11/06/2009 - 00:00

ThinkSmart thrives in downturn

11/06/2009 - 00:00

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FINDING a business that trades well in a weak economy sounds like a great attraction for investors, and West Perth based ThinkSmart reckons it fits the bill.

FINDING a business that trades well in a weak economy sounds like a great attraction for investors, and West Perth based ThinkSmart reckons it fits the bill.

"In a recessionary type environment, the argument is that our product should be stronger, because businesses want to preserve their cash and that's exactly what they're doing," executive chairman Ned Montarello told WA Business News.

"We haven't been trading any stronger than what we are now and 2008 was our strongest year."

Established in 1996, ASX-listed ThinkSmart is an international computer and office equipment finance company with a market capitalisation of about $50 million.

Mr Montarello said its business model delivered inertia profit.

"If we stopped operating today we have 75,000 contracts that will continue to finish their lifespan in the next three to four years," he said.

"That's about $60 million if we did nothing but manage those contracts.

"Our business model has held us in very good stead in a recessionary environment."

The business, which operates in six countries and has an office in the UK, partners with retailers and financial institutions in Europe and Australasia, where it has built a reputation for rapidly processing high volumes of low-value business finance transactions.

"The whole premise behind the business is there is an enormous appetite for small businesses to purchase technology," Mr Montarello said.

"Here in Australia alone there are 2 million small businesses which spend somewhere between $4,000 to $5,000 every year on buying new equipment for their business, whether it be laptop, scanner, printer, whatever.

"Rather than paying $3,000 for a laptop, because when it comes to a small business cash is king, they would much prefer to pay $100 a month, because it's a tax deductible item as they are only paying $100 a month they are able to claim all of that.

"Then at the end of the rental contract they have the option to buy the equipment at fair market value.

The company recently announced that it would achieve positive growth in its 2009 earnings (before interest, tax, depreciation and amortisation) over the $11.3 million result it reported in 2008.

The key driver was the Australian market trading above expectations.

Mr Montarello said the company remained competitive by forging long-term partnerships with major retailers and financial institutions.

ThinkSmart this month executed a new two-year wholesale funding agreement with banking group Société Générale in Spain, supporting the company's recent offensive to further grow its distribution channels globally.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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