ThinkSmart Market Update

19 Dec ThinkSmart Market Update

ThinkSmart Focuses On Profitable Operations In Europe & Australia; Postpones U.S New Business To Drive Sustained EBITDA Performance
ThinkSmart Limited (ASX:TSM), an international computer and office equipment financing company, today said it will focus group resources on growth opportunities within its profitable operations in Europe and Australia in order to sustain a solid EBITDA performance in 2009. This strategy will coincide with the company postponing the writing of new business in the U.S.

“Uncertainty about the length and depth of the U.S. downturn, restrictive credit conditions and the continuing volatility of currency exchange rates has led us to the decision to cease to write any new business in the U.S. for the time being,” said ThinkSmart founder and CEO, Ned Montarello. “We will focus our resources on our more profitable, accessible territories and partnerships in Europe and Australasia where we see opportunities to gain market share through this downturn.

“Our relationships remain open in the U.S. with a view to re-engaging when trading conditions improve.”

Mr Montarello said the company’s U.S. operations will not incur costs in 2009.

Moreover, because of ThinkSmart’s resilient business model the company will continue to be supported by strong and reliable cash flows from both insurance income and inertia income which is generated from contracts expiring.  These revenues provide a significant buffer against any further impact of volatile retail trading conditions. Providing guidance on ThinkSmart’s financial year end on 31^st December, Mr Montarello said the business expected to achieve a 32% like-for-like increase in EBITDA for FY08 of $11m before allowing for operating costs of A$2.7m and exit costs of A$790k associated with its U.S. operations.

“In the overall context of the ThinkSmart business we’ve experienced good growth on FY2007, and we expect a solid performance in 2009 thanks both to our reliable income streams and the continued opportunities for growth in our established, profitable, and growing territories in Europe and Australia. We are net debt free and well positioned to perform,” said Mr Montarello.

“However, while demand for our product has never been stronger than in 2008, we, along with a vast number of other companies, have felt the impact of declining customer credit quality around the globe in the fourth quarter. In preparation for a worsening economic environment and these customer credit conditions we have adopted a tighter credit acceptance criteria in Europe and have managed overheads to largely mitigate that impact.”