ThinkSmart Reaffirms Growth – Posts Record First Half Net Profit

15 Aug ThinkSmart Reaffirms Growth – Posts Record First Half Net Profit

• Net Profit up 5% to $2.9m
• Strong UK performance – new business volumes up 86%
• Continuing to deliver ongoing, sustainable cost efficiencies
• On track for growth in 2011

ThinkSmart Limited (ASX:TSM), a leading international point of sale financing company, has posted a record  first half net profit driven by a strong performance by the group’s UK operations and ongoing, sustainable cost efficiencies.

ThinkSmart’s Net Profit after Tax (NPAT) for the six months to June 30 rose 5% to $2.9 million, the group’s fourth consecutive year of growth since listing. NPAT would have risen 15% if the exchange rate for the Australian dollar had been the same as for the previous corresponding period.

“This is a solid result considering the challenging retailing market. We have shown an excellent track record in growing the business during tough economic times. We remain well positioned for growth in 2011,” said ThinkSmart Executive Chairman and CEO, Ned Montarello.

“Our goal, as previously stated, is to cement ThinkSmart as a leading international provider of point-of-sale finance, and we believe we are delivering on that for our shareholders.

“QuickSmart, our proprietary and Australian patented web based application and approval platform, will allow us to continue to benefit from the growth in on line consumer activity. We recently extended contracts with our leading Australian and UK retail partners, and we have transformed our funding platform to deliver long-term growth.”

In the UK, ThinkSmart boosted revenue by 26%, with Earnings Before Interest and Tax and Depreciation (EBITDA) rising 44%. ThinkSmart launched its Infinity Consumer rental proposition in November 2010 through its long-term partner Dixons Retail Plc, the UK’s largest consumer electrical retailer. Infinity has underpinned an 86% year on year increase in new business volumes in the UK compared to 1H 2010.

“The early results from our UK expansion are encouraging. By offering a consumer proposition in the UK we have the potential to access four times the current available UK market. These results have been achieved in difficult trading conditions which we expect to continue for the remainder of the year” said Mr Montarello. ThinkSmart has been in the UK for more than eight years providing Business-to-Business rental finance.

Despite the current soft Australian retailing landscape, EBITDA in Australia rose 13% to $5.2 million, achieved via a 7% rise in revenue to $13.5 million and the sustainable operating efficiencies delivered via QuickSmart. “The pending integration of Point of Sale capability with our key Australian retail partners will further increase our operational efficiencies and will drive increased transaction volumes,” said Mr Montarello.

“We are aiming to move to 100% electronic processing including e signatures, which will allow us to expand our distribution reach with existing retail partners as well as create new online and multi channel retailer relationships,” he said.

Mr Montarello said the growth path for ThinkSmart remains clear and unchanged:

• Expanding our accessible market through our new services based consumer rental proposition into new and existing markets;
• Introducing new products in existing markets; leveraging our best in class patented QuickSmart online system and our new funding platform;
• Further expanding our online and multi channel retailer network.

“We currently have 2 new products scheduled for release over the next six months.  This will see ThinkSmart diversify our category positioning as well as expand our market place,” said Mr Montarello.

In October 2010, ThinkSmart launched its global funding transformation program to be in a stronger position to capture growth opportunities. ThinkSmart has already secured $160 million in additional funding capacity across Australia and the UK, which along with existing capacity could settle three times 2010 business volumes in 2011 and beyond.

“These funding platforms will support our projected growth plans well into the future as we increase our product range and expand our retailer network,” said Mr Montarello.