2012 Full Year Results Announcement

2012 Full Year Results Announcement

ThinkSmart Posts Profit For 2H12, Forecasts Full Year Profit In 2013 And Makes Good Progress With New Payment Plan Product, FIDO

Key highlights for the year ended 31 December 2012

  • Financial results improve significantly in 2H12 with a return to profit.
  • Outlook reaffirmed with significant double digit growth in new business volumes and a return to full year profit in 2013.
  • As previously forecast, the Group posted a FY loss after tax of $1.4 million.
  • Strong results for the UK business with record levels of new business, up 58% year on year.
  • Transformational year for the Australian business with foundations for growth now in place.
  • Good progress with new payment plan product, Fido – extended agreement with JB Hi-Fi marks a key milestone in the evolution of the product.
  • Improved Group operational efficiency with enhanced asset quality and lower fixed costs following a restructure.
  • Total cash assets of $18.6m, with $6.0m in available cash at 31 December 2012, and no corporate debt.

ThinkSmart Limited today announced a return to profit in the second half of 2012 and reaffirmed guidance for a full year profit in 2013. As previously forecast, the Group reported a full year loss after tax in 2012 of $1.4 million.

ThinkSmart advises that it expects significant double digit growth in new volumes in 2013 with growth underpinned by the first full year of trading for Fido, the Group’s new payment plan product, and continued good momentum in the UK.

“The financial performance of the Group has turned a corner with the return to profit in the second half of 2012. The calendar year just passed was a year of transformation and the foundations have been laid for sustained growth. We are pleased with the progress made in the UK and with Fido and look forward to building on this momentum in 2013″ said ThinkSmart’s Executive Chairman and Chief Executive Officer Ned Montarello.

The UK business recorded its highest ever level of new originations, up 58% on 2011. This strong top line growth was complemented by a scalable model and good cost management.

“The UK business has performed well with strong growth across all key metrics. The partnership with Dixons continues to be mutually beneficial and Dixons’ market position continues to improve. Infinity is a B2C rental product which bundles services from both ThinkSmart and Dixons and volumes have more than doubled in 2012,” said Mr Montarello.

ThinkSmart’s full year financial result reflects a difficult year for the Australian business, with an ambitious transformation agenda (including the move to a securitisation platform) exacerbated by a challenging trading environment. The Group also commenced lease accounting for rental product sales in Australia, with income now spread over the life of a contract rather than recognised up front, as was the case in 2011.

Group Assets Under Management were flat as growth in the UK was offset by a reduction in new business from RentSmart, ThinkSmart’s rental product in Australia. RentSmart volumes were adversely impacted by difficult trading conditions for electronic retailers. In light of these reduced volumes the Group completed a restructure in November and reduced headcount by around 12%, mostly in Australia.

“The foundations for growth in the Australian business are now in place,” said Mr Montarello. “The launch of Fido was an important part of the Group’s transformation agenda and we have been pleased with progress so far.”

“We expect significant volume growth from Fido in 2013 and the acquisition of new retail partners is a key priority for us. After a successful promotion in January, we have included Fido in an extended agreement with JB Hi-Fi and this marks an important milestone in the product’s development.”

“In the past year we have delivered strong growth in the UK and built a solid platform for future growth in Australia. In 2013, we expect to maintain the momentum in the UK and build on the progress made in Australia to deliver significant double digit volume growth and a full year profit.”

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