weighted average contractual life of 4 years (30 June 2021: 5
years).
(c) Dividends
The following dividends were declared and paid by the Group for
the year:
12 months 12 months
to to
30 June 30 June
2022 2021
GBP,000 GBP,000
0.43 pence per ordinary share (2021: 0.85)
paid in year 458 901
0.34 pence per ordinary share declared on 29
June 2022 and paid on 15 July 2022 361 -
---------- ----------
819 901
---------- ----------
(d) Nature and purpose of reserves
The Group's reserves are as stated in the consolidated statement
of changes in equity and represent the following:
Accumulated profit
Cumulative profit and loss net of distributions to owners.
Foreign currency translation reserve
The cumulative effect of movements in foreign exchange rates on
the translation of Group entities with a functional currency other
than the Group's presentation currency. These amounts are
recognised in other comprehensive income.
20. Notes to the Cash Flow Statement
(a) For the purposes of the cash flow statement, cash and cash
equivalents includes cash on hand and in banks and investments in
money market instruments. Cash and cash equivalents at the end of
the financial year as shown in the cash flow statement is
reconciled to the related items in the balance sheet as
follows:
as at as at
30 June 30 June
2022 2021
GBP,000 GBP,000
Reconciliation of cash and cash equivalents
Cash balance comprises:
* Available cash and cash equivalents 5,474 7,007
* Restricted cash 62 60
--------- ---------
5,536 7,067
--------- ---------
The Group's exposure to credit risk, interest rate and
sensitivity analysis of the financial assets and liabilities are
provided in Note 24.
(a) Reconciliation of the profit for the year to net cash flows from operating activities:
12 months 12 months
to to
30 June 30 June
2022 2021
GBP,000 GBP,000
(Loss)/Profit after tax (94,080) 71,664
Add back non-cash and non-operating items:
Depreciation 400 437
Amortisation 402 964
Impairment losses on finance lease receivables 115 (57)
Lease interest 10 19
Loss/(Gain) on Financial Instruments 93,696 (71,267)
Cost of inertia assets sold 184 655
(Increase)/decrease in assets:
Trade receivables, deposits held with funders
and other movements in lease assets 2,253 654
Finance lease receivable (989) 465
Contract asset recognised to revenue 439 (264)
Increase/(decrease) in liabilities:
Trade and other creditors (57) (466)
Contract liabilities (703) (585)
Other interest bearing liabilities - 23
Provisions (35) (53)
Net cash from operating activities 1,635 2,189
---------- ----------
21. Segment Information
The Group currently has one reportable segment which comprise
the Group's core business unit (UK). Head office and other
unallocated corporate functions are shown separately. For the
segment, the Board and the CEO review internal management reports
on a monthly basis. The composition of the reportable segment is as
follows:
UK:
- ThinkSmart Europe Ltd;
- RentSmart Ltd;
- ThinkSmart Insurance Services Administration Ltd;
- ThinkSmart Financial Services Ltd; and
- ThinkSmart UK Ltd.
Corporate and unallocated:
- ThinkSmart Limited.
Operating Segments
Information about reportable Corporate and
segments UK unallocated Total
For the year ended: June June June June June June
2022 2021 2022 2021 2022 2021
GBP,000 GBP,000 GBP,000 GBP,000 GBP,000 GBP,000
Revenue 3,269 4,286 - - 3,269 4,286
Other revenue 206 61 1 1 207 62
Total revenue 3,475 4,347 1 1 3,476 4,348
Customer acquisition cost (74) (258) - - (74) (258)
Cost of inertia assets sold (166) (335) - - (166) (335)
Other operating expenses (2,034) (2,782) (670) (649) (2,704) (3,431)
Depreciation and amortisation (802) (1,401) - - (802) (1,401)
Impairment (losses)/gains (103) 41 - - (103) 41
(Loss)/gain on Financial
Instruments (59,762) 71,267 (33,934) - (93,696) 71,267
Other gains - 1,450 - - - 1,450
Reportable segment profit/(loss)
before income tax (59,466) 72,329 (34,603) (648) (94,069) 71,681
--------- -------- ------------ --------- --------- --------
Reportable segment current
assets 3,760 4,181 34,194 3,359 37,954 7,540
Reportable segment non-current
assets 335 128,738 - - 335 128,738
Reportable segment liabilities 651 1,575 644 246 1,295 1,821
Capital expenditure 41 139 - - 41 139
22. Remuneration of Auditor
12 Months 12 Months
to June 2022 to June 2021
GBP GBP
Audit and review services:
Auditor of the Company:
Provided by BDO 110,297 124,791
-------------- ---------------
Audit and review of financial statements 110,297 124,791
The Group's auditors are BDO.
23. Commitments and Contingent Liabilities
June 2022 June 2021
GBP,000 GBP,000
Leases where Group acts as agent (not included
in the statement of financial position) - 2,583
Deposits held by funder - 2,021
Under the terms of the UK operating agreement with STB where STB
is the lessor, the Group was obliged to purchase delinquent leases
(contracts in arrears for 91 days) from the funder at the funded
amount. The Group entered into a financial guarantee contract with
STB for which the Group provided a deposit to support future
delinquent leases. Both the UK operating agreement and the
financial guarantee contract were terminated on 31 January 2022 at
which time the Group ceased to have any contingent liabilities.
The deposit held by funders was recognised in the prior year as
an asset on the Group's statement of financial position within
other non-current assets (see note 12).
24. Financial Instruments
(a) Interest rate risk
At the reporting date the interest rate profile of the Group's
interest bearing financial instruments were:
Carrying amount
June 2022 June 2021
GBP,000 GBP,000
Variable rate instruments
Cash and cash equivalents (note 20a) 5,536 7,067
Deposits held by funder (note 12) - 2,021
Net financial assets 5,536 9,088
---------- ----------
Sensitivity analysis
A change in 1% in interest rates would have increased or
decreased the Group's profit for continuing operations by the
amounts shown below. This analysis assumes that all other factors
remain constant including foreign currency rates.
June 2022 June 2021
GBP,000 GBP,000
Effect of 1% increase in rates 55 91
Effect of 1% decrease in rates (55) (91)
(b) Market risk
At the reporting date the profile of the Group's financial
instruments with a pubic share price and stock exchange listing
were:
Carrying amount
June 2022 June 2021
GBP,000 GBP,000
Financial assets at fair value through profit
or loss 31,304 -
Net financial assets 31,304 -
---------- ----------
Sensitivity analysis
A change in 1% in market prices would have increased or
decreased the Group's profit for continuing operations by the
amounts shown below. This analysis assumes that all other factors
remain constant including foreign currency rates.
June 2022 June 2021
GBP,000 GBP,000
Effect of 1% increase in market prices 313 -
Effect of 1% decrease in market prices (313) -
(c) Fair value of financial instruments
The carrying amounts of financial assets and financial
liabilities recorded in the financial statements are not materially
different to their fair values.
Fair value hierarchy
The financial instruments carried at fair value have been
classified by valuation method.
The different levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities;
Level 2: inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
Key assumptions in the valuation of the instruments were limited
to interpolating interest rates for certain future periods where
there was no observable market data. The majority of financial
assets and liabilities are measured at amortised cost. At 30 June
2022 the Group held the following financial instruments measured at
fair value through profit or loss:
-- 618,750 shares in Block with a fair value of GBP31,304,066
(2021: GBPnil). The holding in Block is a Level 1 financial
instrument.
At 30 June 2021 (prior year) the Group held a 10% shareholding
in Clearpay which was held as an investment at fair value through
profit or loss with a fair value of GBP125,000,000. In the year the
10% shareholding in Clearpay was disposed, see note 10. The holding
in Clearpay was a Level 3 financial instrument.
(d) Credit risk management
The maximum credit risk exposure of the Group is the sum of the
carrying amount of the Group's financial assets. The carrying
amount of the Group's financial assets that is exposed to credit
risk at the reporting date is:
June 2022 June 2021
Note GBP,000 GBP,000
Cash and cash equivalents 20(a) 5,536 7,067
Trade receivables 17 55
Loan and lease receivable (current) 8 866 38
Loan and lease receivable (non-current) 8 46 -
Insurance prepayment and accrued income
(current) 9 55 158
Insurance prepayment and accrued income
(non-current) 12 3 48
Deposits held by funders 12 - 2,021
6,523 9,387
---------- ----------
The carrying amount of the Group's financial assets that are
exposed to credit risk at the reporting date by geographic region
is:
June 2022 June 2021
GBP,000 GBP,000
Australia 3,825 3,278
UK 2,698 6,109
6,523 9,387
---------- ----------
The carrying amount of the Group's financial assets that are
exposed to credit risk at the reporting date by types of
counterparty is:
June 2022 June 2021
GBP,000 GBP,000
Banks (i) 5,536 7,067
Funders (ii) - 2,021
Insurance partners (iii) 58 206
Retail customers (iv) 912 38
Others 17 55
6,523 9,387
---------- ----------
(i) Cash and cash equivalents are held with banks with S&P ratings of A and AA-.
(ii) Deposits held with banks with S&P ratings of A and AA-.
(iii) In the current financial reporting period, 100% (prior
year: 100%) of the prepayment relates to RentSmart Limited's (UK)
upfront insurance premium payments to Allianz on behalf of the
rental customer. The premiums are recovered from the customer on a
monthly basis. In the event the customer defaults, the policy is
cancelled and Allianz refunds the unexpired premium. Allianz holds
an AA rating with S&P Insurer Financial Strength and
Counterparty Credit Rating.
(iv) Retail customers are assessed for creditworthiness against
a bespoke credit scorecard based on information drawn from a
selection of industry sources.
The ageing of the Group's trade and lease receivables at the
reporting date was:
Gross Impairment Gross Impairment
June June 2022 June June 2021
2022 GBP,000 2021 GBP,000
GBP, GBP,000
000
Not past due 988 76 66 -
Past due 0-30 days 38 24 19 -
Past due 31-120 days 21 18 10 8
Past due 121-365 days 16 16 17 11
--------------------- -------------------------- -------------------- --------------
1,063 134 112 19
--------------------- -------------------------- -------------------- --------------
Impairment is measured using a 12-month ECL method unless the
credit risk on a financial instrument has increased significantly
since initial recognition in which case the lifetime ECL method is
adopted. For receivables, a simplified approach to measuring
expected credit losses using a lifetime expected loss allowance is
available.
The Group applies the simplified approach to providing for
expected credit losses (ECLs) under AASB 9, which permits the use
of the lifetime expected loss provision for trade and lease
receivables. The Group makes specific provisions for lifetime
expected credit losses against these receivables where additional
information is known regarding the recoverability of those
balances. For the remaining trade and lease receivables balances,
the Group has established an ECL model using provision matrices for
recognising ECLs on its trade receivables, based on its historical
credit loss experience over a two year period, adjusted (where
appropriate) for forward-looking factors.
The movement in the allowance for impairment in respect of trade
and lease receivables during the year was as follows:
June 2022 June 2021
GBP,000 GBP,000
Balance at 1 July 19 79
Impairment loss recognised 135 (44)
Bad debt written off (20) (16)
Balance at 30 June 134 19
---------- ----------
Trade and lease receivables are reviewed and considered for
impairment on a periodic basis, based on the number of days
outstanding and number of payments in arrears, adjusted (where
appropriate) for forwards looking factors.
(e) Currency risk management
Exposure to currency risk
The Group's exposure to foreign currency risk is limited to the
cash balances held by the Australian parent ThinkSmart Limited
denominated in Australian Dollars and the financial assets listed
on the NYSE and denominated in US Dollars:
June 2022 June 2021
GBP,000 GBP,000
Cash and cash equivalents 2,832 3,277
10% strengthening of AUD (283) (328)
10% weakening of AUD 283 328
June 2022 June 2021
AUD/GBP year end exchange rate 0.5671 0.5429
June 2022 June 2021
GBP,000 GBP,000
Financial assets listed on NYSE 31,304 -
10% strengthening of USD (3,130) -
10% weakening of USD 3,130 -
June 2022 June 2021
USD/GBP year end exchange rate 0.8232 0.7221
(f) Liquidity risk management
The following are the contractual maturities of financial
liabilities, including estimated interest payments and excluding
the impact of netting agreements:
June 2022 June 2021
GBP,000 GBP,000
Trade and other payables 563 728
Lease liabilities 46 149
609 877
---------- ----------
Less than 1 year 609 831
1-2 years - 46
---- ----
609 877
---- ----
25. Related Party Disclosures
The following were Key Management Personnel of the Group at any
time during the reporting period and unless otherwise indicated
were Key Management Personnel for the entire period:
Executive Chairman
N Montarello
Executive Directors
G Halton (Chief Financial Officer)
Non-Executive Directors
P Gammell
D Adams
The Key Management Personnel remuneration included in 'employee
benefits expense' in Note 6(e) is as follows:
12 months 12 months
to June to June
2022 2021
GBP GBP
Short-term employee benefits 404,080 414,690
Post-employment benefits 15,188 14,403
Other long-term benefits 2,909 2,958
422,177 432,051
---------- ----------
Business expenses incurred by KMP's and
reimbursed by the Company - -
---------- ----------
26. Subsequent Events
Scheme Implementation Deed
On 29 July 2022 the Company announced that it has entered into a
binding Scheme Implementation Deed with Tuscan Equity Pty Ltd
("Tuscan Equity") under which Tuscan Equity would acquire the
entire issued share capital of ThinkSmart pursuant to a scheme of
arrangement under the Australian Corporations Act 2001 (Cth) ("the
Scheme").
Tuscan Equity is a company limited by shares that was
incorporated in Australia for the purposes of the Scheme and is
wholly owned and controlled by Ned Montarello, ThinkSmart's
Executive Chairman, CEO, founder and current 29.4% shareholder
(29.94% on a fully diluted basis including all vested but currently
unexercised share options). As such, an Independent Board Committee
("IBC"), comprising all of the directors of ThinkSmart other than
Mr Montarello, was established to consider the proposal for the
Scheme on behalf of ThinkSmart.
Under the Scheme, Tuscan Equity will acquire 100% of
ThinkSmart's issued shares, including the shares owned and/or
controlled by Mr Montarello. In exchange, ThinkSmart shareholders,
other than Mr Montarello and entities he controls ("ThinkSmart
Independent Shareholders"), will be entitled to receive cash
consideration equal to the proceeds realised from the post-Scheme
implementation sale on the New York Stock Exchange ("NYSE") of the
proportion of the 618,750 shares in Block Inc ("Block") held by
ThinkSmart attributable to their shareholding in ThinkSmart (net of
their proportion of sale fees, which are expected to be
approximately 0.5% of the gross proceeds from the sale of the Block
shares held by ThinkSmart and after conversion into Pounds Sterling
or Australian dollars (as applicable)).
Under the Scheme, Tuscan Equity will also acquire all of the
ThinkSmart shares held by Mr Montarello and entities he controls in
exchange for shares in Tuscan Equity, or if Mr Montarello so
elects, part or all of Mr Montarello's shares in ThinkSmart may be
acquired by Tuscan Equity for cash consideration, in which case he
will receive the same cash consideration as the ThinkSmart
Independent Shareholders funded by a proportionate increase in the
number of Block shares that will be sold by ThinkSmart post-Scheme
implementation.
The cash consideration to be paid under the Scheme will be
determined shortly following implementation of the Scheme when the
relevant number of Block shares owned by ThinkSmart are sold on the
NYSE. The number of Block shares sold will be that percentage of
ThinkSmart's 618,750 Block shares that is equal to the percentage
of shares in ThinkSmart held by ThinkSmart Independent Shareholders
together with any shares Mr Montarello elects to sell to Tuscan
Equity for cash consideration, rounded to the nearest whole number
of Block shares.
The actual cash consideration received by ThinkSmart Independent
Shareholders for their ThinkSmart shares (and Mr Montarello for any
ThinkSmart shares he owns or controls and which he elects to sell
to Tuscan Equity for cash consideration) will be determined based
on the actual sale price achieved for the relevant number of Block
shares sold by ThinkSmart on the day they are sold (net of sale
fees and after currency conversion) and will therefore not be known
until after the Scheme has been implemented. By way of example, the
Block closing share price on the NYSE on 21 July 2022 was US$74.76.
If the Block shares were sold for US$74.76 per share and the sale
fees equated to 0.5% of the proceeds, ThinkSmart shareholders who
receive the Scheme consideration in Pounds Sterling (being holders
of depositary interests and holders of ThinkSmart shares who elect
to receive Pounds Sterling) would receive approximately 36.01 pence
per ThinkSmart share (assuming 1.1992 USD: 1 GBP). This compares to
the ThinkSmart closing share price on AIM on 21 July 2022 of 25.00
pence and
would represent a 44.0% premium to that closing price of
ThinkSmart shares.
Holders of ThinkSmart Depositary Interests will be paid the
Scheme consideration in Pounds Sterling, while holders of
ThinkSmart shares who do not hold via Depositary Interests will
receive the Scheme consideration in Australian dollars but can make
an election to receive Pounds Sterling.
Holders of the 1,679,532 ThinkSmart employee share options,
which include Mr Montarello, Mr Halton and another member of
ThinkSmart's executive team, will be able to exercise their options
prior to the Scheme taking effect (these options all being
currently vested and free of any conditions to their exercise). Any
shares issued on exercise of share options will also be acquired by
Tuscan Equity under the Scheme.
Following implementation of the Scheme, ThinkSmart will be
controlled by Mr Montarello. Following the subsequent payment of
the Scheme consideration by Tuscan Equity to satisfy its
obligations under the Scheme, Tuscan Equity, via its 100 %
ownership of ThinkSmart, will hold the remainder of the Block
shares that are not sold, as well as ThinkSmart's remaining
business operations which comprise ThinkSmart's legacy leasing
business, which is undergoing a managed wind down, and the
provision of an outsourced call centre customer support service to
support the Clearpay business that was previously owned by
ThinkSmart.
The implementation of the Scheme is subject to shareholder,
regulatory and Court approval.
Shareholder return
At the General Meeting held on 29 June 2022 shareholders
approved a return of capital of 3.5188 cents per share together
with a special dividend of 0.6210 cents per share. Both the return
of capital and special dividend were paid to shareholders on 15
July 2022. Having been approved and declared on 29 June 2022 the
special dividend was accrued in the financial statement of the
Group for the year ending 30 June 2022.
27. Earnings per Share
12 months 12 months
to June to June
2022 2021
GBP,000 GBP,000
(Loss)/Profit after tax attributable to
ordinary shareholders (94,080) 71,664
30 June 30 June
2022 2021
Number Number
Weighted average number of ordinary shares
(basic) 106,587,814 106,518,740
Effects of dilution from share options 1,679,532 1,724,532
------------ ------------
Weighted average number of ordinary shares
(diluted) 108,267,346 108,243,272
------------ ------------
30 June 30 June
Earnings per share 2022 2021
Basic earnings per share (pence) (88.27) 67.28
Diluted earnings per share (pence) - continuing
operations (88.27) 66.21
28. Parent entity information
Set out below is the supplementary information about the parent
entity.
Statement of profit or loss and other comprehensive income
June 2022 June 2021
GBP,000 GBP,000
Profit/(loss) after tax 26,357 (319)
Total comprehensive income 26,357 (319)
Statement of financial position
June 2022 June 2021
GBP,000 GBP,000
Total current assets 2,890 3,359
---------- ----------
Total assets 36,892 10,137
---------- ----------
Total current liabilities 644 246
---------- ----------
Total liabilities 644 246
---------- ----------
Equity
Issued share capital 7,862 10,413
Accumulated profits 28,386 (522)
---------- ----------
Total equity 36,248 9,891
---------- ----------
Guarantees entered into by the parent entity in relation to the
debts of its subsidiaries
The parent entity has provided third party guarantees in
relation to the debts of its subsidiaries. No deficiencies of
assets exist in any of these subsidiaries.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June
2022 and 30 June 2021.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant
and equipment as at 30 June 2022 and 30 June 2021.
Significant accounting policies
The accounting policies of the parent entity are consistent with
those of the consolidated entity, as disclosed in note 1, except
for the following:
-- Investments in subsidiaries are accounted for at cost, less
any impairment, in the parent entity;
-- Investments in associates are accounted for at cost, less any
impairment, in the parent entity; and
-- Dividends received from subsidiaries are recognised as other
income by the parent entity and its receipt may be an indicator of
an impairment of the investment.
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END
FR SFFFALEESELU
(END) Dow Jones Newswires
September 15, 2022 02:00 ET (06:00 GMT)
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