(Alliance News) - ThinkSmart Ltd on Wednesday reported it swung to interim profit on an investment gain as legal proceedings related to a GBP20 million damages claim against UK mobile retailer Carphone Warehouse "remain ongoing".
In the six months to December 31, the investor and digital payments platform provider reported a pretax profit of GBP16.0 million, swinging from a GBP453,000 loss in the year prior.
The company recorded GBP16.4 million in "unrealised gains" related to the revaluation of its 10% holding in ClearPay Finance Ltd, a company which allows customers to split the costs of their retail purchases.
ThinkSmart Executive Chair Ned Montarello said: "ThinkSmart's successful sale of 90% of its Clearpay subsidiary to Afterpay in 2018 continues to generate considerable value for shareholders as evidenced by the GBP3.2 million December 2019 special dividend/capital return and GBP16.4 million revaluation gain in the value of its retained shareholding in Clearpay."
ThinkSmart booked revenue of GBP3.3 million during the interim period, down 27% year-on-year from GBP4.6 million.
Montarello added: "The operating performance of the Clearpay business since its launch in the UK in May 2019 on the Afterpay platform has been highly impressive. This momentum has a direct read through to the value of our Clearpay holding and we see significant future valuation upside potential.
"ThinkSmart's legal claim against Carphone Warehouse for breaches of contract with regard to the Upgrade Everytime and Flexible Leasing products is ongoing."
In November, the company said its subsidiary RentSmart Ltd issued formal legal proceedings against Carphone Warehouse, which is part of FTSE 250 electrical goods retailer Dixons Carphone PLC.
Volumes from RentSmart's Flexible Leasing contract with Carphone Warehouse were significantly below the numbers targeted, ThinkSmart said at the time.
Under RentSmart's contract with Carphone Warehouse, Carphone was under obligations for the marketing and promotion of the relevant product.
RentSmart said it has held discussions with Carphone Warehouse over the low volumes generated, and the retailer's "failure to comply with its obligations", which have been unsuccessful.
As a result, RentSmart began legal proceedings against Carphone Warehouse, eyeing GBP20 million in damages.
ThinkSmart shares were 3.3% higher at 18.08 pence each in London on Wednesday morning.
By Eric Cunha; ericcunha@alliancenews.com
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