Big profit increase for ThinkSmart

ThinkSmart (ASX:TSM), an international computer and office equipment financing company, reported a record full-year EBITDA (pre IPO and U.S. costs) of $11.3 million for the year ended 31 December 2008, up from $8.3m in the previous corresponding period. The results exceeded the company’s recent profit guidance.

Total revenue rose 7% to $38.9 million with gross margin increasing 7%. ThinkSmart declared a fully-franked final dividend of 1.5 cents per share, representing a 22% dividend yield for the full year.

“This is a pleasing and solid result given the current global economic climate,” said ThinkSmart Founder and CEO, Ned Montarello. “Our business has proven exceedingly resilient, and traded well through these challenging times.

“We have had strong customer demand which is evidenced in markets like the UK where, despite our partner’s retail sales being in double digit decline, we have experienced a 10% like-for-like (LFL) increase in demand as small businesses increasingly look to solutions such as ours to help them sustain their cash flow.

Locally in Australia, JB Hi-Fi and Dick Smith continue to perform well.”

“Margins are up, and our recurring inertia income, which is received on the expiry of customer contracts continues to exceed forecasts.”

Mr Montarello said that despite most of the downturn for retail trade in Europe having occurred in the last half of the calendar year, ThinkSmart had achieved a 33% growth in EBITDA for that period over the same time in the previous year.

“We finished off 2008 with strong EBITDA growth and have seen a solid LFL growth for January. Although we expect 2009 to be flat with regard to customer acquisition, we have a positive outlook for EBITDA in 2009.

“Operationally, we are net debt free; have managed our cost base; and are aggressively pursuing market share gains within our European territories where we have a real opportunity to increase our retail distribution channels.


“Our strategy is to align with market leading, international retailers to meet the finance needs of small businesses shopping for technology in their stores. It’s a niche that we believe we are leading globally. While we have not scheduled to expand in to any new territories during 2009, our clear strategy is to continue to grow market share in all of our existing territories, both organically and through the establishment of new retail partnerships.”

ThinkSmart is a leading international financial services company that is focused on the delivery of B2B finance products through the retail environment. The business currently operates with market leading retailers and financial institutions in the UK, Spain, Italy, France, Australia and New Zealand where it has built a reputation for processing high volumes of low value business finance transactions both quickly and efficiently.

Source: proactiveinvestors.com