ThinkSmart AGM Market Update

21 May ThinkSmart AGM Market Update

ThinkSmart Limited (ASX:TSM), an international computer and office equipment financing company, will provide a full update on its growth strategies at its Annual General Meeting in Perth today.

ThinkSmart Executive Chairman and CEO, Ned Montarello, said:

“During FY 2010, ThinkSmart is maintaining its target of a 20% growth in EBITDA, weighted to the second half, through a set of strategies that will see us continue to grow our distribution channels, improve our core product offerings and improve our product delivery.

“Our business is executing well against these strategies and we have delivered strong like-for-like EBITDA growth through the first quarter of this calendar year.

“More than 95% of the Group’s EBITDA is generated from its Australian and UK operations.

“Australia has notably achieved a significant like-for-like gain in applications as a result of our enhanced consumer rental product.  The business delivered  above EBITDA expectation in the first quarter, with April and May, whilst softer, still positive to budget and sound year-on-year growth.

“In the UK we are seeing the benefits of our new funding agreement with Secure Trust Bank and a rebuilding of the business channel in the PC World stores which has contributed to a particularly strong May after a subdued first four months.

“PC World’s owners, DSG International, last week reported that second half sales were up 8% for the group.  In addition, it also plans to accelerate its Megastore and 2-in-1 format store openings which will further extend our reach this year,” said Mr Montarello.

DSG dominates the UK high street though its PC World and Currys chains which have over 700 stores combined and reported sales of over A$7bn in 2009.

“Across mainland Europe we’ve achieved strong like-for-like growth off a low base in Spain with our expanded distribution channels.  In Italy we expect to quickly see the benefits of the addition of the 200 store Computer Discount chain to our retailer mix when it launches next month.

“Although these markets currently account for less than 5% of our EBITDA, we are able to operate in them by leveraging our low cost operating base in the UK.

“We have strong, secure funding and retail relationships and these territories present as solid opportunities for us to continue our strategy of expanding our distribution channels to position the business well for a future recovery in European markets.”

Earlier this week, ThinkSmart signed a five year, exclusive agreement with DSG International to offer rental finance to UK consumers which will lay the foundations for continued strong growth in 2011.

“We believe the opportunity to emulate our Australian business and expand into consumer rental in the UK has the potential to increase our UK market fourfold which would clearly be game changing for us.

“We are targeting a launch for the second half of this year, the timing of which is dependent on the completion of an IT project to integrate our application system into DSG’s “Eclipse” till system and upon securing a consumer funder to underwrite the customer contracts.

“Negotiations with prospective funders are underway and the IT integration is on track to be completed in September.

“Management and the board remain confident that our current strategies will see us meet our 2010 targets assuming that there is not a material deterioration in macroeconomic settings in Australia or the UK.  We will be going into 2011 excited by the scale of the opportunity before us.”