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indeed, the value of TSL's investment in Clearpay will clearly continue growing from here and it would be a consideration for AP/Square to buy out their stake at some point, however, TSL may consider it beneficial to let it run on , so increasing value to 160p+ on current view or substantially higher if growth continues in the BNPL mkt as expected....Square/AP will have to make TSL a very attractive offer I would assume to tempt them to hand over their stake..TSL shareholders should benefit substantially either way ...
Have I misinterpreted Q1 Calendar 2022? I took this to mean spring time 2022. If so, plenty of time to increase the take out valuation and/or a new bidder to materialise. APT still well below year high
It could also become contested?
I'm holding and will await the news that it will be acquired. The only risk I see is that the Square acquisition of Afterpay doesn't go ahead for whatever reason.
I'm not selling till 150 at least:). Why sell earlier?
I agree. This is based on trading to 30/6/21. We will have another 9month growth to the earliest time of the purchase and in addition the dynamics are in the UK's favour
ST analysed scenarios and predicts 164p take out before long. I think it could be more. Bnpl growing fast
Use the Black–Scholes model to see the difference
..sum-of-the-parts valuation of 164p a share for TSL's own shares'....upside just increased further
Yet again they have noted in the notes that the afterpay board have put in the liability at aud99.9mil. Some big difference between the two (125m gbp is roughly double) - someone’s telling porkie pies
I wish they’d provide clarity on what is likely to happen to the 3.5% esop share-is it likely to all be achieved (assume so as the company is booming)-does Thinksmart get any benefit from this etc?
excellent results today, no debt, huge increase in profit from CP investment, cash £7m and further upside remains.....next target 140p+
Profit after tax up 35% to £71.7 million (FY20: £53.0 million) driven by a £71.3 million non-cash fair value gain on the independent valuation(2) of the Group's retained 10%(1) shareholding in Clearpay.
10%(1) shareholding in Clearpay independently revalued to £125 million(2) at year end (up from £106.6 million at 31 December 2020 and £53.7 million at 30 June 2020). Afterpay Ltd ("Afterpay") retains the remaining 90% of Clearpay.
The revaluation is as at 30 June 2021 and therefore prior to the announcement of the proposed takeover of Afterpay by Square Inc. Since then the Afterpay share price has risen from AU$118.17 on 30 June 2021 to AU$133.30 as at 1 September 2021.
Net assets at period end of £134.5 million are equivalent to 126.20 pence per share (FY20: £66.5 million/62.42 pence per share).
Put/call option agreement with Afterpay Ltd ("Afterpay"), exercisable in 2023/24, for the remaining 10%(1) shareholding in Clearpay provides a clear and agreed legal mechanism to enable Clearpay shareholding realisation.
A change of control of Afterpay from the announced Square takeover would give Afterpay the right to exercise its call option anytime following the change of control occurring. As announced by Square and Afterpay, this takeover is expected to complete Q1 calendar 2022. Following a change of control, ThinkSmart will continue to retain its reciprocal put option, exercisable in February 2024. The exercise price for the call option will be determined by the same pre-agreed valuation principles whether or not the option is exercised early. In addition, if the shares of Afterpay are no longer quoted on a recognised stock exchange at the time of the exercise then Afterpay can only elect to pay the exercise price in cash.
Shareholder return with special dividend and capital return of A$6.5 million (6.1 cents per share), equivalent to £3.7 million, paid in December 2020.
Sale of 90% shareholding in Clearpay to Afterpay and retained 10%(1) shareholding has now generated cumulative accounting profit of £135.1 million (including £124.9 million(2) of non-cash fair value gains), with the 10%(1) stake offering further upside potential subject to the ongoing performance of Clearpay.
Cash and cash equivalents of £7.1 million at 30 June 2021
a lot to like and substantial upside remains going forward ...hugely profitable, no debt and a sensible cash balance...
Profit after tax up 35% to £71.7 million (FY20: £53.0 million)
10% shareholding in Clearpay £125 million (up from £106.6) further upside potential subject to the ongoing performance of Clearpay
Cash and cash equivalents of £7.1 m
For shareholders, our investment in Clearpay has now generated over £135 million of profit, and we believe there remains further upside potential. While our focus is on value creation via our holding in Clearpay, the managed wind down of our legacy operations continues to generate positive cash flow as we control costs while rightsizing the operations to lower volumes. This leaves our balance sheet robust with £7.1 million of cash and no debt.
"Ultimately, we believe ThinkSmart is well placed to continue accruing material value for shareholders, subject to Clearpay's ongoing progress, and we thank shareholders for their ongoing support of the strategy."
factsheet online seems to have been updated early
Net assets of 126pence/share. clearpay stake worth 125m.
Hopefully a nice set of finals tomorrow, with plenty of new customers.
Mind you, TSL seem to apply a 20% discount as it's not a 'controlling stake' which I guess has some merit (offset by the fact that they may well be in a position where they want/have to buy - so a 'sellers market' premium could arguably apply)
broker has updated valuation to 139p using 13% of Afterpay’s value as benchmark, with potential for a 160p+ value possible...clear upside potential highlighted by IC too with target of 140p+
I wonder if they will buy out think smart before the limescale already proposed?
Afterpay state they have ' rising financial liabilities, namely the increased value of options held in its UK operations by ThinkSmart, as its stock value has soared'.......TSL value increased again
Afterpay state they have ' rising financial liabilities, namely the increased value of options held in its UK operations by ThinkSmart..'.......TSL value increasing again
Afterpay share price remained $133 . Square has already agreed to buy Afterpay for $39billlion
'.... the UK business had increased in value, which meant Afterpay had a larger liability to a business partner who owns an option over a part of the UK business."
"Increase in the valuation of Afterpay's UK operation (Clearpay) due to better than expected results for the period ended 30 June 2021, improvements to Clearpay's forecast future cash flows, and increases in broader market valuations for similar businesses."
A lot to like ...
Note 16 from the afterpay annual report.
"The valuations are conducted by a reputable, licensed and qualified independent valuer using the
valuation principles outlined in the relevant Share Purchase Agreements and use cash flow
projections based on operating budgets which reflect management’s view of the expected
long-term growth profile of the businesses.
The determination of cash flows over the life of a business requires management judgement in
assessing the future number of merchant acquisitions, customer usage, potential price changes as
well as any changes to the costs of the product and of other operating costs incurred by the
The valuations are then derived by discounting the cash flow projections to present value using
discount rates that reflect current market conditions, external analyst views, industry benchmarks,
and, where available, the underlying businesses cost of debt and/or equity.
Because the valuations are determined using cash flow inputs that are not based on observable
market data, they are considered to be level 3 within the fair value hierarchy as per AASB 13 Fair
Value Measurement (see Note 17)"
What is interesting is they seem to be mostly based on cash flow forecasts-I guess a "bottom up" approach, whereas Thinksmart's expert seems to be doing a top down approach (APT say we think this will generate X cashflow, which should be then worth Y, Thinksmart say APT is worth X and the Clearpay component is then worth Y). I smell a lawsuit coming given how far apart these numbers seem to be. No commentary as to if they would initiate the exercise of the option in the event of a takeover...
'For accounting purposes an independent valuer estimates a carrying value for this stake using a range of measures and then applies a liquidity discount to it. The RNS notes that last December’s value was £107m or 100p per share (that is for 10% which includes the 3.5% share due to Clearpay employees; TSL’s net value therefore was £69m for its 6.5% stake). Which is interesting, but is not really an accurate reflection of what TSL would receive if the buy-out option were exercised today.
That option exercise valuation is governed by an agreed formula which has not been disclosed. Our rule of thumb has assumed that Clearpay is worth 10% of Afterpay (which translates into TSL shareholder value equal to 0.65% of Afterpay’s market cap). Our guess at 10% is based on the fact that Clearpay accounted for around 8% of Afterpay’s revenues but was growing faster than the group as a whole. The RNS states that Clearpay now represents 13% of Afterpay’s customer base; while TSL management has previously told us that Clearpay customers are more frequent users of the service than the group average - and therefore should be more valuable.
Marking the Afterpay price to the full value of the bid means the 10% valuation basis implies £136m or 127p per Think Smart share. If we are generous and raise this to 13%, in line with Clearpay’s share of Afterpay’s customer base, we get 166p. So assuming this approach to Clearpay valuation is broadly correct, there is still value on the table ...Conclusion: a few things to think about but this is clearly excellent news. With a potential Clearpay stake valuation now in the 127p and above region there is enough of a value gap to remain holding TSL..'
afterpay a$132.... :-)