Letter from the Chair of the ThinkSmart Independent Board Committee

Dear fellow ThinkSmart Shareholder,

Proposed acquisition of ThinkSmart Ltd by Tuscan Equity Pty Ltd

On behalf of the ThinkSmart Independent Board Committee, I am pleased to provide you with this Scheme Booklet which contains important information for your consideration about the proposed acquisition of ThinkSmart by Tuscan Equity Pty Ltd (BidCo) by way of a scheme of arrangement under the Australian Corporations Act 2001 (Cth).

Background to the Scheme

On 29 July 2022, ThinkSmart announced that it had entered into a Scheme Implementation Deed with BidCo under which it is proposed that BidCo will acquire all of the shares in ThinkSmart as at the Scheme Record Date.

BidCo is a proprietary company limited by shares that was incorporated in Australia for the purposes of the Scheme and is wholly owned and controlled by Mr Ned Montarello, ThinkSmart's Executive Chairman, CEO, founder and (together with the Excluded Shareholders) current 29.4% shareholder.[1]

As such, an Independent Board Committee comprising all of the directors of ThinkSmart other than Mr Ned Montarello has been established to consider the proposal for the Scheme on behalf of ThinkSmart.

In order for the Scheme to be implemented it must be approved at meetings of ThinkSmart Shareholders and by the Court. The Scheme is also conditional on regulatory approval from the UK Financial Conduct Authority (described further below). In addition, the Scheme is subject to other customary conditions, including the Independent Expert continuing to conclude that the Scheme is in the best interests of ThinkSmart Shareholders (excluding the Excluded Shareholders).

The purpose of this Scheme Booklet is to provide you with information about the Scheme to assist you to determine how to vote on the Scheme at the applicable Scheme Meeting.

Overview of the Scheme

If the Scheme is approved and implemented, ThinkSmart Shareholders entitled to receive the Cash Consideration will receive cash consideration equal to the proceeds realised from the post-Scheme implementation sale on the New York Stock Exchange of the proportion of the 618,750 shares in Block held by ThinkSmart attributable to their fully diluted[2] shareholding in ThinkSmart (net of their proportion of the 0.5% sale fees and other applicable costs, and after conversion of the proceeds from United States Dollars into Pounds Sterling and Australian Dollars as applicable).

Holders of ThinkSmart Depositary Interests will be paid the Cash Consideration in Pounds Sterling, while holders of ThinkSmart Shares who do not hold via ThinkSmart Depositary Interests will receive the Cash Consideration in Australian Dollars but can make an election to receive Pounds Sterling.

The amount of Cash Consideration actually received by Scheme Shareholders will be dependent on both the price of Block Shares at the time of the sale of the Block Sale Shares and the applicable exchange rates at the time of the conversion of the sale proceeds. Therefore, the amount of Cash Consideration received by Scheme Shareholders will not be known until after the Implementation Date and therefore after ThinkSmart Shareholders are required to vote on the Scheme.

Further detail regarding the variability of the Cash Consideration is set out in section 4.1 of this Scheme Booklet.

The following chart shows the price of Block Shares over the time period used by the Independent Expert to value the Cash Consideration (see the Independent Expert Report in Annexure 1 for further details):

The Cash Consideration will be paid to those ThinkSmart Shareholders entitled to receive the Cash Consideration in cash after implementation of the Scheme, which is expected to occur in December 2022.

Whilst the Scheme will result in ThinkSmart Shareholders selling their shareholding in ThinkSmart and no longer having exposure to Block Shares via ThinkSmart, ThinkSmart Shareholders can (if they wish to) make their own arrangements to purchase shares in Block on-market, thereby enabling them to have a direct exposure to Block Shares rather than through a shareholding in ThinkSmart. ThinkSmart Shareholders wishing to make their own arrangements to purchase Block Shares directly should seek their own advice to understand the relevant implications (including tax implications) and should be aware that there may be transaction costs in connection with the purchase of Block Shares on-market.

Shareholders in ThinkSmart will be able to continue to trade ThinkSmart Shares (via the ThinkSmart Depositary Interests) on the Alternative Investment Market of the London Stock Exchange up until suspension of dealings on AIM of ThinkSmart Depositary Interests on the Effective Date.

Excluded Shareholders

The Excluded Shareholders are those ThinkSmart Shareholders who are associated with BidCo and Mr Ned Montarello. Whilst ThinkSmart Shareholders other than Excluded Shareholders will receive the Cash Consideration under the Scheme, the Excluded Shareholders can elect to receive either Cash Consideration or BidCo Shares (or a combination thereof) as consideration for their Scheme Shares. To the extent the Excluded Shareholders elect to receive BidCo Shares, they will retain exposure to ThinkSmart's assets and liabilities after the Scheme is implemented, which are discussed further below.

The Excluded Shareholders will not be permitted to vote at the General Scheme Meeting and will instead vote at a separate Scheme Meeting (being the Excluded Shareholder Scheme Meeting) on a separate Scheme Resolution (being the Excluded Shareholder Scheme Resolution). The reason there are two Scheme Meetings is that the Excluded Shareholders constitute a separate class of members because they are offered different consideration under the Scheme as noted above.

Financial Assistance Resolution and the Financial Benefit Resolution

For the Scheme to proceed, ThinkSmart Shareholders will also need to approve the Financial Assistance Resolution and the Financial Benefit Resolution at ThinkSmart's 2022 Annual General Meeting, which will be held on the same day and prior to the General Scheme Meeting.

The Excluded Shareholders will be excluded from voting on the Financial Assistance Resolution and the Financial Benefit Resolution.

Details of the Financial Assistance Resolution and the Financial Benefit Resolution, including why these resolutions are required, are set out in section 9 of this Scheme Booklet and in the Notice of Annual General Meeting in Annexure 6.

UK Financial Conduct Authority

Furthermore, the Scheme is conditional on, and will not become Effective unless, the UK Financial Conduct Authority provides the necessary approval under the UK Financial Services and Markets Act 2000.

Details of the regulatory approvals that are required to implement the Scheme, including the reasons why a change in control notification has been submitted to the UK Financial Conduct Authority in connection with the Scheme, are set out in sections 4.3 and 7.4(a) of this Scheme Booklet.

ThinkSmart's assets other than the Block Shares

If the Scheme is Effective, following the sale of the Block Sale Shares and payment of the Scheme Consideration, ThinkSmart's assets and operations will comprise:

·                 approximately £2.2 million in cash, noting that the ThinkSmart Group's cash balance as at the Last Practicable Date is approximately £2.8 million;

·                 the remainder of the Block Shares which are not Block Sale Shares;

·                 ThinkSmart's legacy leasing business which is currently subject to a managed wind down process; and

·                 ThinkSmart's business of providing an outsourced call centre customer support service to support the Clearpay business which was previously owned by ThinkSmart.

In relation to these assets and operations, if the Scheme is Effective BidCo currently intends to procure that ThinkSmart:

·                 continues to hold the remaining Block Shares which are not Block Sale Shares and will monitor this holding over time taking into account its own relevant financial objectives and priorities (including rationalisation of the legacy ThinkSmart corporate group);

·                 continues the existing managed wind down process for the legacy leasing business in an orderly manner through to completion; and

·                 continues to provide the outsourced call centre customer support service to the Clearpay business which was previously owned by ThinkSmart, noting that this can be terminated by either Clearpay or ThinkSmart at any time with 3 months' notice.

Where appropriate, BidCo may also arrange the rationalisation of any subsidiaries in the ThinkSmart corporate group which are dormant or otherwise no longer required.

Recommendation of the ThinkSmart Independent Board Committee

The ThinkSmart Independent Board Committee unanimously recommends that ThinkSmart Shareholders vote in favour of the Scheme in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of ThinkSmart Shareholders (other than the Excluded Shareholders). Subject to those same qualifications, each member of the ThinkSmart Independent Board Committee intends to vote, or cause to be voted, all the ThinkSmart Shares held or controlled by them in favour of the Scheme at the applicable Scheme Meeting.

Details of the interests of the ThinkSmart Directors (including the members of the ThinkSmart Independent Board Committee) in ThinkSmart are set out in section 10.1 of this Scheme Booklet.

In forming its unanimous recommendation, the ThinkSmart Independent Board Committee carefully considered the following reasons (which are explained in more detail in section 1 of this Scheme Booklet):

·                 The Independent Expert has concluded that the Scheme is fair and reasonable and therefore in the best interests of ThinkSmart Shareholders (other than the Excluded Shareholders), in the absence of a Superior Proposal.

·                 The Scheme facilitates an exit by ThinkSmart Shareholders of their shareholding in ThinkSmart at a price that eliminates the discount to the market value of ThinkSmart's holding in Block Shares at which ThinkSmart Shares have historically traded.

Prior to the announcement of the Scheme on 29 July 2022 on AIM, ThinkSmart Shares traded at an approximate 31% average discount to the market value of its Block shareholding since it received the Block Shares on 1 February 2022.[3] As at the Last Practicable Date, this discount had reduced to approximately 12% since the announcement of the Scheme. The Scheme effectively allows Scheme Shareholders to eliminate the prevailing discount at which ThinkSmart Shares have traded relative to the market value of its Block shareholding and realise value for their interest in the Block Shares (held indirectly via ThinkSmart).

Further detail regarding the variability of the Cash Consideration is set out in section 4.1.

·                 Under the Scheme, ThinkSmart Shareholders entitled to receive Cash Consideration will receive cash consideration equal to their proportion of proceeds realised from the post-Scheme implementation sale on the New York Stock Exchange of the Block Sale Shares (net of their proportion of the 0.5% sale fees and other applicable costs, and after conversion of the proceeds from United States Dollar into Pounds Sterling and Australian Dollars (as applicable)). The Scheme therefore allows ThinkSmart Shareholders to realise value for their ThinkSmart Shares within a relatively short time frame, with payment of the Cash Consideration expected to be made in December 2022.

As announced by ThinkSmart on 13 May 2022, ThinkSmart has been undertaking a strategic review of its Block shareholding and has considered a number of options to maximise shareholder value (which included reviewing BidCo's proposal to acquire all the shares in ThinkSmart as described above). The proposed Scheme is the culmination of that review.

The ThinkSmart Independent Board Committee considers the Scheme to be the preferred commercial mechanism for Scheme Shareholders to exit their investment in ThinkSmart as compared to remaining shareholders of ThinkSmart during the eventual wind down and liquidation of ThinkSmart. In particular, a public company wind down and liquidation process is expected to be a more protracted process than the Scheme that would result in additional costs to ThinkSmart (and indirectly ThinkSmart Shareholders), therefore reducing ThinkSmart's available cash and the value that would be available to ThinkSmart Shareholders.

While the Scheme will not result in ThinkSmart Shareholders realising value for the residual components of the ThinkSmart business (as detailed in section 5.2(b) of this Scheme Booklet) or receiving the cash currently held by ThinkSmart, these assets are considered to be immaterial by the ThinkSmart Independent Board Committee when compared to the value of ThinkSmart's holding in Block Shares. Although ThinkSmart will continue to generate income from its call centre and secondary rentals, the ThinkSmart Independent Board Committee considers these operations lack the scale to cover both operating and corporate costs, such as data storage costs, salaries and property leases and the cash balance would be expected to reduce to cover these costs and likely eventual wind down and liquidation of ThinkSmart. The ThinkSmart Independent Board Committee expects that the costs of maintaining ThinkSmart as a listed entity until completion of the wind down would likely exceed the cash generated from the wind down of its business operations. The ThinkSmart Independent Board Committee therefore considers the Scheme to be the optimal commercial transaction overall.

·                 ThinkSmart Shares currently trade at a discount relative to the market value of its holding in Block Shares. As noted above, prior to the announcement of the Scheme on 29 July 2022, ThinkSmart Shares traded at an approximate 31% average discount to the market value of its Block shareholding since it received the Block Shares on 1 February 2022.[4] As at the Last Practicable Date, this discount had reduced to approximately 12% since the announcement of the Scheme.

If the Scheme does not proceed, and no comparable proposal or Superior Proposal is received by the ThinkSmart Independent Board Committee, then the discount between the price of a ThinkSmart Share and the market value of ThinkSmart's Block holding could increase to a level closer to that observed prior to the announcement of the Scheme. This would likely reduce the ThinkSmart Share price compared to the ThinkSmart Share price as at the Last Practicable Date.

·                 You will not incur any brokerage charges on the transfer of your ThinkSmart Shares to BidCo under the Scheme. However, brokerage will be payable in relation to the sale of the Block Shares - see section 4.1 of this Scheme Booklet for further information. It is possible that such brokerage charges (and, potentially GST/VAT on those charges) would be incurred if you dispose of your ThinkSmart Shares other than under the Scheme.

In determining to unanimously recommend the Scheme, the ThinkSmart Independent Board Committee also considered the disadvantages of the Scheme proceeding, and reasons why you may consider voting against the Scheme, which include the following:

·                 There are a number of risks associated with the Scheme, which are set out in detail in section 7 of this Scheme Booklet. These risks include:

·                 performance risk;

·                 risks relating to the deferred payment of the Cash Consideration, including the uncertainty regarding the price of Block Shares at the time the Block Sale Shares are sold and, in particular, the risk that the Block Share price may fall at any time prior to the sale of the Block Sale Shares; and

·                 risks relating to implementation of the Scheme.

In relation to the performance risk specifically, it is noted that if the Scheme becomes Effective, ThinkSmart Shareholders will transfer their ThinkSmart Shares to BidCo on the Implementation Date. However, ThinkSmart Shareholders entitled to receive Cash Consideration will not receive their Cash Consideration until after the Implementation Date and the amount of Cash Consideration will be determined by the price at which the Block Sale Shares can be sold for following Implementation.

There is therefore a risk that ThinkSmart Shareholders transfer their ThinkSmart Shares to BidCo on the Implementation Date but that BidCo does not pay the Cash Consideration, in breach of its obligations under the Scheme Implementation Deed, Deed Poll and Funds Flow Deed. However, the ThinkSmart Independent Board Committee considers this risk to be theoretical only, because:

·                 it would require BidCo (which is controlled by ThinkSmart's founder and Executive Chairman) to deliberately breach its obligations under the Scheme Implementation Deed, Deed Poll and Funds Flow Deed all of which are legally binding documents which form key elements of the Court supervised process in connection with the Scheme. If, contrary to the ThinkSmart Independent Board Committee's expectation, such a breach did occur, Scheme Shareholders will have an unsecured claim against BidCo under the Deed Poll in relation to the payment of the Cash Consideration; and

·                 as a practical matter, under the terms of the Scheme Implementation Deed, the members of the ThinkSmart Independent Board Committee will remain on the ThinkSmart Board until after the Cash Consideration has been despatched to Scheme Shareholders, and so, the ThinkSmart Independent Board Committee will assist with overseeing the payment of the Cash Consideration to the Scheme Shareholders in accordance with the Scheme.

Further details of this performance risk are set out in section 7.4(b) of this Scheme Booklet.

·                 You may disagree with the ThinkSmart Independent Board Committee's unanimous recommendation and the Independent Expert's conclusion.

·                 You may believe it is in your best interests to maintain your current investment and risk profile, in particular:

·                 you may consider that the price of Block Shares in the future will be higher than the prevailing price at the time of the sale of the Block Sale Shares in connection with the Scheme; and

·                 you may consider that the value of ThinkSmart's legacy leasing business may, in the future, increase above its current value or be greater than the value attributed to it by the Independent Expert (see section 6 of the Independent Expert's Report in Annexure 1).

·                 You may consider that a Superior Proposal could emerge in the future. The ThinkSmart Independent Board Committee is, as at the date of this Scheme Booklet, not aware of, and has not received, any Superior Proposal.

·                 The tax consequences of transferring your ThinkSmart Shares pursuant to the Scheme, specifically the bringing forward of a taxation event, may not be attractive to you.

Further details on these reasons are provided in section 1.2 of this Scheme Booklet.

Independent Expert

The ThinkSmart Independent Board Committee appointed Grant Thornton Corporate Finance Pty Ltd as the Independent Expert to assess the merits of the Scheme. The Independent Expert has concluded that the Scheme is fair and reasonable and therefore in the best interests of ThinkSmart Shareholders (excluding the Excluded Shareholders), in the absence of a Superior Proposal.

A complete copy of the Independent Expert's Report is included as Annexure 1 to this Scheme Booklet.

How to vote

Your vote is important and I encourage you to vote on this significant proposed transaction. ThinkSmart will conduct the Scheme Meetings and Annual General Meeting virtually via the Computershare Virtual Meeting Platform with ThinkSmart Shareholders (and their proxies) being able to cast votes in real time during the Meetings.

For the Scheme to proceed, ThinkSmart Shareholders will need to approve the Scheme Resolutions at the applicable Scheme Meeting and the Financial Assistance Resolution and Financial Benefit Resolution at ThinkSmart's 2022 Annual General Meeting, which will be held prior to the Scheme Meetings. The ThinkSmart Independent Board Committee encourages ThinkSmart Shareholders to vote at both the Annual General Meeting and the applicable Scheme Meeting.

All ThinkSmart Shareholders who would like to have their vote counted must either:

·                 vote by lodging a Proxy Form online at www.investorvote.com.au (Control ID: 181913 (for the Annual General Meeting), 181915 (for the General Scheme Meeting) and 181916 (for the Excluded Shareholder Scheme Meeting)) for the applicable Meeting no later than the times noted in the Key Dates section of this Scheme Booklet. ThinkSmart Shareholders are strongly encouraged to lodge a Proxy Form appointing the Chair of the applicable Meeting as their proxy. ThinkSmart Shareholders can complete the Proxy Form that was enclosed with the Notice of Meeting and Notice and Access Letter to provide specific instructions on how a shareholder's vote is to be cast on each item of business, and the Chair must follow those instructions. Lodgement instructions are set out in the Proxy Form attached to each Notice of Meeting and Notice and Access Letter. If a person other than the Chair is appointed as proxy, the proxy must attend the Meeting via the Computershare Virtual Meeting Platform and vote. The proxy will revert to the Chair in the absence of the appointed proxy holder's attendance at the applicable Meeting; or

·                 participate via the Computershare Virtual Meeting Platform and vote live at the applicable Meeting. The Meetings will be accessible to all ThinkSmart Shareholders (and their proxies) via the Computershare Virtual Meeting Platform, which will allow ThinkSmart Shareholders (and their proxies) to listen to and observe the applicable Meeting and ask questions on the business of the Meeting. ThinkSmart Shareholders (and their proxies) attending via the Computershare Virtual Meeting Platform will be able to participate in the Meetings and vote in real time.

ThinkSmart DI Holders may access the applicable Meetings via the Computershare Virtual Meeting Platform but will not be permitted to vote at the applicable Meeting. For their votes to be counted, ThinkSmart DI Holders must submit their CREST Voting Instruction to ThinkSmart's agent by the required cut-off time set out in section 3.2 of this Scheme Booklet. Alternatively, ThinkSmart DI Holders can vote using the enclosed Form of Instruction as per the instruction set out in section 3.2.

I encourage you to submit a directed proxy vote so that your vote will be counted if for any reason you cannot join the meeting (for example, if there is an issue with your internet connection on the day of the meeting).

The Scheme will only become Effective if it is approved by:

·                 at least 75% of the total number of votes cast on the General Scheme Resolution by ThinkSmart Shareholders (excluding the Excluded Shareholders); and

·                 more than 50% of ThinkSmart Shareholders (excluding the Excluded Shareholders) by number present and voting at the General Scheme Meeting (unless the Court orders otherwise).

The Scheme also requires similar approvals from the Excluded Shareholders on the Excluded Shareholder Scheme Resolution, as explained in section 4.5(b) of this Scheme Booklet.

In addition, the Scheme will only become Effective if the Financial Assistance Resolution and Financial Benefit Resolution are passed at the Annual General Meeting, as set out in section 9 of this Scheme Booklet.

If you wish for the Scheme to proceed, it is important that you vote in favour of the applicable Scheme Resolution at the applicable Scheme Meeting and the Financial Assistance Resolution and Financial Benefit Resolution at the Annual General Meeting.

Further details regarding how to access the Computershare Virtual Meeting Platform and vote are set out in:

·                 the Notice of General Scheme Meeting for ThinkSmart Shareholders who are not Excluded Shareholders, as contained in Annexure 4 of this Scheme Booklet;

·                 the Notice of Excluded Shareholder Scheme Meeting for Excluded Shareholders, as contained in Annexure 5 of this Scheme Booklet; and

·                 the Notice of Annual General Meeting for ThinkSmart Shareholders, as contained in Annexure 6 of this Scheme Booklet.

Further information

This Scheme Booklet sets out important information regarding the Scheme, including the reasons for the ThinkSmart Independent Board Committee's recommendation and the Independent Expert's Report. It also sets out reasons why you may wish to vote against the Scheme, as well as the risks associated with the Scheme (which are set out in section 7 of this Scheme Booklet).

Please read this document carefully and in its entirety as it will assist you in making an informed decision as to how to vote. I would also encourage you to seek independent financial, legal and taxation advice before making any investment decision in relation to your ThinkSmart Shares.

If you have any questions, please contact the ThinkSmart Shareholder Information Line on 1300 528 984 (within Australia) or +61 3 9415 4826 (outside Australia), between 8.30am and 5.00pm (Sydney time), Monday to Friday. ThinkSmart DI Holders can contact the dedicated Depositary Interest Information Line on +44 0207 887 2225 or +44 0800 298 7356 (within the United Kingdom) between 9.00am and 5.00pm (London time), Monday to Friday.

On behalf of the ThinkSmart Independent Board Committee, I would like to take this opportunity to thank you for your ongoing support. I encourage you to vote in favour of the Scheme, which the ThinkSmart Independent Board Committee believes, and the Independent Expert has concluded, is fair and reasonable and therefore in the best interests of ThinkSmart Shareholders (other than the Excluded Shareholders), in the absence of a Superior Proposal.

 

Yours sincerely

 

David Adams

Senior Independent Non-Executive Director

Chair of the ThinkSmart Independent Board Committee

 

 

Event	Time and date
First Court Date	21 October 2022
Date of this Scheme Booklet	24 October 2022
Latest time and date for receipt of proxy forms or powers of attorney by the ThinkSmart Share Registry for: ·     Annual General Meeting ·     General Scheme Meeting ·     Excluded Shareholder Scheme Meeting	14 November 2022 at 5.30pm (Perth time)
Time and date for determining eligibility to vote at the Annual General Meeting and the Scheme Meetings	14 November 2022 at 5.30pm (Perth time) for ThinkSmart Shareholders 11 November 2022 at 6.00pm (London time) for ThinkSmart DI Holders
Annual General Meeting	16 November 2022 at 4.00pm (Perth time)
Scheme Meetings: ·     General Scheme Meeting ·     Excluded Shareholder Scheme Meeting* *If the General Scheme Meeting concludes after 5.30pm (Perth time) on this date, the Excluded Shareholder Scheme Meeting will begin as soon as practicable after the conclusion of the General Scheme Meeting.	16 November 2022 (T) at: ·     5.00pm (Perth time) ·     5.30pm (Perth time)
If the Scheme is approved by the Requisite Majorities
Second Court Date Court hearing to approve the Scheme	22 November 2022
Last day for dealings in, and for the registration of transfer of, ThinkSmart Shares Last day for repositioning securities between the ThinkSmart Share Register (for Australian shares) and the ThinkSmart DI Register (for UK Depositary Interests)	22 November 2022
Suspension of dealings in ThinkSmart Shares	23 November 2022 at 7.30am (London time)
Effective Date Court order lodged with ASIC and announcement to AIM	23 November 2022
Scheme Record Date Date for determining entitlements to Scheme Consideration for: ·     ThinkSmart Shareholders ·     ThinkSmart DI Holders	25 November 2022 at: ·     5.00pm (Perth time) ·     6.00pm (London time)
Disablement of CREST in respect of ThinkSmart Shares	25 November 2022 at 6.00pm London time
Implementation Date	2 December 2022
Cancellation of admission to trading on AIM of ThinkSmart Shares	5 December 2022 at 7.00am (London time)
Sale of Block Sale Shares	5 December 2022 to 7 December 2022
Payment of Scheme Consideration*	As soon as practicable following the sale of the Block Sale Shares, expected to be approximately 8 Business Days after completion of the sale of the Block Sale Shares

 

All times and dates in the above timetable are references to the time and date in Perth, Australia unless otherwise stated. All such times and dates are subject to change. Certain times and dates are conditional on the approval of the Scheme by ThinkSmart Shareholders and by the Court, and the satisfaction of the other conditions precedent of the Scheme set out in section 4.3 of this Scheme Booklet, including regulatory approval from the UK Financial Conduct Authority. Any changes will be announced by ThinkSmart via the RNS of the LSE.

* For the avoidance of doubt, the value of the Cash Consideration will not be known at the time of cancellation of admission to trading on AIM of ThinkSmart Shares.

 

1.1         Why you should vote in favour of the Scheme

(a)          The ThinkSmart Independent Board Committee unanimously recommends that you vote in favour of the Scheme, in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of ThinkSmart Shareholders (other than the Excluded Shareholders)

The ThinkSmart Independent Board Committee unanimously recommends that ThinkSmart Shareholders vote in favour of the Scheme, in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of ThinkSmart Shareholders (other than the Excluded Shareholders).

Subject to those same qualifications, each member of the ThinkSmart Independent Board Committee intends to vote, or cause to be voted, all the ThinkSmart Shares held or controlled by them in favour of the Scheme at the applicable Scheme Meeting. The interests of the Independent Directors in ThinkSmart Shares are set out in section 10.1.

(b)          The Independent Expert has concluded that the Scheme is fair and reasonable and, therefore, in your best interests

The Independent Expert has analysed ThinkSmart's business and, in light of this analysis, the Independent Expert has concluded that the Scheme is fair and reasonable and, therefore, is in the best interests of ThinkSmart Shareholders (other than the Excluded Shareholders), in the absence of a Superior Proposal.

The reasons why the Independent Expert reached these conclusions are set out in the Independent Expert's Report, a copy of which is included in Annexure 1. The ThinkSmart Independent Board Committee encourages you to read this report in its entirety.

(c)          The Scheme allows ThinkSmart Shareholders to realise full value at prevailing market prices for their pro rata interest in Block

The Scheme facilitates an exit by ThinkSmart Shareholders of their shareholding in ThinkSmart at a price that eliminates the discount to the market value of ThinkSmart's holding in Block Shares at which ThinkSmart Shares have historically traded.

Prior to the announcement of the Scheme on 29 July 2022, ThinkSmart Shares traded at an approximate 31% average discount to the market value of its Block shareholding since it received the Block Shares on 1 February 2022.[5] As at the Last Practicable Date, this discount had reduced to approximately 12% since the announcement of the Scheme. The Scheme effectively allows Scheme Shareholders to eliminate the prevailing discount at which ThinkSmart Shares have traded relative to the market value of its Block shareholding and realise value for their interest in the Block Shares (held indirectly via ThinkSmart).

Further detail regarding the variability of the Cash Consideration is set out in section 4.1.

(d)          The Scheme Consideration provides you with cash value for your ThinkSmart Shares, together with an exit opportunity in respect of your ThinkSmart Shares

Under the Scheme, ThinkSmart Shareholders entitled to receive Cash Consideration will receive Cash Consideration equal to their proportion of the proceeds realised from the post-Scheme implementation sale on the New York Stock Exchange of the Block Sale Shares (net of their proportion of the 0.5% sale fees and other applicable costs, and after conversion of the proceeds from United States Dollars into Pounds Sterling and Australian Dollars (as applicable)). The Scheme therefore allows ThinkSmart Shareholders to realise value for their ThinkSmart Shares within a relatively short time frame, with payment of the Cash Consideration to be made as soon as practicable following the sale of the Block Sale Shares (payment expected to occur in December 2022).

As announced by ThinkSmart on 13 May 2022, ThinkSmart has been undertaking a strategic review of its Block shareholding and has considered a number of options to maximise shareholder value (which included reviewing BidCo's proposal to acquire all the shares in ThinkSmart as described above). The proposed Scheme is the culmination of that review.

The ThinkSmart Independent Board Committee considers the Scheme to be the preferred commercial mechanism for Scheme Shareholders to exit their investment in ThinkSmart as compared to remaining shareholders of ThinkSmart during the eventual wind down and liquidation of ThinkSmart. In particular, a public company wind down and liquidation process is expected to be a more protracted process than the Scheme that would result in additional costs to ThinkSmart (and indirectly ThinkSmart Shareholders), therefore reducing ThinkSmart's available cash and the value that would be available to ThinkSmart Shareholders.

While the Scheme will not result in ThinkSmart Shareholders realising value for the residual components of the ThinkSmart business (as detailed in section 5.2(b) of this Scheme Booklet) or receiving the cash currently held by ThinkSmart, the ThinkSmart Independent Board Committee considers that these assets are immaterial when compared to the value of ThinkSmart's holding in Block Shares. Although ThinkSmart will continue to generate income from its call centre and secondary rentals, the ThinkSmart Independent Board Committee considers these operations lack the scale to cover both operating and corporate costs, such as data storage costs, salaries and property leases and the cash balance would be expected to reduce to cover these costs and likely eventual wind down and liquidation of ThinkSmart. The ThinkSmart Independent Board Committee expects that the costs of maintaining ThinkSmart as a listed entity until completion of the wind down would likely exceed the cash generated from the wind down of its business operations. The ThinkSmart Independent Board Committee therefore considers the Scheme to be the optimal commercial transaction overall.

(e)          No Superior Proposal has emerged

Since the proposed Scheme was announced up until the date of this Scheme Booklet, no Superior Proposal has emerged.

The ThinkSmart Independent Board Committee is, as at the date of this Scheme Booklet, not aware of, and has not received, any Superior Proposal.

(f)           The discount of ThinkSmart Shares relative to the market value of its holding in Block Shares is expected to increase if the Scheme does not proceed

ThinkSmart Shares have traded at a discount relative to the market value of its holding in Block Shares. As noted above, prior to the announcement of the Scheme on 29 July 2022, ThinkSmart Shares traded at an approximate 31% average discount to the market value of its Block shareholding since it received the Block Shares on 1 February 2022.[6] As at the Last Practicable Date, this discount had reduced to approximately 12% since the announcement of the Scheme.

If the Scheme does not proceed, and no comparable proposal or Superior Proposal is received by the ThinkSmart Independent Board Committee, then the discount between the price of a ThinkSmart Share and the market value of ThinkSmart's Block holding could increase to a level closer to that observed prior to the announcement of the Scheme. This would likely reduce the ThinkSmart Share price compared to the ThinkSmart Share price as at the Last Practicable Date.

(g)          Brokerage charges will not apply to the transfer of your ThinkSmart Shares to BidCo

You will not incur any brokerage charges on the transfer of your ThinkSmart Shares to BidCo under the Scheme. However, brokerage may be payable in relation to the sale of the Block Shares - see section 4.1 of this Scheme Booklet for further information.

It is possible that such brokerage charges (and, potentially GST/VAT on those charges) would be incurred if you dispose of your ThinkSmart Shares other than under the Scheme.

1.2         Why you may consider voting against the Scheme

(a)          There are a number of risks associated with the Scheme

There are a number of risks associated with the Scheme, which are set out in detail in section 7 of this Scheme Booklet. These risks include the following:

Performance risk: If the Scheme becomes Effective, ThinkSmart Shareholders will transfer their ThinkSmart Shares to BidCo on the Implementation Date. However, ThinkSmart Shareholders entitled to receive Cash Consideration will not receive their Cash Consideration until after the Implementation Date and the amount of Cash Consideration will be determined by the price at which the Block Sale Shares can be sold for following Implementation.

There is therefore a risk that ThinkSmart Shareholders transfer their ThinkSmart Shares to BidCo on the Implementation Date but that BidCo does not pay the Cash Consideration, in breach of its obligations under the Scheme Implementation Deed, Deed Poll and Funds Flow Deed. However, the ThinkSmart Independent Board Committee considers this risk to be theoretical only, because:

·                 it would require BidCo (which is controlled by ThinkSmart's founder and Executive Chairman) to deliberately breach its obligations under the Scheme Implementation Deed, Deed Poll and Funds Flow Deed all of which are legally binding documents which form key elements of the Court supervised process in connection with the Scheme. If, contrary to the ThinkSmart Independent Board Committee's expectation, such a breach did occur, Scheme Shareholders will have an unsecured claim against BidCo under the Deed Poll in relation to the payment of the Cash Consideration and

·                 as a practical matter, under the terms of the Scheme Implementation Deed, the members of the ThinkSmart Independent Board Committee will remain on the ThinkSmart Board until after the Cash Consideration has been despatched to Scheme Shareholders, and so, the ThinkSmart Independent Board Committee will assist with overseeing the payment of the Cash Consideration to the Scheme Shareholders in accordance with the Scheme.

Further details of this risk are set out in section 7.4(b) of this Scheme Booklet.

Risks relating to deferred payment of Cash Consideration: There is a risk that the price of Block Shares falls between the date ThinkSmart Shareholders approve the Scheme and the date the Block Sale Shares are sold, which will directly impact the amount of Cash Consideration received by ThinkSmart Shareholders entitled to receive Cash Consideration. See section 4.1 of this Scheme Booklet for further discussion of how changes in the Block Share price will impact the Cash Consideration. Even if the Scheme does not proceed, for so long as ThinkSmart continues to hold Block Shares, it is likely that any fall in the price of Block Shares would result in a fall in the price of ThinkSmart Shares.

In addition, as the proceeds from the sale of the Block Sale Shares will be converted from United States Dollars to Australian Dollars and Pounds Sterling (as required), the amount of Cash Consideration received by Scheme Shareholders will depend on the applicable exchange rate at the time of conversion.

Further details of this risk are set out in section 7.4(b) of this Scheme Booklet.

Risks relating to implementation the Scheme: The implementation of the Scheme is subject to certain conditions precedent, which are summarised in section 4.3 and are set out in full in clause 3.1 of the Scheme Implementation Deed.

ThinkSmart will only apply to the Court for orders approving the Scheme if each of the conditions precedent (except Court approval of the Scheme) are satisfied or waived (if capable of waiver) prior to 8.00am (Perth time) on the Second Court Date. As such, failure to satisfy or waive, or a delay in satisfying or waiving, any of the conditions precedent may delay or prevent implementation of the Scheme. The failure of a condition precedent to be satisfied or waived (if capable of waiver) may also give rise to a right of either ThinkSmart or BidCo to terminate the Scheme Implementation Deed.

There is a risk that the ThinkSmart Shareholders do not approve the Scheme by the Requisite Majorities or do not approve the Financial Assistance Resolution or Financial Benefit Resolution. There is also a risk that the Court may not, at the final court hearing, approve the Scheme, or may only be willing to approve the Scheme subject to conditions that ThinkSmart and/or BidCo (as applicable) are not prepared to accept. There is also a risk that some or all of the aspects of the ThinkSmart Shareholder and Court approvals required for the Scheme to proceed may be delayed.

There is also a risk that the FCA rejects the change in control notification submitted on behalf of BidCo.

Further details of this risk are set out in section 7.4(a) of this Scheme Booklet.

(b)          You may disagree with the ThinkSmart Independent Board Committee's unanimous recommendation and the Independent Expert's conclusion

Despite the unanimous recommendation of the ThinkSmart Independent Board Committee to vote in favour of the Scheme and the conclusion of the Independent Expert that the Scheme is in the best interests of ThinkSmart Shareholders (other than the Excluded Shareholders) in the absence of a Superior Proposal, you may believe that the Scheme is not in your best interests.

(c)          You may believe it is in your best interests to maintain your current investment and risk profile

You may prefer to keep your ThinkSmart Shares to preserve your investment in an AIM-listed company with the specific characteristics of ThinkSmart.

In particular:

·                 you may consider that the price of Block Shares in the future will be higher than the prevailing price at the time of the sale of the Block Sale Shares in connection with the Scheme; and

·                 you may consider that the value of ThinkSmart's legacy leasing business may, in the future, increase above its current value or be greater than the value attributed to it by the Independent Expert (see section 6 of the Independent Expert's Report in Annexure 1).

Additionally, you may consider that, despite the risk factors relevant to ThinkSmart's potential future operations (including those set out in section 7 of this Scheme Booklet), ThinkSmart may be able to return greater value from its assets by remaining a standalone entity or by seeking alternative corporate transactions in the future. However, as ThinkSmart's primary assets are the Block Shares you could hold a similar investment and risk profile by purchasing shares in Block directly.

You may also consider that it would be difficult to identify or invest in alternative investments that have a similar investment profile to that of ThinkSmart or may incur transaction costs in undertaking any new investment.

(d)          You may believe that there is potential for a Superior Proposal to emerge

You may consider that a Superior Proposal could emerge in the future.

The ThinkSmart Independent Board Committee is, as at the date of this Scheme Booklet, not aware of, and has not received, any Superior Proposal.

(e)          The tax consequences of transferring your ThinkSmart Shares pursuant to the Scheme may not be attractive to you

The tax consequences of the Scheme applicable to you will depend on your personal situation and the circumstances of the Scheme.

If the price of Block Shares does not materially change between the Implementation Date and the sale date for the Block Shares, the Australian and UK tax outcomes of transferring your ThinkSmart Shares pursuant to the Scheme are expected to be broadly in line with an on-market sale of ThinkSmart Shares (see section 8 of this Scheme Booklet for further details).

The Scheme would bring forward a taxation event for Scheme Shareholders, potentially diluting Scheme Shareholders' exposure in the market (e.g. by having lower after-tax proceeds for a direct investment in Block Shares).

ThinkSmart Shareholders should read the tax implications of the Scheme outlined in section 8 of this Scheme Booklet. However, section 8 is general in nature, and ThinkSmart Shareholders should consult with their own independent taxation advisers regarding the tax implications of the Scheme.

 

This section 2 answers some frequently asked questions relating to the Scheme. It is not intended to address all relevant issues for ThinkSmart Shareholders. This section 2 should be read together with all other parts of this Scheme Booklet.

Question	Answer	More information
Overview of the Scheme
Why have I received this Scheme Booklet?	This Scheme Booklet has been sent to you because you are a ThinkSmart Shareholder and you are being asked to vote on the Scheme. This Scheme Booklet is intended to help you consider and decide on how to vote on the Scheme at the Scheme Meetings.	Section 4
What is the Scheme?	The Scheme is a scheme of arrangement between ThinkSmart and the Scheme Shareholders. A "scheme of arrangement" is a statutory procedure in the Corporations Act that is commonly used in transactions in Australia that may result in a change of ownership or control of a company. In addition to requiring Court approval, schemes of arrangement require a shareholder vote in favour of a resolution to implement the scheme of arrangement by the Requisite Majorities. If the Scheme becomes Effective, BidCo will acquire all of the Scheme Shares for the Scheme Consideration. ThinkSmart will be delisted from AIM and become a wholly owned subsidiary of BidCo.	Section 4 and Annexure 2
BidCo
Who is BidCo?	BidCo is a special purpose Australian proprietary company limited by shares incorporated specifically for the purpose of acquiring the ThinkSmart Shares pursuant to the Scheme. BidCo is 100% wholly owned by Mr Ned Montarello, the current Executive Chairman and CEO of ThinkSmart.	Section 6
Does BidCo currently hold any ThinkSmart Shares?	As at the date of this Scheme Booklet, BidCo does not hold any ThinkSmart Shares. As at the Last Practicable Date, Mr Ned Montarello and the other Excluded Shareholders own 31,342,286 ThinkSmart Shares, representing approximately 29.4% of the ThinkSmart Shares.[7]	Section 6
Recommendations and intentions
What do the ThinkSmart Directors recommend?	The ThinkSmart Independent Board Committee unanimously recommends that you vote in favour of the Scheme, in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of ThinkSmart Shareholders (excluding the Excluded Shareholders). The reasons for this recommendation and other relevant considerations are set out in section 1. In light of the arrangements summarised in section 6.1, Mr Ned Montarello, who is the sole shareholder of BidCo, has recused himself from discussions on the Scheme and abstains from giving a recommendation in respect of how ThinkSmart Shareholders should vote on the Scheme. Details of the interests of the ThinkSmart Directors (including the members of the ThinkSmart Independent Board Committee) in ThinkSmart are set out in section 10.1 of this Scheme Booklet. ThinkSmart Shareholders should have regard to these details in the context of the recommendation of the ThinkSmart Independent Board Committee which appears through this Scheme Booklet, when considering how to vote on the Scheme. The ThinkSmart Independent Board Committee encourages you to seek independent legal, financial, taxation or other appropriate professional advice.	Letter from the Chair of the ThinkSmart Independent Board Committee and section 1
What are the intentions of the ThinkSmart Independent Board Committee members?	Each member of the ThinkSmart Independent Board Committee intends to vote, or cause to be voted, all the ThinkSmart Shares held or controlled by them in favour of the Scheme at the applicable Scheme Meeting in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of ThinkSmart Shareholders (other than the Excluded Shareholders).	Letter from the Chair of the ThinkSmart Independent Board Committee and section 1.1(a)
What is the conclusion of the Independent Expert?	The Independent Expert has concluded that the Scheme is fair and reasonable and therefore in the best interests of ThinkSmart Shareholders (other than the Excluded Shareholders), in the absence of a Superior Proposal. A complete copy of the Independent Expert's Report is included as Annexure 1 to this Scheme Booklet.	Annexure 1
What choices do I have as a ThinkSmart Shareholder?	As a ThinkSmart Shareholder who is eligible to vote on the Scheme, you have the following choices in relation to your ThinkSmart Shares: ·     vote in favour of the Scheme at the applicable Scheme Meeting; ·     vote against the Scheme at the applicable Scheme Meeting; ·     sell your ThinkSmart Shares or ThinkSmart Depositary Interests; or ·     do nothing.	Section 4.2
Overview of the Scheme Consideration
What is the Scheme Consideration?	If the Scheme is implemented, ThinkSmart Shareholders (other than the Excluded Shareholders) will receive the Cash Consideration which is equal to the proceeds realised from the post-Scheme implementation sale on the New York Stock Exchange of the proportion of the 618,750 shares in Block held by ThinkSmart attributable to their fully diluted[8] shareholding in ThinkSmart (net of their proportion of the 0.5% sale fees and after conversion into Pounds Sterling and Australian Dollars, as applicable). The amount of Cash Consideration actually received by Scheme Shareholders will be dependent on both the price of Block Shares at the time of the sale of the Block Sale Shares and the applicable exchange rates at the time of the conversion of the sale proceeds. Therefore, the amount of Cash Consideration received by Scheme Shareholders will not be known until after the Implementation Date and therefore after ThinkSmart Shareholders are required to vote on the Scheme. If the Scheme is implemented, Excluded Shareholders will receive ·     if an Excluded Shareholder does not make an Election, one new BidCo Share for each ThinkSmart Share held; or ·     if an Excluded Shareholder does make an Election: -    the Cash Consideration per Scheme Share to which the Election relates; and -    the Scrip Consideration (being one BidCo share per Scheme Share) for any Scheme Shares to which the Election does not relate. If an Excluded Shareholder elects to receive Cash Consideration in respect of some or all of its ThinkSmart Shares, the total number of Block Shares to be sold by ThinkSmart will increase by that proportion of ThinkSmart Shares. This means that the Cash Consideration otherwise received by ThinkSmart Shareholders will not be impacted by an Excluded Shareholder electing to receive some or all of their Scheme Consideration as Cash Consideration.	Section 4.1
When and how will I receive my Cash Consideration?	If the Scheme becomes Effective, Scheme Shareholders entitled to receive Cash Consideration will be sent the Cash Consideration as soon as practicable after the Implementation Date once the Block Sale Shares have been sold and the sale proceeds have been received and converted into the applicable currencies. The Cash Consideration is expected to be sent approximately 8 Business Days after completion of the sale of the Block Sale Shares. Scheme Shareholders entitled to receive Cash Consideration will be paid the Cash Consideration in Australian Dollars, except for the Depositary Custodian who will be paid the Cash Consideration in Pounds Sterling (meaning that ThinkSmart DI Holders will receive the Cash Consideration in Pounds Sterling). The Cash Consideration will be paid: ·     For ThinkSmart DI Holders, by way of assured payment obligation directly through the CREST system. ·     For ThinkSmart Shareholders that are not ThinkSmart DI Holders, as follows: -    where a Scheme Shareholder has validly elected to receive payments from ThinkSmart in Australian Dollars, by electronic funds transfer to their nominated bank account; -    by the Global Wire Payment Service, if a Scheme Shareholder who resides outside of Australia has elected to receive payments from ThinkSmart electronically in their local currency using the ThinkSmart Share Registry's Global Wire Payment Service; or -    otherwise, by cheque in Australian Dollars, dispatched by post to the Scheme Shareholder's registered address. To provide or update your bank account details or Global Wire Payment Instruction, please visit www.computershare.com.au/easyupdate/TSMU.	Section 4.1
Will I have to pay brokerage?	You will not have to pay brokerage on the transfer of your ThinkSmart Shares to BidCo under the Scheme. However, brokerage will be payable in relation to the sale of the Block Shares and the total sale costs for the sale of the Block Shares are expected to be 0.5% of sale proceeds.	Sections 1.1(g) and 4.1
What are the taxation implications of the Scheme?	The taxation implications of the Scheme will depend on your particular circumstances. Section 8.1 provides a general description of the Australian taxation consequences for Scheme Shareholders, and section 8.2 provides a general description of the United Kingdom taxation consequences for Scheme Shareholders. You should seek independent professional taxation advice with respect to your particular circumstances.	Section 8
Conditions to the Scheme
Are there any conditions to the Scheme?	Yes. The Scheme is subject to various conditions precedent that must be satisfied or waived (if capable of waiver) in order for the Scheme to be implemented. These conditions are summarised in section 4.3 and are set out in full in clause 3.1 of the Scheme Implementation Deed. The conditions include customary conditions in schemes of arrangement (such as shareholder approval, Court approval and the Independent Expert continuing to conclude that the Scheme is in the best interest of ThinkSmart Shareholders (other than the Excluded Shareholders)). As at the date of this Scheme Booklet, the ThinkSmart Independent Board Committee is not aware of any circumstance which would cause any condition to the Scheme not be satisfied or waived (if capable of waiver).	Section 4.3
What is required for the Scheme to become Effective?	The Scheme will become Effective if: ·     the Scheme is approved by the Requisite Majorities of ThinkSmart Shareholders at each of the Scheme Meetings to be held on 16 November 2022; ·     the Financial Assistance Resolution and Financial Benefit Resolution are approved at the Annual General Meeting to be held prior to the Scheme Meetings; ·     the Court approves the Scheme at the Second Court Hearing; and ·     all of the other conditions precedent to the Scheme are satisfied or waived (if capable of waiver).	N/A
Scheme Meetings
When and where will the General Scheme Meeting be held?	The General Scheme Meeting for ThinkSmart Shareholders (excluding the Excluded Shareholders) will be held virtually via the Computershare Virtual Meeting Platform on 16 November 2022, commencing at 5.00pm (Perth time). Please see the Notice of General Scheme Meeting in Annexure 4 for further details in relation to the conduct of the General Scheme Meeting. The General Scheme Meeting may be postponed or adjourned. Any such postponement or adjournment will be announced by ThinkSmart.	Annexure 4
When and where will the Excluded Shareholder Scheme Meeting be held?	The Excluded Shareholder Scheme Meeting for Excluded Shareholders will be held virtually via the Computershare Virtual Meeting Platform on 16 November 2022, commencing at 5.30pm (Perth time). If the General Scheme Meeting concludes after 5.30pm (Perth time) on this date, the Excluded Shareholder Scheme Meeting will begin as soon as practicable after the conclusion of the General Scheme Meeting. Please see the Notice of Excluded Shareholder Scheme Meeting in Annexure 5 for further details in relation to the conduct of the Excluded Shareholder Scheme Meeting. The Excluded Shareholder Scheme Meeting may be postponed or adjourned. Any such postponement or adjournment will be announced by ThinkSmart.	Annexure 5
Why are there two Scheme Meetings in relation to the Scheme?	The reason that there are two Scheme Meetings is that the Excluded Shareholders constitute a separate class of members because they are offered different consideration under the Scheme (being the Scrip Consideration, unless an Excluded Shareholder elects otherwise). This means that the Excluded Shareholders will not be permitted to vote at the General Scheme Meeting and will instead vote at the Excluded Shareholder Scheme Meeting on a separate Scheme Resolution (being the Excluded Shareholder Scheme Resolution).	Section 4.5
What will Scheme Shareholders be asked to vote on at the Scheme Meetings?	At each respective Scheme Meeting, Scheme Shareholders will be asked to vote on whether to approve the Scheme.	Annexure 4 and Annexure 5
What is the ThinkSmart Shareholder approval threshold for the Scheme?	In order to become Effective, the Scheme must be approved by the Requisite Majorities, being: (a)   in relation to the General Scheme Resolution, a resolution passed by: ·      unless the Court orders otherwise, a majority in number (more than 50%) of ThinkSmart Shareholders (excluding Excluded Shareholders) present and voting at the General Scheme Meeting (either in person or by proxy, attorney or, in the case of corporate ThinkSmart Shareholders, body corporate representative); and ·      at least 75% of the total number of votes cast on the General Scheme Resolution at the General Scheme Meeting by ThinkSmart Shareholders (excluding Excluded Shareholders) present and voting (either in person or by proxy, attorney or, in the case of corporate ThinkSmart Shareholders, body corporate representative); and (b)   in relation to the Excluded Shareholder Scheme Resolution, a resolution passed by: ·      unless the Court orders otherwise, a majority in number (more than 50%) of Excluded Shareholders present and voting at the Excluded Shareholder Scheme Meeting (either in person or by proxy, attorney or, in the case of corporate Excluded Shareholders, body corporate representative); and ·      at least 75% of the total number of votes cast on the Excluded Shareholder Scheme Resolution at the Excluded Shareholder Scheme Meeting by Excluded Shareholders present and voting (either in person or by proxy, attorney or, in the case of corporate Excluded Shareholders, body corporate representative). Even if the Scheme is approved by the Requisite Majorities of Scheme Shareholders at the Scheme Meetings, the Scheme is still subject to the approval of the Court.	Section 4.5
Am I entitled to vote at a Scheme Meeting?	ThinkSmart Shareholders who are recorded on the ThinkSmart Share Register at 5.30pm (Perth time) on 14 November 2022 will be entitled to attend and vote at the applicable Scheme Meeting. ThinkSmart DI Holders who are recorded on the ThinkSmart DI Register at 6.00pm (London time) on 11 November 2022 will be entitled to access the applicable Scheme Meeting but will not vote at the applicable Scheme Meeting (see below).	Annexure 4 and Annexure 5
How can I vote if I can't attend the Scheme Meetings?	ThinkSmart Shareholders who would like to vote but cannot attend the applicable Scheme Meeting can vote by either appointing a proxy or an attorney. They may also vote by appointing a corporate representative if that option is applicable. ThinkSmart DI Holders will not vote at the applicable Scheme Meeting. ThinkSmart DI Holders may only vote by completing the Form of Instruction for the applicable Meeting in accordance with the instructions on the form and lodging it with the Depositary or by completing CREST Voting Instructions for the applicable Meeting.	Section 3.2(d), Annexure 4 and Annexure 5
When will the results of the Scheme Meetings be known?	The results of each Scheme Meeting will be available as soon as possible after the conclusion of the Scheme Meetings and will be announced by ThinkSmart via the RNS of the LSE once available.	N/A
Is voting compulsory?	Voting is not compulsory. However, the Scheme will only be successful if it is approved by ThinkSmart Shareholders by the Requisite Majorities at each Scheme Meeting, so voting is important and the ThinkSmart Independent Board Committee encourages you to vote. The ThinkSmart Independent Board Committee unanimously recommends that ThinkSmart Shareholders vote in favour of the Scheme in the absence of a Superior Proposal, and subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of ThinkSmart Shareholders (other than the Excluded Shareholders). In light of the arrangements summarised in section 6.1, Mr Ned Montarello, who is the sole shareholder of BidCo, has recused himself from discussions on the Scheme and abstains from giving a recommendation in respect of how ThinkSmart Shareholders should vote on the Scheme.	Section 4.5
What happens to my ThinkSmart Shares if I do not vote, or if I vote against the Scheme, and the Scheme becomes effective and is implemented?	If you do not vote, or vote against the Scheme, the Scheme may still be implemented if it is approved by the Requisite Majorities of ThinkSmart Shareholders and the Court. If this occurs, your ThinkSmart Shares will be transferred to BidCo and you will receive the Scheme Consideration even though you did not vote on, or voted against, the Scheme.	Section 4.5(a)
What happens if the Scheme does not become Effective?	If the Scheme is not implemented: ·      ThinkSmart Shareholders will continue to hold ThinkSmart Shares; ·      ThinkSmart Shareholders will not receive the Scheme Consideration; ·      a Reimbursement Fee up to a maximum of $200,000 (excluding GST) may be payable by ThinkSmart to BidCo under certain circumstances. Those circumstances do not include the failure by ThinkSmart Shareholders to approve the Scheme at the Scheme Meetings; ·      ThinkSmart Shareholders will continue to be exposed to the risks associated with Block Shares through their ThinkSmart shareholding, as well as the ongoing wind down of ThinkSmart's business operations and likely eventual liquidation; and ·      ThinkSmart will continue as an AIM-listed entity incurring ongoing listing and corporate costs.	Sections 4.4 and 7.4(c)
Annual General Meeting
When and where will the Annual General Meeting be held?	The 2022 Annual General Meeting will be held virtually via the Computershare Virtual Meeting Platform on 16 November 2022, commencing at 4.00pm (Perth time). Please see the Notice of Annual General Meeting in Annexure 6 for further details in relation to the conduct of the Annual General Meeting. The Annual General Meeting may be postponed or adjourned. Any such postponement or adjournment will be announced by ThinkSmart.	Annexure 6
What are the Financial Assistance Resolution and Financial Benefit Resolution being considered at the Annual General Meeting?	ThinkSmart will provide the Loan (as lender) to BidCo (as borrower) as part of the flow of the sale proceeds from the sale of the Block Sale Shares from ThinkSmart to BidCo, following which the proceeds will be converted to Australian Dollars and Pounds Sterling (as required). By incurring obligations under the Loan Deed (including to provide the Loan) ThinkSmart will be: ·     giving financial assistance to BidCo to acquire ThinkSmart Shares for the purposes of Part 2J.3 of the Corporations Act; and ·     giving a financial benefit to BidCo for the purposes of Chapter 2E of the Corporations Act. This must be authorised by ThinkSmart Shareholders for the purposes of sections 260A and 208 of the Corporations Act. ThinkSmart Shareholders need to approve both the Financial Assistance Resolution and the Financial Benefit Resolution, in addition to the Scheme Resolutions, for the Scheme to be implemented.	Section 9
What is the ThinkSmart Shareholder approval threshold for the Financial Assistance Resolution and Financial Benefit Resolution?	The Financial Assistance Resolution must be approved by a special resolution (ie 75% or more) of ThinkSmart Shareholders (with no votes being cast in favour of the resolution by any of BidCo's associates (being Mr Ned Montarello and the Excluded Shareholders)). The Financial Benefit Resolution needs to be approved by a simple majority (ie more than 50%) of votes cast by ThinkSmart Shareholders. Mr Ned Montarello and the Excluded Shareholders will also be excluded from voting on this resolution under section 224 of the Corporations Act. ThinkSmart Shareholders need to approve both the Financial Assistance Resolution and the Financial Benefit Resolution, in addition to the Scheme Resolutions, for the Scheme to be implemented.	Section 9 and Annexure 6
Am I entitled to vote at the Annual General Meeting?	ThinkSmart Shareholders who are recorded on the ThinkSmart Share Register at 5.30pm (Perth time) on 14 November 2022 will be entitled to attend and vote at the Annual General Meeting. ThinkSmart DI Holders who are recorded on the ThinkSmart DI Register at 6.00pm (London time) on 11 November 2022 will be entitled to access the Annual General Meeting but will not vote at the Annual General Meeting (see below).	Section 9 and Annexure 6
How can I vote if I can't attend the Annual General Meeting?	ThinkSmart Shareholders who would like to vote but cannot attend the Annual General Meeting can vote by either appointing a proxy or an attorney. They may also vote by appointing a corporate representative if that option is applicable. ThinkSmart DI Holders will not vote at the Annual General Meeting. ThinkSmart DI Holders may only vote by completing the Form of Instruction for the Annual General Meeting in accordance with the instructions on the form and lodging it with the Depositary or by completing CREST Voting Instructions for the Annual General Meeting.	Section 9 and Annexure 6
When will the results of the Annual General Meeting be known?	The results of the Annual General Meeting will be available as soon as possible after the conclusion of the Annual General Meeting and will be announced by ThinkSmart once available.	N/A
Is voting compulsory?	Voting is not compulsory. However, the Scheme will only be successful if the Financial Assistance Resolution and Financial Benefit Resolution are approved by ThinkSmart Shareholders, so voting is important and the ThinkSmart Independent Board Committee encourages you to vote. The ThinkSmart Independent Board Committee unanimously recommends that ThinkSmart Shareholders vote in favour of the Scheme in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of ThinkSmart Shareholders (other than the Excluded Shareholders). The ThinkSmart Independent Board Committee also unanimously recommends that ThinkSmart Shareholders vote in favour of the Financial Assistance Resolution and Financial Benefit Resolution at the Annual General Meeting. Mr Ned Montarello owns and controls BidCo. Accordingly, he does not make any recommendation in relation to the Financial Assistance Resolution or Financial Benefit Resolution.	Sections 4.5 and 9
Do the Financial Assistance Resolution and Financial Benefit Resolution need to be approved for the Scheme to be implemented?	Yes, for the Scheme to be implemented, ThinkSmart Shareholders need to approve both the Financial Assistance Resolution and the Financial Benefit Resolution, in addition to the Scheme Resolutions. It is therefore important that ThinkSmart Shareholders vote at the Annual General Meeting in addition to the applicable Scheme Meeting.	Section 9
Other questions
What happens if a Competing Proposal is received?	If a Competing Proposal is received, the ThinkSmart Independent Board Committee will carefully consider it. ThinkSmart must notify BidCo of that Competing Proposal in accordance with the Scheme Implementation Deed. ThinkSmart Shareholders should note that ThinkSmart has agreed to certain exclusivity provisions in favour of BidCo under the Scheme Implementation Deed that restrict ThinkSmart's ability to participate in negotiations and discussions in relation to a Competing Proposal (subject to certain fiduciary exceptions).	Section 10.4
What is the performance risk associated with the Scheme?	If the Scheme becomes Effective, ThinkSmart Shareholders will transfer their ThinkSmart Shares to BidCo on the Implementation Date. However, ThinkSmart Shareholders entitled to receive Cash Consideration will not receive their Cash Consideration until after the Implementation Date and the amount of Cash Consideration will be determined by the price at which the Block Sale Shares can be sold for following Implementation. There is therefore a risk that ThinkSmart Shareholders transfer their ThinkSmart Shares to BidCo on the Implementation Date but that BidCo does not pay the Cash Consideration, in breach of its obligations under the Scheme Implementation Deed, Deed Poll and Funds Flow Deed. However, the ThinkSmart Independent Board Committee considers this risk to be theoretical only, because: ·     it would require BidCo (which is controlled by ThinkSmart's founder and Executive Chairman) to deliberately breach its obligations under the Scheme Implementation Deed, Deed Poll and Funds Flow Deed all of which are legally binding documents which form key elements of the Court supervised process in connection with the Scheme. If, contrary to the ThinkSmart Independent Board Committee's expectation, such a breach did occur, Scheme Shareholders will have an unsecured claim against BidCo under the Deed Poll in relation to the payment of the Cash Consideration; and ·     as a practical matter, under the terms of the Scheme Implementation Deed, the members of the ThinkSmart Independent Board Committee will remain on the ThinkSmart Board until after the Cash Consideration has been despatched to Scheme Shareholders, and so, the ThinkSmart Independent Board Committee will assist with overseeing the payment of the Cash Consideration to the Scheme Shareholders in accordance with the Scheme. Further details of the performance risk are set out in section 7.4(b).	Section 7
What are the other risks associated with the ThinkSmart business?	In considering the Scheme, ThinkSmart Shareholders should be aware that there are a number of risk factors, both general and specifically relating to ThinkSmart, which may affect the future operating and financial performance of ThinkSmart and the price and/or value of ThinkSmart Shares. If the Scheme proceeds, ThinkSmart Shareholders will receive the Scheme Consideration, will cease to hold ThinkSmart Shares and will also no longer be exposed to such risks. If the Scheme does not proceed, ThinkSmart Shareholders will continue to hold ThinkSmart Shares and continue to be exposed to risks associated with investment in ThinkSmart. In deciding whether to vote in favour of the Scheme, ThinkSmart Shareholders should read this Scheme Booklet carefully and consider the risk factors set out in section 7, as well as the other information contained in this Scheme Booklet before making any decision in relation to the Scheme.	Section 7
Can I sell my ThinkSmart Shares now?	The Scheme does not preclude you from selling some or all of your ThinkSmart Shares prior to the Effective Date. ThinkSmart intends to apply to AIM for ThinkSmart Shares to be suspended from trading on AIM from 7.30am (London time) on the Effective Date. ThinkSmart Shareholders who sell some or all of their ThinkSmart Shares: ·     may receive payment (which may vary from the Scheme Consideration) for the sale of their ThinkSmart Shares sooner than they would receive the Scheme Consideration under the Scheme; ·     may incur a brokerage charge; ·     will not be able to participate in the Scheme or, if one emerges, a Superior Proposal, in respect of those ThinkSmart Shares they have sold; and ·     may be liable for income tax (including capital gains tax) on the disposal of their ThinkSmart Shares (as they also may be under the Scheme - see section 8 for further information).	Section 4.2
If the Scheme is implemented, will ThinkSmart cease trading on AIM?	ThinkSmart intends to apply to AIM for ThinkSmart Shares to be suspended from trading on AIM from 7.30am (London time) on the Effective Date. ThinkSmart then intends to apply for the cancellation of the admission of ThinkSmart Shares to trading on AIM to occur shortly after the Implementation Date.	N/A
What if I have further questions about the Scheme?	For further information, please contact the ThinkSmart Shareholder Information Line on 1300 528 984 (within Australia) or +61 3 9415 4826 (outside Australia), between 8.30am and 5.00pm (Sydney time), Monday to Friday. ThinkSmart DI Holders can contact the dedicated Depositary Interest Information Line on +44 0207 887 2225 or +44 0800 298 7356 (within the United Kingdom) between 9.00am and 5.00pm (London time), Monday to Friday. If you are in doubt about anything in this Scheme Booklet, please contact your financial, legal, taxation or other professional adviser immediately.	N/A

 

 

3.1         Step 1: Read this Scheme Booklet

You should carefully read this Scheme Booklet in its entirety before deciding whether to vote in favour of the Scheme.

If you have any questions, please contact the ThinkSmart Shareholder Information Line on 1300 528 984 (within Australia) or +61 3 9415 4826 (outside Australia), between 8.30am and 5.00pm (Sydney time), Monday to Friday. ThinkSmart DI Holders can contact the dedicated Depositary Interest Information Line on +44 0207 887 2225 or +44 0800 298 7356 (within the United Kingdom) between 9.00am and 5.00pm (London time), Monday to Friday.

If you are in any doubt as to what you should do, please consult your legal, financial, tax or other professional adviser immediately.

3.2         Step 2: Vote on the Scheme

(a)          Your vote is important

For the Scheme to proceed, it is necessary that the Requisite Majorities of ThinkSmart Shareholders vote in favour of the Scheme.

For the Scheme to proceed, ThinkSmart Shareholders will need to approve the Scheme Resolution at the applicable Scheme Meeting and the Financial Assistance Resolution and the Financial Benefit Resolution at ThinkSmart's 2022 Annual General Meeting, which will be held prior to the Scheme Meetings. The ThinkSmart Independent Board Committee encourages ThinkSmart Shareholders to vote at both the Annual General Meeting and the applicable Scheme Meeting.

(b)          Scheme Meetings and Annual General Meeting

The General Scheme Meeting will be held virtually via the Computershare Virtual Meeting Platform at 5.00pm (Perth time) on 16 November 2022. Details about the General Scheme Meeting are set out in the Notice of General Scheme Meeting contained in Annexure 4.

The Excluded Shareholder Scheme Meeting will be held virtually via the Computershare Virtual Meeting Platform at 5.30pm (Perth time) on 16 November 2022. Details about the Excluded Shareholder Scheme Meeting are set out in the Notice of Excluded Shareholder Scheme Meeting contained in Annexure 5.

If the General Scheme Meeting concludes after 5.30pm (Perth time) on 16 November 2022, the Excluded Shareholder Scheme Meeting will begin as soon as practicable after the conclusion of the General Scheme Meeting. Details about the Excluded Shareholder Scheme Meeting are set out in the Notice of Excluded Shareholder Scheme Meeting contained in Annexure 5.

The Annual General Meeting will be held virtually via the Computershare Virtual Meeting Platform prior to the Scheme Meetings at 4.00pm (Perth time) on 16 November 2022. Details about the Annual General Meeting are set out in the Notice of Annual General Meeting contained in Annexure 6.

(c)          Who is entitled to vote?

ThinkSmart Shareholders registered on the ThinkSmart Share Register at 5.30pm (Perth time) on 14 November 2022, will be entitled to vote at:

·                 the Annual General Meeting;

·                 the General Scheme Meeting, if they are not an Excluded Shareholder; and

·                 the Excluded Shareholder Scheme Meeting, if they are an Excluded Shareholder.

ThinkSmart DI Holders who are recorded on the ThinkSmart DI Register at 6.00pm (London time) on 11 November 2022 will be entitled to vote at the Annual General Meeting and the General Scheme Meeting.

(d)          How to vote?

ThinkSmart Shareholders

You may vote:

·                 in person, by attending the relevant Meeting via the Computershare Virtual Meeting Platform. Details regarding how to access the Computershare Virtual Meeting Platform and vote are set out in:

‒    the Notice of General Scheme Meeting for ThinkSmart Shareholders who are not Excluded Shareholders, as contained in Annexure 4 of this Scheme Booklet;

‒    the Notice of Excluded Shareholder Scheme Meeting for Excluded Shareholders, as contained in Annexure 5 of this Scheme Booklet; and

‒    the Notice of Annual General Meeting for ThinkSmart Shareholders, as contained in Annexure 6 of this Scheme Booklet.

·                 by proxy, by lodging a Scheme Meeting proxy form or Annual General Meeting proxy form online at www.investorvote.com.au (Control ID: 181913 (for the Annual General Meeting), 181915 (for the General Scheme Meeting) and 181916 (for the Excluded Shareholder Scheme Meeting)) or by completing, signing and lodging a proxy form for the relevant Meeting in accordance with the instructions set out on the form. To be valid, your proxy form(s) must be received by the ThinkSmart Share Registry by:

‒    5.30pm (Perth time) on 14 November 2022 for ThinkSmart Shareholders voting by proxy at the Annual General Meeting;

‒    5.30pm (Perth time) on 14 November 2022 for ThinkSmart Shareholders (excluding Excluded Shareholders) voting by proxy at the General Scheme Meeting; or

‒    5.30pm (Perth time) on 14 November 2022 for Excluded Shareholders voting by proxy at the Excluded Shareholder Scheme meeting;

·                 by attorney, by appointing an attorney to attend and vote at the relevant Meeting on your behalf and providing a duly executed power of attorney to the ThinkSmart Share Registry by:

‒    5.30pm (Perth time) on 14 November 2022 for ThinkSmart Shareholders voting by attorney at the Annual General Meeting;

‒    5.30pm (Perth time) on 14 November 2022 for ThinkSmart Shareholders (excluding Excluded Shareholders) voting by attorney at the General Scheme Meeting; or

‒    5.30pm (Perth time) on 14 November 2022 for Excluded Shareholders voting by attorney at the Excluded Shareholder Scheme meeting; or

·                 by corporate representative, in the case of a body corporate which is a ThinkSmart Shareholder, by appointing a corporate representative to attend and vote at the relevant Meeting on behalf of that ThinkSmart Shareholder.

Further details on how to vote are contained in Annexure 4, Annexure 5 and Annexure 6.

ThinkSmart DI Holders

If you are entitled to vote and are a ThinkSmart DI Holder, you can do so only:

·                 by completing the Form of Instruction for the applicable Meeting in accordance with the instructions on the form and lodging it with the Depositary at the following address: Computershare Investor Services plc, The Pavilions, Bridgwater Road, Bristol BS99 6ZY by 11 November 2022 at 9.00 am (London time) for the Annual General Meeting or 10.00am (London time) for the General Scheme Meeting; or

·                 by completing CREST Voting Instructions for the applicable Meeting.

ThinkSmart DI Holders should vote through the Form of Instruction or via the CREST voting service using a CREST Voting Instruction. To be effective, the Form of Instruction or the CREST Voting Instruction for each applicable Meeting must be received by the Depositary no later than 9.00am (London time) for the Annual General Meeting or 10.00am (London time) for the General Scheme Meeting on 11 November 2022.

ThinkSmart DI Holders can access the applicable Meeting virtually via the Computershare Virtual Meeting Platform, but cannot vote at the Meeting. ThinkSmart DI Holders can only vote through the process described above. ThinkSmart DI Holders (or their proxies) should submit a request to ThinkSmart at www.thinksmartworld.com/contact to be provided with a link to the Computershare Virtual Meeting Platform.

Further details on how to vote are contained in Annexure 4, Annexure 5 and Annexure 6.

 

4.1         Overview of Scheme Consideration

Cash Consideration

The Cash Consideration under the Scheme relates to the proceeds from the sale of certain Block Shares held by ThinkSmart.

If the Scheme becomes Effective, then:

·                 the Block Sale Shares will be the number of the Block Shares held by ThinkSmart that will be sold and will be referable to the proportion of Scheme Shares held by Scheme Shareholders entitled to receive Cash Consideration. This will be calculated as: 618,750 (being the total number of Block Shares held by ThinkSmart) multiplied by the total number of Relevant Scheme Shares (being the ThinkSmart Shares held by Scheme Shareholders who are entitled to receive Cash Consideration), and divided by the total number of ThinkSmart Shares on issue at that time, rounded to the nearest whole number of Block Shares;

·                 the Broker irrevocably appointed by ThinkSmart and BidCo will be instructed to sell the Block Sale Shares on-market on the New York Stock Exchange as soon as practicable on the next Trading Day following the Implementation Date (and, in any event, within 3 Trading Days following the Implementation Date)[9]; and

·                 BidCo and ThinkSmart will procure that the proceeds from the sale of the Block Sale Shares (subject to certain adjustments as set out in the definition of Block Sale Share Proceeds - see section 11.1 of this Scheme Booklet) are, as soon as practicable, paid to the Scheme Shareholders entitled to receive Cash Consideration under the Scheme:

‒    pro rata to the relative respective holdings of Relevant Scheme Shares of each Scheme Shareholder entitled to receive Cash Consideration;

‒    in the applicable currencies (see below); and

‒    net of any banking charges or fees (including wire transfer fees or corresponding charges) or charges or fees of a similar nature which are incurred with respect to the payment of the Block Sale Share Proceeds to the relevant Scheme Shareholder entitled to receive Cash Consideration under the Scheme and net of any other amounts (including tax) required by law to be withheld (if applicable).

Where the calculation of the Cash Consideration to be provided to a particular Scheme Shareholder would result in the Scheme Shareholder becoming entitled to a fraction of a cent (or a fraction of a pence, where applicable), the fractional entitlement will be rounded down to the nearest whole cent or pence (as applicable).

Variability of the Cash Consideration

The Cash Consideration to be paid under the Scheme is dependent on:

·                 the price of Block Shares on the New York Stock Exchange as at the date of the sale; and

·                 the applicable currency conversion rates as at the date of the conversion of the sale proceeds from United States Dollars to Pounds Sterling and Australian Dollars (as applicable).

Therefore, the Cash Consideration to be paid under the Scheme will not be known until after the Implementation Date and after the date Scheme Shareholders are asked to vote on the Scheme. Accordingly, the amount of Cash Consideration that is ultimately received by Scheme Shareholders may be more or less than was anticipated by the Scheme Shareholders prior to the Scheme Record Date.

ThinkSmart makes no representation that any sale price received for the Block Sale Shares will be the best price available for Block Shares at the relevant time.

The table below demonstrates how the Cash Consideration received by Scheme Shareholders may vary depending on the average price received for the Block Sale Shares.[10] This table is illustrative only and ThinkSmart does not guarantee that the average price received for the Block Sale Shares will be in the ranges noted below.

Average Block Sale Share price realised (USD)	Indicative Cash Consideration per ThinkSmart Share (GBP)	Indicative Cash Consideration per ThinkSmart Share (AUD)
US$44.74, being a 20% discount to the closing price of Block Shares as at the Last Practicable Date	£0.2266	A$0.4083
US$50.33, being a 10% discount to the closing price of Block Shares as at the Last Practicable Date	£0.2550	A$0.4594
US$55.92, being the closing price of Block Shares as at the Last Practicable Date	£0.2833	A$0.5104
US$61.51, being a 10% premium to the closing price of Block Shares as at the Last Practicable Date	£0.3116	A$0.5615
US$67.10, being a 20% premium to the closing price of Block Shares as at the Last Practicable Date	£0.3399	A$0.6125

 

The following chart shows the price of Block Shares over the time period used by the Independent Expert to value the Cash Consideration (see the Independent Expert Report in Annexure 1 for further details):

Entitlement to Cash Consideration

The Scheme Shareholders entitled to receive Cash Consideration under the Scheme are:

·                 the ThinkSmart Shareholders (excluding the Excluded Shareholders) who hold ThinkSmart Shares at the Scheme Record Date; and

·                 any Excluded Shareholder who holds ThinkSmart Shares at the Scheme Record Date and elects to receive Cash Consideration in accordance with the election procedure below.

Currency conversion

As the Block Sale Shares are traded in United States Dollars on the New York Stock Exchange, the Block Sale Share Proceeds will be received in United States Dollars.

The Block Sale Share Proceeds will therefore be converted from United States Dollars into Australian Dollars and Pounds Sterling (as described below). The Scheme Shareholders will bear all foreign exchange risk and costs in relation to any currency conversion undertaken in connection with the conversion and transfer of the Cash Consideration.

The applicable currency conversion rate will be set at the time the Block Sale Share Proceeds are converted and will be equal to the applicable exchange rate that ThinkSmart receives for the transaction. It is likely that the exchange rate received by ThinkSmart will be different to the exchange rate that is published prior to the Scheme Record Date. Accordingly, the amount of Cash Consideration that is ultimately received by Scheme Shareholders may be more or less than was anticipated by the Scheme Shareholders prior to the Scheme Record Date.

ThinkSmart makes no representation that any exchange rate received will be the best exchange rate available.

Cash Consideration payment currencies

Scheme Shareholders entitled to receive Cash Consideration will be paid the Cash Consideration in Australian Dollars, except for the Depositary Custodian who will be paid the Cash Consideration in Pounds Sterling (meaning that the ThinkSmart DI Holders will receive the Cash Consideration in Pounds Sterling).

ThinkSmart Shareholders who reside outside of Australia may, before the Scheme Record Date, elect to receive payments from ThinkSmart electronically in their local currency using the ThinkSmart Share Registry's Global Wire Payment Service.

Withholding tax

As set out in the Scheme Implementation Deed and the definition of "Block Sale Share Proceeds" in this Scheme Booklet, BidCo is entitled to deduct from the Block Sale Share Proceeds any tax (including withholding) which is required to be remitted to a Government Agency (with such tax excluding any income tax or tax on profits). Such withholding tax, if applicable, would reduce the Cash Consideration received by Scheme Shareholders.

Based on Australian, English and United States tax law applicable as at the date of this Scheme Booklet, neither ThinkSmart nor BidCo expect any such withholding tax to apply to the sale of the Block Sale Shares by ThinkSmart and therefore do not expect there to be any associated reduction in the amount of Cash Consideration to be received by Scheme Shareholders entitled to receive Cash Consideration. However, new law (or changes in the way current law is regulated) may occur between the date of this Scheme Booklet and the time when the Block Sale Shares are sold, which could result in withholding tax applying. To the extent that any such change (or potential change) of law arises, BidCo and ThinkSmart intend to communicate this and the associated impact on the Cash Consideration to ThinkSmart Shareholders via ThinkSmart's website at https://www.thinksmartworld.com.

Payment

The Cash Consideration will be sent to the Scheme Shareholders entitled to receive Cash Consideration as soon as practicable after the Implementation Date once the Block Sale Shares have been sold and the Block Sale Share Proceeds have been received and converted into the applicable currencies. Payment is currently expected to be sent to Scheme Shareholders approximately 8 Business Days after completion of the sale of the Block Sale Shares.

It is important to note that you will only receive the Scheme Consideration (including the Cash Consideration, if applicable) if you are a Scheme Shareholder. You will be a Scheme Shareholder if you hold ThinkSmart Shares at the Scheme Record Date.

The Cash Consideration will be paid:

·                 For ThinkSmart DI Holders, by way of assured payment obligation directly through the CREST system.

·                 For ThinkSmart Shareholders that are not ThinkSmart DI Holders, as follows:

‒    where a Scheme Shareholder has, before the Scheme Record Date, validly elected to receive payments from ThinkSmart in Australian Dollars, by electronic funds transfer to the bank account nominated by the Scheme Shareholder;

‒    by the Global Wire Payment Service, if a Scheme Shareholder who resides outside of Australia has, before the Scheme Record Date, elected to receive payments from ThinkSmart electronically in their local currency using the ThinkSmart Share Registry's Global Wire Payment Service; or

‒    otherwise, by cheque in Australian Dollars, dispatched by post to the Scheme Shareholder's registered address.

To provide or update your bank account details or Global Wire Payment Instruction, please visit www.computershare.com.au/easyupdate/TSMU.

Excluded Shareholders

The Excluded Shareholders are those ThinkSmart Shareholders who are associated with BidCo and Mr Ned Montarello. The Excluded Shareholders can elect to receive either Cash Consideration or BidCo Shares (or a combination thereof) as consideration for their Scheme Shares.

If the Scheme becomes Effective, the Excluded Shareholders will be entitled to receive either:

·                 the Scrip Consideration; or

·                 if an Excluded Shareholder makes an Election:

‒    the Cash Consideration per Scheme Share in respect of that number of Scheme Shares held by the Excluded Shareholder on the Scheme Record Date for which the Excluded Shareholder has made an Election (in an Election Form) to receive the Cash Consideration; and

‒    the Scrip Consideration per Scheme Share in respect of the Scheme Shares held by the Excluded Shareholder on the Scheme Record Date for which the Excluded Shareholder has not made an Election (in an Election Form) to receive the Cash Consideration.

Scrip Consideration

If an Excluded Shareholder is entitled to receive Scrip Consideration under the Scheme, then for each ThinkSmart Share held by the Excluded Shareholder as at the Scheme Record Date for which an Election has not been made, the Scrip Consideration is 1 BidCo Share.

Cash Consideration

To make an Election to receive Cash Consideration, the Excluded Shareholder must complete and sign an Election Form and ensure the Election Form is received by ThinkSmart before the Election Time, being 5:00pm on the fifth Business Day before the date of the Scheme Meetings, or such other date as is agreed in writing between BidCo and ThinkSmart. ThinkSmart will make Election Forms available to each Excluded Shareholder.

If an Excluded Shareholder elects to receive Cash Consideration in respect of some or all of its ThinkSmart Shares, the total number of Block Shares to be sold by ThinkSmart (in accordance with the procedure noted above) will increase by that proportion of ThinkSmart Shares.

ThinkSmart Shareholders will receive the sale proceeds (subject to the adjustments noted above) relating to the proportion of the 618,750 Block Shares held by ThinkSmart attributable to their fully diluted[11] shareholding in ThinkSmart as at the Scheme Record Date. This means that the Cash Consideration otherwise received by ThinkSmart Shareholders will not be impacted by an Excluded Shareholder electing to receive some or all of their Scheme Consideration as Cash Consideration.

4.2         Your choices as a ThinkSmart Shareholder

As a ThinkSmart Shareholder who is eligible to vote at the applicable Scheme Meeting, you have the following choices in relation to your ThinkSmart Shares:

Vote in favour of the Scheme

This is the course of action unanimously recommended by the ThinkSmart Independent Board Committee, in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude that the Scheme is in the best interest of ThinkSmart Shareholders (other than the Excluded Shareholders).

To follow the ThinkSmart Independent Board Committee's unanimous recommendation, you should:

·                 vote in favour of the Scheme at the applicable Scheme Meeting on 16 November 2022; and

·                 vote in favour of the Financial Assistance Resolution and Financial Benefit Resolution at ThinkSmart's 2022 Annual General Meeting, which will be held prior to the Scheme Meetings.

For a summary of how to vote on the Scheme, please refer to section 3, the Notice of General Scheme Meeting contained in Annexure 4 (for ThinkSmart Shareholders excluding Excluded Shareholders), the Notice of Excluded Shareholder Scheme Meeting contained in Annexure 5 (for Excluded Shareholders) and the Notice of Annual General Meeting contained in Annexure 6.

Vote against the Scheme

If, despite the ThinkSmart Independent Board Committee's unanimous recommendation and the Independent Expert's conclusion that the Scheme is fair and reasonable and therefore in the best interest of ThinkSmart Shareholders (other than the Excluded Shareholders), you do not support the Scheme, you may vote against the Scheme at the applicable Scheme Meeting on 16 November 2022 and against the Financial Assistance Resolution and Financial Benefit Resolution at the Annual General Meeting, which will be held prior to the Scheme Meetings.

However, if all the Conditions Precedent to the Scheme are satisfied or waived (if capable of waiver) and the Scheme becomes Effective and is implemented, the Scheme will bind all Scheme Shareholders, including those who vote against the Scheme Resolution at the applicable Scheme Meeting (and/or those that vote against the Financial Assistance Resolution and Financial Benefit Resolution at the Annual General Meeting) and those who do not vote at all.

As noted in ThinkSmart's RNS announcement dated 29 July 2022, Mr Ned Montarello has confirmed he intends to vote in favour of the Scheme in respect of all the ThinkSmart Shares he holds or controls. Accordingly, the Excluded Shareholder Scheme Resolution is expected to be passed at the Excluded Shareholder Scheme Meeting.

Sell your ThinkSmart Shares or ThinkSmart Depositary Interests

The Scheme does not preclude you from selling some or all of your ThinkSmart Shares prior to the Effective Date.

ThinkSmart intends to apply to AIM for ThinkSmart Shares to be suspended from trading on AIM from 7.30am (London time) on the Effective Date.

ThinkSmart Shareholders who sell some or all of their ThinkSmart Shares:

·                 are likely to receive payment (which may vary from the Scheme Consideration) for the sale of their ThinkSmart Shares sooner than they would receive the Scheme Consideration under the Scheme;

·                 may incur a brokerage charge;

·                 will not be able to participate in the Scheme or, if one emerges, a Superior Proposal, in respect of those ThinkSmart Shares they have sold; and

·                 may be liable for income tax (including capital gains tax) on the disposal of their ThinkSmart Shares (as they also may be under the Scheme - see section 8 for further information).

Do nothing

ThinkSmart Shareholders who elect not to vote at the relevant Scheme Meeting or do not sell their ThinkSmart Shares will:

·                 if the Scheme is implemented - have any ThinkSmart Shares held by them as at the Scheme Record Date transferred to BidCo by operation of the Scheme and receive the Scheme Consideration; or

·                 if the Scheme is not implemented - retain their ThinkSmart Shares.

4.3         Conditions to the Scheme

Implementation of the Scheme is subject to the following outstanding conditions precedent:

(a)          Regulatory approvals: the UK Financial Conduct Authority providing the necessary approvals under the UK Financial Services and Markets Act 2000, and ASIC issuing or providing all relief, waivers, confirmations, exemptions, consents or approvals necessary to implement the Scheme (with such approvals not being revoked before 8.00am on the Second Court Date);

(b)          Shareholder approval: the Requisite Majorities of ThinkSmart Shareholders approve the Scheme at the Scheme Meetings;

(c)          Independent Expert: the Independent Expert does not change its conclusion or withdraw its Independent Expert's Report before 8.00am on the Second Court Date;

(d)          Court approval: the Court approves the Scheme in accordance with section 411(4)(b) of the Corporations Act;

(e)          Financial Assistance Resolution and Financial Benefit Resolution: ThinkSmart Shareholders approve the Financial Assistance Resolution and Financial Benefit Resolution at the Annual General Meeting;

(f)           Restraints: no restraining order, injunction or other order that would prevent or delay the Scheme made by a court of competent jurisdiction or Government Agency is in effect at 8.00am on the Second Court Date;

(g)          No Target Prescribed Occurrence or Target Regulated Event: no Target Prescribed Occurrence or Target Regulated Event (each as defined in the Scheme Implementation Deed) occurs between (and including) 29 July 2022 and 8.00am on the Second Court Date; and

(h)          Sale of Block Shares: ThinkSmart not selling, disposing of or otherwise dealing with any Block Shares (other than in accordance with the Scheme Implementation Deed) between (and including) 29 July 2022 and 8.00am on the Second Court Date.

The Scheme was also subject to the following conditions, which have been satisfied:

(a)          Broker: the Broker having been appointed in accordance with the Scheme Implementation Deed.

The Scheme will not proceed unless all of the conditions precedent to the Scheme are satisfied or waived (as applicable) in accordance with the Scheme Implementation Deed.

As at the date of this Scheme Booklet, none of the Independent Directors or BidCo Directors are aware of any circumstances which would cause any condition precedent not to be satisfied.

4.4         Implications if the Scheme does not become Effective

If the Scheme is not implemented:

·                 ThinkSmart Shareholders will continue to hold ThinkSmart Shares and will be exposed to general risks as well as risks specific to ThinkSmart, including those set out in section 7.

·                 ThinkSmart Shareholders will not receive the Scheme Consideration.

·                 A reimbursement fee of up to $200,000 (excluding GST) may be payable by ThinkSmart to BidCo under certain circumstances. Those circumstances do not include the failure by ThinkSmart Shareholders to approve the Scheme at the Scheme Meetings. Further information on the reimbursement fee is set out in section 10.4(g).

·                 ThinkSmart Shareholders will continue to be exposed to the ThinkSmart business, meaning:

‒    they will continue to have exposure to Block Shares through their ThinkSmart shareholding. The risks associated with Block (including those set out in section 7.2(a) will therefore continue to apply to ThinkSmart Shareholders;

‒    the ThinkSmart Directors will consider alternate opportunities in respect of ThinkSmart's Block Shares, including whether to retain such shareholding or to sell ThinkSmart's Block Shares, and what to do with the proceeds from any such sale. As at the date of this Scheme Booklet, the ThinkSmart Directors have not made any decision regarding ThinkSmart's Block Shares should the Scheme not become Effective; and

‒    they will remain exposed to the ongoing wind down of ThinkSmart's business operations and likely eventual liquidation. This includes the uncertainty relating to the timing of any exit for ThinkSmart Shareholders, if the ThinkSmart Group were to be liquidated following conclusion of the wind down of ThinkSmart's business operations, noting there may also be significant costs involved in a liquidation scenario as well as the time taken to complete the liquidation process before a final distribution of any remaining cash could be made to ThinkSmart Shareholders.

·                 ThinkSmart will have incurred approximately £0.7 million of costs relating to the Scheme.

·                 ThinkSmart will continue as an AIM-listed entity incurring ongoing listing and corporate costs with management continuing to wind down the legacy leasing business and provision of an outsourced call centre customer support service to support the Clearpay business which can be terminated at any time with 3 months' notice.

·                 The ThinkSmart Independent Board Committee expects that the costs of maintaining ThinkSmart as a listed entity until completion of the wind down would likely exceed the cash generated from the wind down of its business operations.

·                 Since the announcement of the Scheme on 29 July 2022, the average discount that ThinkSmart Shares trade to the market value of its Block shareholding has reduced from approximately 31% (for the period between 1 February 2022 (when ThinkSmart first received the Block Shares) and 28 July 2022) to approximately 12% (for the period between 29 July 2022 and the Last Practicable Date).[12] If the Scheme is not implemented, it is likely that the price of a ThinkSmart Share will change such that the discount to the market value of its Block shareholding will increase (subject to any changes to the Block Share price).

4.5         Key steps in the Scheme

(a)          Scheme Meetings and Scheme approval requirements

The Court has ordered ThinkSmart to convene the Scheme Meetings at which ThinkSmart Shareholders will be asked to approve the Scheme.

The terms of the Scheme Resolutions to be considered at the Scheme Meetings are contained in the Notice of General Scheme Meeting in Annexure 4 (for ThinkSmart Shareholders excluding Excluded Shareholders) and the Notice of Excluded Shareholder Scheme Meeting in Annexure 5 (for Excluded Shareholders).

ThinkSmart Shareholders (excluding Excluded Shareholders) are to vote on the General Scheme Resolution at the General Scheme Meeting. Excluded Shareholders are to vote on the Excluded Shareholder Scheme Resolution at the separate Excluded Shareholder Scheme Meeting.

The Scheme will only become Effective and be implemented if:

·                 it is approved by the Requisite Majorities of ThinkSmart Shareholders at each applicable Scheme Meeting;

·                 ThinkSmart Shareholders approve the Financial Assistance Resolution and the Financial Benefit Resolution at ThinkSmart's 2022 Annual General Meeting;

·                 it is approved by the Court at the Second Court Hearing; and

·                 the other conditions precedent to the Scheme outlined in section 4.3 are satisfied or waived (as applicable).

The Requisite Majorities of ThinkSmart Shareholders to approve the Scheme are:

1             in relation to the General Scheme Resolution, a resolution passed by:

‒    unless the Court orders otherwise, a majority in number (more than 50%) of ThinkSmart Shareholders (excluding Excluded Shareholders) present and voting at the General Scheme Meeting (either in person or by proxy, attorney or, in the case of corporate ThinkSmart Shareholders, body corporate representative); and

‒    at least 75% of the total number of votes cast on the General Scheme Resolution at the General Scheme Meeting by ThinkSmart Shareholders (excluding Excluded Shareholders) present and voting (either in person or by proxy, attorney or, in the case of corporate ThinkSmart Shareholders, body corporate representative); and

2             in relation to the Excluded Shareholder Scheme Resolution, a resolution passed by:

‒    unless the Court orders otherwise, a majority in number (more than 50%) of Excluded Shareholders present and voting at the Excluded Shareholder Scheme Meeting (either in person or by proxy, attorney or, in the case of corporate Excluded Shareholders, body corporate representative); and

‒    at least 75% of the total number of votes cast on the Excluded Shareholder Scheme Resolution at the Excluded Shareholder Scheme Meeting by Excluded Shareholders present and voting (either in person or by proxy, attorney or, in the case of corporate Excluded Shareholders, body corporate representative).

The Court has the power to waive the first requirements referred to in paragraphs (1) and (2) above.

The entitlement of ThinkSmart Shareholders to attend and vote at the Scheme Meetings is set out in the Notice of General Scheme Meeting in Annexure 4 (for ThinkSmart Shareholders excluding Excluded Shareholders) and the Notice of Excluded Shareholder Scheme Meeting in Annexure 5 (for Excluded Shareholders).

Details of the Financial Assistance Resolution and the Financial Benefit Resolution are set out in section 9. The entitlement of ThinkSmart Shareholders to attend and vote at the Annual General Meeting is set out in the Notice of Annual General Meeting in Annexure 6.

As at the Last Practicable Date, ThinkSmart DI Holders represent approximately 47% of the ordinary fully paid shares of ThinkSmart. If necessary, ThinkSmart intends to seek a declaration from the Court at the Second Court Date to include the ThinkSmart DI Holders who provide voting instructions to the Depositary Custodian as if they were present at the meeting for the purpose of calculating the majority in number present and voting at the General Scheme Meeting.

The objective in seeking that declaration would be to treat ThinkSmart DI Holders in a way that is consistent with the ThinkSmart Shareholders that do not hold their ThinkSmart Shares via the ThinkSmart Depositary Interests. In the absence of the declaration, the ThinkSmart DI Holders would be represented by one proxy at the applicable Meeting and thus would count as only one ThinkSmart Shareholder for the purpose of calculating the number present and voting at the applicable Meeting.

The granting of such declaration (if sought by ThinkSmart) and the terms of it are at the discretion of the Court.

Voting is not compulsory. However, the ThinkSmart Independent Board Committee unanimously recommends that ThinkSmart Shareholders vote in favour of the Scheme in the absence of a Superior Proposal, and subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of ThinkSmart Shareholders (other than the Excluded Shareholders).

You should be aware that even if you do not vote, or vote against the Scheme, the Scheme may still be implemented if it is approved by the Requisite Majorities of ThinkSmart Shareholders and the Court. If this occurs, your ThinkSmart Shares will be transferred to BidCo and you will receive the Scheme Consideration even though you did not vote on, or voted against, the Scheme.

The results of each Scheme Meeting will be available as soon as possible after the conclusion of the Scheme Meetings and will be announced by ThinkSmart via the RNS of the LSE once available.

(b)          Excluded Shareholders and the Excluded Shareholder Scheme Meeting

The Excluded Shareholders are listed in section 11.1 of this Scheme Booklet. As at the Last Practicable Date, the Excluded Shareholders own 31,342,286 ThinkSmart Shares.

Because the Excluded Shareholders are offered a different form of consideration under the Scheme to all other ThinkSmart Shareholders (see section 4.1 of this Scheme Booklet), their rights under the Scheme differ from those of other ThinkSmart Shareholders under the Scheme such that they constitute a separate class of shareholders for the purposes of voting on the Scheme. This means that the Excluded Shareholders will not be permitted to vote at the General Scheme Meeting and will instead vote at the Excluded Shareholder Scheme Meeting on a separate Scheme Resolution (being the Excluded Shareholder Scheme Resolution).

The Excluded Shareholder Scheme Resolution must be passed at the Excluded Shareholder Scheme Meeting by the Requisite Majorities (of Excluded Shareholders). As noted in ThinkSmart's RNS announcement dated 29 July 2022, Mr Ned Montarello has confirmed he intends to vote in favour of the Scheme in respect of all the ThinkSmart Shares he holds or controls. Accordingly, the Excluded Shareholder Scheme Resolution is expected to be passed at the Excluded Shareholder Scheme Meeting.

In addition, the Excluded Shareholders will not be permitted to vote on the Financial Assistance Resolution and the Financial Benefit Resolution, as set out in section 9 of this Scheme Booklet.

(c)          Court approval of the Scheme

In the event that:

·                 the Scheme is approved by the Requisite Majorities of ThinkSmart Shareholders at each of the Scheme Meetings; and

·                 all other conditions precedent to the Scheme (except Court approval of the Scheme) have been satisfied or waived (as applicable),

then ThinkSmart will apply to the Court for orders approving the Scheme.

Each ThinkSmart Shareholder has the right to appear at the Second Court Hearing.

(d)          Effective Date

If the Court approves the Scheme, the Scheme will become Effective on the Effective Date, being the date an office copy of the Court order from the Second Court Hearing approving the Scheme is lodged with ASIC. ThinkSmart will, on the Scheme becoming Effective, give notice of that event to AIM.

ThinkSmart intends to apply to AIM for ThinkSmart Shares to be suspended from trading on AIM from 7.30am (London time) on the Effective Date.

(e)          Scheme Record Date and entitlement to Scheme Consideration

ThinkSmart Shareholders who are recorded on the ThinkSmart Share Register on the Scheme Record Date (currently expected to be 5.00pm (Perth time) on 25 November 2022 or such other time and date as the parties agree in writing) will be entitled to receive the Scheme Consideration in respect of the ThinkSmart Shares they hold at that time.

ThinkSmart DI Holders who are recorded on the ThinkSmart DI Register on the Scheme Record Date (currently expected to be 6.00pm (London time) on 25 November 2022 or such other time and date as the parties agree in writing) will be entitled to receive the Scheme Consideration in respect of the ThinkSmart Shares their ThinkSmart Depositary Interests relate to at that time.

(1)           Dealings on or prior to the Scheme Record Date

For the purposes of determining which ThinkSmart Shareholders are eligible to participate in the Scheme, dealings in ThinkSmart Shares will be recognised only if:

·                 in the case of dealings of the type to be effected by CREST, the transferee is registered in the ThinkSmart DI Register as the holder of the relevant ThinkSmart Depositary Interests on or before the Scheme Record Date; and

·                 in all other cases, registrable transfer or transmission applications in respect of those dealings, or valid requests in respect of other alterations, are received by the ThinkSmart Share Registry before the Scheme Record Date (and the transferee remains registered as at the Scheme Record Date).

For the purposes of determining entitlements under the Scheme, ThinkSmart will not accept for registration or recognise any transfer or transmission applications in respect of ThinkSmart Shares or ThinkSmart Depositary Interests received after the Scheme Record Date.

(2)           Dealings after the Scheme Record Date

For the purpose of determining entitlements to the Scheme Consideration, ThinkSmart and the Depositary must maintain the ThinkSmart Share Register and ThinkSmart DI Register in its form as at the Scheme Record Date until the Implementation Date. The ThinkSmart Share Register and ThinkSmart DI Register in this form will solely determine entitlements to the Scheme Consideration.

After the Scheme Record Date:

·                 all certificates and statements of holding for ThinkSmart Shares including statements of holding for ThinkSmart Depositary Interests (other than statements of holding in favour of BidCo) will cease to have effect as documents relating to title in respect of such ThinkSmart Shares; and

·                 each entry on the ThinkSmart Share Register or ThinkSmart DI Register (other than entries on the ThinkSmart Share Register in respect of BidCo) will cease to have effect except as evidence of entitlement to the Scheme Consideration in respect of the ThinkSmart Shares relating to that entry.

(f)           Implementation Date

On the Implementation Date, the Scheme Shares will be transferred to BidCo.

(g)          Payment of Scheme Consideration

As described in section 4.1 of this Scheme Booklet, following Implementation of the Scheme, the Broker appointed by ThinkSmart and BidCo, will be instructed to sell the Block Sale Shares on-market on the New York Stock Exchange as soon as practicable on the next Trading Day following the Implementation Date (and, in any event, within 3 Trading Days following the Implementation Date).

BidCo and ThinkSmart will procure that the proceeds from the sale of the Block Sale Share (subject to certain adjustments as set out in the definition of Block Sale Share Proceeds - see section 11.1 of this Scheme Booklet) are, as soon as practicable, paid to the Scheme Shareholders entitled to receive Cash Consideration under the Scheme:

·                 pro rata to the relative respective holdings of Relevant Scheme Shares of each Scheme Shareholder entitled to receive Cash Consideration;

·                 in accordance with the applicable currencies (see section 4.1); and

·                 net of any banking charges or fees (including wire transfer fees or corresponding charges) or charges or fees of a similar nature which are incurred with respect to the payment of the Block Sale Share Proceeds to the relevant Scheme Shareholder entitled to receive Cash Consideration under the Scheme and net of any other amounts (including tax) required by law to be withheld (if applicable).

BidCo is contractually obliged, under the Scheme Implementation Deed, to pay the Scheme Consideration to the Scheme Shareholders.

In addition, as at the date of this Scheme Booklet, a Deed Poll has been entered into by BidCo in favour of the Scheme Shareholders. Under the Deed Poll, BidCo covenants in favour of the Scheme Shareholders to:

·                 provide, or procure the provision of, the Scheme Consideration to each Scheme Shareholder, subject to the Scheme becoming Effective; and

·                 undertake all other actions attributed to BidCo under the Scheme.

The Deed Poll may be relied on and enforced by any Scheme Shareholder in accordance with its terms even though the Scheme Shareholders are not party to it. A copy of the Deed Poll is contained in Annexure 3.

To further support BidCo's obligation to pay the Cash Consideration to Scheme Shareholders, BidCo and ThinkSmart have entered into the following:

·                 Broker Agreement between ThinkSmart, BidCo and the Broker, under which the Broker is irrevocably appointed to sell the Block Sale Shares and is obliged to remit the proceeds back to ThinkSmart; and

·                 Funds Flow Deed between ThinkSmart and BidCo, which sets out the flow of proceeds to ThinkSmart Shareholders once the Block Sale Shares have been sold, including the applicable currency conversions.

4.6         Warranties by Scheme Shareholders

Under the terms of the Scheme, each Scheme Shareholder is taken to have warranted to ThinkSmart and BidCo, and appointed and authorised ThinkSmart as its attorney and agent to warrant to BidCo, on the Implementation Date, that:

·                 all their ThinkSmart Shares (including any rights and entitlements attaching to those shares) which are transferred under the Scheme will, at the date of transfer, be fully paid and free from all mortgages, charges, liens, encumbrances, pledges, security interests (including any 'security interests' within the meaning of section 12 of the Personal Property Securities Act 2009 (Cth)) and interests of third parties of any kind, whether legal or otherwise, and restrictions on transfer of any kind; and

·                 they have full power and capacity to transfer their Scheme Shares to BidCo together with any rights attaching to those shares.

4.7         Cancellation of admission to AIM

ThinkSmart will apply for the cancellation of the admission of ThinkSmart Shares to trading on AIM to occur shortly after the Implementation Date.

 

5.1         Introduction

ThinkSmart's origins are as a specialist digital payments platform business with operations within retail consumer and business finance.

ThinkSmart was listed on the Australian Securities Exchange on 4 June 2007 and transferred its listing from the ASX to the Alternative Investment Market of the London Stock Exchange in 2016, following the sale of its Australian operations and expansion into the United Kingdom market, in order to better align its listing with its principal place of business.

Over the years, ThinkSmart has had operations in providing point-of-sale lease finance for high-volume small-ticket electronic and commercial equipment in Australia and the United Kingdom, including B2B (business-to-business) and B2C (business-to-consumer) point-of-sale lease finance through its longstanding relationships with retail businesses.

ThinkSmart's current business strategy is to deliver shareholder value through managing its shareholding in Block (see section 5.2 below), while managing the orderly wind down of its legacy leasing business and providing an outsourced call centre customer support service for Clearpay.

Further information on ThinkSmart and its operations is available on its website at https://www.thinksmartworld.com.

5.2         Business overview

(a)          ThinkSmart's shareholding in Block

ThinkSmart currently holds 618,750 shares in Block, Inc., a global fintech company incorporated in Delaware, United States. Block became a public company and Block's Class A Shares were listed on the New York Stock Exchange on 19 November 2015 under the symbol SQ.

Block provides financial services and digital payment solutions to international markets by creating tools that empower businesses, sellers and individuals to participate in the economy. Block provides more than 30 distinct products and services to sellers (together the "seller ecosystem"), while through Block's Cash App, it provides a parallel ecosystem of financial services to support individuals in managing their money (together the "Cash App ecosystem").

Block acquired Afterpay in 2022 and also owns a majority ownership stake in TIDAL, a global music and entertainment platform that seeks to expand Block's purpose of economic empowerment to artists. Block also recently launched TBD, a bitcoin-focused ecosystem established to build an open developer platform with the sole goal of making it easy to create non-custodial, permissionless, and decentralised financial services.

Block's financial model is based on the recurrent use of its tools, attracting transaction-based revenue, subscription and services-based revenue, hardware revenue and bitcoin revenue. Block has a market capitalisation of approximately US$33 billion as at the close of trading on NYSE on the Last Practicable Date.

Clearpay is a "buy now pay later" specialist digital payments platform business developed by ThinkSmart.

In August 2018, the ThinkSmart Group sold 90% of the shares in Clearpay Finance Ltd (ThinkSmart's wholly owned subsidiary which operated the Clearpay business) to Afterpay Ltd for £10.5 million, delivering a profit on sale of £7.9 million. Following the announcement of the intended takeover of Afterpay by Block (at the time named Square, Inc.) in November 2021, which entitled Afterpay to exercise its call option to buy the remaining shares in Clearpay held by ThinkSmart in cash at any time following the change of control, the ThinkSmart Group agreed with Afterpay to sell its remaining 10% shareholding in Clearpay to Afterpay in exchange for 1.65 million shares in Afterpay, subject to ThinkSmart shareholder approval, which was given on 14 January 2022.

ThinkSmart's Afterpay shares were subsequently exchanged for 618,750 shares in Block, following the completion of the takeover of Afterpay by Block, on 1 February 2022. On 1 February 2022 Block Shares had a closing share price on the New York Stock Exchange of US$127.61 which, by the Last Practicable Date, had reduced to US$55.92 in line with the reduction in share prices of global technology stocks.

Since acquiring the Block Shares, ThinkSmart Shares have typically traded at an approximate 31% average discount to the market value of its Block shareholding and have continued to do so after the 1 July 2022 record date for the A$4.4 million (£2.5 million equivalent[13]) capital return and dividend payment which was paid to ThinkSmart shareholders on 15 July 2022. This July 2022 payment to shareholders takes the total capital return and dividend payments by ThinkSmart to its shareholders, since the sale of 90% of Clearpay in August 2018, to A$30.5 million (£16.7 million equivalent[14]).

As announced on 13 May 2022, ThinkSmart has been undertaking a strategic review of its Block shareholding and has considered a number of options to maximise shareholder value (which included reviewing BidCo's proposal to acquire all the shares in ThinkSmart as described above). The proposed Scheme is the culmination of that review.

(b)          ThinkSmart's legacy leasing business and call centre customer support service

ThinkSmart's business operations comprise the legacy leasing business and provision of an outsourced call centre customer support service to support the Clearpay business which can be terminated at any time with three months' notice.

ThinkSmart's legacy leasing business operations are currently in managed wind down following the cessation of new leasing volumes origination in February 2021. As at 30 June 2022, the ThinkSmart Group's finance lease receivables had a gross receivable balance of £0.7 million and an average term outstanding of seven months (with a maximum term outstanding of 28 months).

Whilst the managed wind down has yielded positive cash flows to date, due to the ThinkSmart business' declining revenues associated with the wind down and the fixed costs associated with maintaining an AIM listing and related corporate overhead costs, the ThinkSmart business is now entering a period of being cash flow negative. Following the A$4.4 million (£2.5 million equivalent[15]) capital return and dividend payment on 15 July 2022, the ThinkSmart Group's cash balance as at the Last Practicable Date is approximately £2.8 million and it is expected that this balance will continue to reduce if ThinkSmart remains listed going forward, as a result of ongoing operational and corporate costs exceeding its income, transaction costs relating to the Scheme and the eventual costs of liquidating the ThinkSmart Group.

5.3         ThinkSmart Board and senior management

(a)          ThinkSmart Board

The ThinkSmart Board comprises the following directors:

Name	Position
Mr Ned Montarello	Executive Chairman
Mr Peter Joshua Thomas Gammell	Independent Non-Executive Director
Mr David Alexander Robertson Adams	Independent Non-Executive Director
Mr Gary Robert Halton	Director

(b)          ThinkSmart senior management

ThinkSmart's senior management comprises the following members:

Name	Position
Mr Ned Montarello	Chief Executive Officer
Mr Gary Robert Halton	Chief Financial Officer

 

5.4         Historical financial information

(a)          Basis of preparation

This section 5.4 sets out a summary of historical financial information in relation to ThinkSmart for the purpose of this Scheme Booklet. The financial information has been derived from ThinkSmart's financial statements for the financial years ended 30 June 2022, 2021 and 2020, which were audited by BDO Audit (WA) Pty Ltd.

The historical financial information of ThinkSmart is presented in an abbreviated form and does not contain all the disclosures, presentation, statements or comparatives that are usually provided in an annual report prepared in accordance with the Corporations Act. ThinkSmart considers that for the purposes of this Scheme Booklet the historical financial information presented in an abbreviated form is more meaningful to ThinkSmart Shareholders.

Further detail on ThinkSmart's financial performance can be found in:

·                 the financial statements for the year ended 30 June 2022 (included in the announcement of the results for the year ended 30 June 2022 released on RNS on 15 September 2022);

·                 the financial statements for the year ended 30 June 2021 (included in the announcement of the results for the year ended 30 June 2021 released on RNS on 14 September 2021); and

·                 the financial statements for the year ended 30 June 2020 (included in the announcement of the results for the year ended 30 June 2020 released on RNS on 17 September 2020),

each of which can be found on ThinkSmart's website (thinksmartworld.com) or the LSE website (londonstockexchange.com).

(b)          Historical consolidated statement of profit & loss and other comprehensive income

	12 Months to 30 June 2022 £,000	12 Months to 30 June 2021 £,000	12 Months to 30 June 2020 £,000
Revenue	3,269	4,286	6,079
Other revenue	207	62	253
Total revenue	3,476	4,348	6,332
Customer acquisition cost	(74)	(258)	(627)
Cost of inertia assets sold	(166)	(335)	(700)
Other operating expenses	(2,704)	(3,431)	(4,270)
Depreciation and amortisation	(802)	(1,401)	(2,047)
Impairment gains/(losses)	(103)	41	(2)
(Losses)/gains on Financial Instruments	(93,696)	71,267	54,418
Other gains	-	1,450	-
(Loss)/profit before tax	(94,069)	71,681	53,104
Income tax charge	(11)	(17)	(62)
Net (loss)/profit after tax - attributable to owners of the Company	(94,080)	71,664	53,042
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss, net of income tax:
Foreign currency translation differences for foreign operations	(13)	(43)	146
Total items that may be reclassified subsequently to profit or loss net of income tax	(13)	(43)	146
Other comprehensive income/(loss) for the year, net of income tax	(13)	(43)	146
Total comprehensive (loss)/income for the year attributable to owners of the Company	(94,093)	71,621	53,188

 

(c)          Historical consolidated statement of financial position

	As at 30 June 2022 £,000	As at 30 June 2021 £,000	As at 30 June 2020 £,000
Current assets
Cash and cash equivalents	5,536	7,067	8,805
Trade receivables	17	55	129
Finance lease receivables	866	38	431
Financial assets at fair value through profit or loss	31,304	-	-
Other current assets	231	380	924
Total current assets	37.954	7,540	10,289
Non-current assets
Finance lease receivables	46	-	15
Plant and equipment	98	302	460
Intangible assets	188	590	1,433
Financial assets at fair value through profit or loss	-	125,000	53,733
Contract assets	-	777	1,430
Other non-current assets	3	2,069	2,147
Total non-current assets	335	128,738	59,218
Total assets	38,289	136,278	69,507
Current liabilities
Trade and other payables	(1,043)	(728)	(1,195)
Lease liabilities	(46)	(103)	(94)
Contract liabilities	(39)	(410)	(648)
Provisions	(167)	(202)	(255)
Total current liabilities	(1,295)	(1,443)	(2,192)
Non-current liabilities
Lease liabilities	-	(46)	(148)
Contract liabilities	-	(332)	(679)
Total non-current liabilities	-	(378)	(827)
Total liabilities	(1,295)	(1,821)	(3,019)
Net assets	36,994	134,457	66,488
Equity
Issued capital	7,862	10,413	13,164
Reserves	(2,888)	(2,875)	(2,832)
Accumulated profits	32,020	126,919	56,156
Total equity	36,994	134,457	66,488

 

(d)          Historical consolidated statement of cash flows

	12 Months to 30 June 2022 £,000	12 Months to 30 June 2021 £,000	12 Months to 30 June 2020 £,000
Cash Flows from Operating Activities
Receipts from customers	3,152	4,033	4,741
Payments to suppliers and employees	(2,832)	(3,796)	(4,670)
(Payments)/receipts in respect of lease receivables	(746)	511	3,244
Payments from other interest-bearing liabilities, inclusive of related costs	-	-	(2,533)
Interest received	61	65	108
Interest and finance charges paid	(10)	(92)	(380)
Receipts/(payments) from security guarantee	2,021	35	(29)
Income tax (paid)/received	(11)	(17)	478
Other gains receipts	-	1,450	-
Net cash from operating activities	1,635	2,189	959
Cash Flows from Investing Activities
Payments for plant and equipment	(41)	(17)	(398)
Payment for intangible assets - software & contract rights	-	(122)	(111)
Payments for purchase of financial instruments	-	-	(987)
Receipts from sale of financial instruments	-	-	5,376
Net cash (used in)/from investing activities	(41)	(139)	3,880
Cash Flows from Financing Activities
Payment of lease liabilities	(103)	(93)	(114)
Dividends paid	(458)	(901)	(1,135)
Proceeds from share issue net of costs	8	6	-
Return of capital net of costs	(2,559)	(2,757)	(2,047)
Net cash used in financing activities	(3,112)	(3,745)	(3,296)
Net (decrease)/increase in cash and cash equivalents	(1,518)	(1,695)	1,543
Effect of exchange rate fluctuations on cash held	(13)	(43)	163
Cash and cash equivalents at beginning of the financial year	7,067	8,805	7,099
Total cash and cash equivalents at the end of the financial period	5,536	7,067	8,805
Restricted cash and cash equivalents at the end of the financial period	(62)	(60)	(61)
Net available cash and cash equivalents at the end of the financial period	5,474	7,007	8,744

 

5.5         Material changes in financial position (since 30 June 2022)

Other than as disclosed in this Scheme Booklet, including in relation to the A$4.4 million (£2.5 million equivalent[16]) capital return and dividend payment which was paid to ThinkSmart shareholders on 15 July 2022 (which reduced ThinkSmart's cash balance accordingly), to the knowledge of the ThinkSmart Directors, there have been no material changes to the financial position of ThinkSmart and the ThinkSmart Group since 30 June 2022.

As ThinkSmart's primary asset is its holding of Block Shares, ThinkSmart's financial position (in particular, its financial assets at fair value) is impacted by changes in the price of Block Shares. ThinkSmart Shareholders should note that the price of Block Shares has traded in a range of US$89.70 and US$51.51 in the period between 30 June 2022 and the Last Practicable Date and has declined from US$61.46 as at 30 June 2022 to US$55.92 as at the Last Practicable Date.

5.6         Capital structure

As at the Last Practicable Date, the capital structure of ThinkSmart was:

Type of security	Number on issue
ThinkSmart Shares	106,587,814 (in respect of which 50,611,736 are held as ThinkSmart Depositary Interests as at the Last Practicable Date).
ThinkSmart Options	1,679,532 expiring 21 December 2026 with an exercise price of 0.1308 Pounds Sterling.

 

Additional details about ThinkSmart's equity incentive plan under which the ThinkSmart Options were issued are set out in section 10.2 of this Scheme Booklet.

5.7         Significant holders in ThinkSmart Shares

As extracted from filings released on the LSE RNS on or before the Last Practicable Date, the following persons are significant holders of ThinkSmart Shares:

 

Significant holder	Number of ThinkSmart Shares	Voting power in ThinkSmart
Mr Ned Montarello (together with the Excluded Shareholders)	31,342,286	29.40%
Mr Peter Gammell	12,582,572	11.80%
London and Capital Asset Management Ltd	3,309,685	3.11%

 

Note: The table above displays beneficial holdings, which may be held through nominee accounts.

5.8         Publicly available information about ThinkSmart

ThinkSmart is subject to the AIM Rules and UK MAR and, as such, is subject to regular reporting and disclosure obligations. These reporting and disclosure requirements include, subject to some exceptions, a requirement on ThinkSmart to disclose information without delay concerning its financial condition, sphere of activity, performance of its business or its expectations of its performance (or other 'inside information' of a precise nature) that would be likely to have a significant effect on the price of ThinkSmart Shares.

In addition, as a company incorporated in Australia, ThinkSmart is required to lodge various documents with ASIC. Copies of documents lodged with ASIC by ThinkSmart may be obtained from an ASIC office.

ThinkSmart Shareholders may obtain a copy of ThinkSmart's financial statements for the year ended 30 June 2022 from the LSE website (londonstockexchange.com), from ThinkSmart's website (thinksmartworld.com) or by calling the ThinkSmart Shareholder Information Line on 1300 528 984 (within Australia) or +61 3 9415 4826 (outside Australia), between 8.30am and 5.00pm (Sydney time), Monday to Friday. ThinkSmart DI Holders can contact the dedicated Depositary Interest Information Line on +44 0207 887 2225 or +44 0800 298 7356 (within the United Kingdom) between 9.00am and 5.00pm (London time), Monday to Friday.

 

This section 6 has been prepared by, and is the responsibility of, BidCo.

This section 6 contains information relating to BidCo and outlines how BidCo is funding the Scheme Consideration. It also includes an explanation of BidCo's intentions regarding ThinkSmart under the Transaction.

Although BidCo believes that the statements regarding its intentions concerning future events in this section 6 have been made on a reasonable basis, no assurance can be given that such intentions will not change in the future.

6.1         Overview of BidCo and BidCo ownership structure

BidCo is a special purpose Australian proprietary company limited by shares incorporated specifically for the purpose of acquiring the ThinkSmart Shares pursuant to the Scheme.

As a special purpose Australian proprietary company, BidCo does not have any assets other than nominal paid up capital. Similarly, BidCo does not have any liabilities other than its obligations under the Scheme Implementation Deed, Deed Poll and Funds Flow Deed.

As referred to in section 6.3 below, BidCo will be satisfying its obligation to pay the Cash Consideration to Scheme Shareholders by the post-Scheme implementation sale on the New York Stock Exchange of the Block Sale Shares held by ThinkSmart (net of their proportion of sale fees and after conversion into Pounds Sterling and Australian dollars (as applicable)). In order to facilitate the sale, BidCo has agreed under the Scheme Implementation Deed that the members of the ThinkSmart Independent Board Committee will remain on the ThinkSmart Board until after the Cash Consideration has been despatched to Scheme Shareholders. Accordingly, the ThinkSmart Independent Board Committee will assist with overseeing the payment of the Cash Consideration to the Scheme Shareholders in accordance with the Scheme.

BidCo is 100% wholly owned and controlled by Mr Ned Montarello, the Executive Chairman and CEO of ThinkSmart.

The BidCo Board currently comprises the following directors:

·                 Mr Ned Montarello;

·                 Mr Adam Montarello; and

·                 Mr Scott Montarello.

It is not currently intended that the BidCo Board will be reconstituted as part of the Transaction.

The rights and liabilities attaching to BidCo Shares issued as Scheme Consideration for Excluded Shareholders under the Scheme are contained in the constitution of BidCo and are subject to the Corporations Act. The form of the constitution of BidCo is customary for an Australian proprietary company limited by shares.

6.2         Rationale for proposing Scheme

BidCo's rationale for proposing the Scheme is to:

·                 provide for a commercial outcome that would enable ThinkSmart Shareholders to exit their investment in ThinkSmart as compared to them remaining shareholders during the eventual wind down and liquidation of ThinkSmart;

·                 delist ThinkSmart to enable the wind down of its legacy operations to be effected in a more cost-effective manner; and

·                 provide Mr Ned Montarello and the other Excluded Shareholders an opportunity to continue to have exposure to the residual Block Shares held by ThinkSmart following implementation of the Scheme.

6.3         Funding of the Scheme Consideration

Under the Scheme, BidCo will acquire 100% of the ThinkSmart Shares, including the shares owned by the Excluded Shareholders.

In exchange, Scheme Shareholders entitled to receive Cash Consideration will receive the Cash Consideration which will be funded entirely by the post-Scheme implementation sale on the New York Stock Exchange of the Block Sale Shares held by ThinkSmart (net of their proportion of sale fees and after conversion into Pounds Sterling and Australian Dollars (as applicable)).

Under the Scheme, BidCo will also acquire all of the ThinkSmart Shares held by the Excluded Shareholders in exchange for issuing BidCo Shares to the Excluded Shareholders, or if an Excluded Shareholder so elects, part or all of its ThinkSmart Shares may be acquired by BidCo for Cash Consideration, in which case the Excluded Shareholder will receive the same Cash Consideration as the other Scheme Shareholders (to be funded by a proportionate increase in the number of Block Shares that will be sold by ThinkSmart post-Scheme implementation sale, as instructed by BidCo).

6.4         Interest in ThinkSmart Shares

As at the date of this Scheme Booklet, BidCo does not hold any ThinkSmart Shares.

As at the date of this Scheme Booklet, Mr Ned Montarello and the other Excluded Shareholders hold the following ThinkSmart Shares and ThinkSmart Options:

Excluded Shareholder	Number of ThinkSmart Shares	Number of ThinkSmart Options
Mr Ned Montarello	1,078,253	1,073,863
Mr Ned Montarello as trustee for the Montarello Investment Trust	27,021,956	0
Ms Kimberly Montarello	1,680	0
Ms Kimberly Montarello & Mr Ned Montarello as trustees for the Adam Montarello Trust	1,200	0
Ms Kimberly Montarello & Mr Ned Montarello as trustees for the Scott Montarello Trust	1,200	0
Ms Kimberly Montarello & Mr Ned Montarello as trustees for the Montarello Superannuation Fund	3,237,997	0

 

6.5         BidCo's intentions

(a)          Introduction

If the Scheme is implemented, BidCo will become the holder of all ThinkSmart Shares on the Implementation Date and, accordingly, ThinkSmart will become a wholly-owned subsidiary of BidCo on that date.

This section 6.5 sets out BidCo's current intention only with respect to ThinkSmart and is based on the information relating to ThinkSmart and the general business environment which is known to BidCo at the date of this Scheme Booklet.

Accordingly, the statements set out in this section 6.5 are statements of present intention only and may change as new information becomes available or as circumstances change.

(b)          ThinkSmart's cancellation from AIM

As noted in section 4.7, ThinkSmart will apply for the cancellation of the admission of ThinkSmart Shares to trading on AIM to occur shortly after the Implementation Date. BidCo intends to continue that process to the extent it has not been completed prior to the Implementation Date.

(c)          Board of Directors

If the Scheme becomes Effective, the ThinkSmart Board will be reconstituted following the despatch of the Scheme Consideration to Scheme Shareholders.

BidCo's current intention is that, following payment of the Scheme Consideration to Scheme Shareholders, the ThinkSmart Board will comprise:

·                 Mr Ned Montarello;

·                 Mr Adam Montarello; and

·                 Mr Scott Montarello.

BidCo's current intention is that there will be no change to the directors of ThinkSmart's Subsidiaries. This means that Mr Ned Montarello and Mr Gary Halton will be the directors of all of ThinkSmart's Subsidiaries, other than Mr Keith Jones who will also be a director of ThinkSmart Europe Limited and Mr Ned Montarello who will be the sole director of ThinkSmart LTI Pty Limited.

(d)          Assets and operations

Following implementation of the Scheme, ThinkSmart will be controlled by Mr Ned Montarello (who owns 100% of the shares in BidCo).

Following payment of the Scheme Consideration by BidCo to satisfy its obligations under the Scheme, ThinkSmart's assets and operations will comprise:

·                 approximately £2.2 million in cash, noting that the ThinkSmart Group's cash balance as at the Last Practicable Date is approximately £2.8 million;

·                 the remainder of the Block Shares which are not Block Sale Shares;

·                 ThinkSmart's legacy leasing business which is currently subject to a managed wind down process; and

·                 ThinkSmart's business of providing an outsourced call centre customer support service to support the Clearpay business which was previously owned by ThinkSmart.

Following implementation of the Scheme, BidCo currently intends to procure that ThinkSmart:

·                 continues to hold the remaining Block Shares which are not Block Sale Shares and will monitor this holding over time taking into account its own relevant financial objectives and priorities (including rationalisation of the legacy ThinkSmart corporate group);

·                 continues the existing managed wind down process for the legacy leasing business in an orderly manner through to completion; and

·                 continues to provide the outsourced call centre customer support service to the Clearpay business which was previously owned by ThinkSmart, noting that this can be terminated by either Clearpay or ThinkSmart at any time with 3 months' notice.

Where appropriate, BidCo may also arrange the rationalisation of any subsidiaries in the ThinkSmart corporate group which are dormant or otherwise no longer required.

(e)          Employees

It is not expected that implementation of the Scheme will have any immediate impact on the employees of ThinkSmart (other than the changes to the directors of ThinkSmart and its Subsidiaries as detailed in section 6.5(c)).

As noted in section 6.5(d), ThinkSmart's legacy leasing business is already in the process of a managed wind-down.

The provision of the outsourced call centre customer support service to Clearpay can be terminated by either Clearpay or ThinkSmart at any time with 3 months' notice. BidCo will continue to monitor and review the personnel requirements of ThinkSmart in this context.

6.6         Additional information

(a)          Dealing in ThinkSmart Shares in previous four months

Neither BidCo nor its Associates have provided or agreed to provide any consideration for any BidCo Shares under any transaction or agreement during the period of four months before the date of this Scheme Booklet, except for the Scheme Consideration which BidCo has agreed to provide under the Scheme.

(b)          Benefits to ThinkSmart Shareholders

During the four months before the date of this Scheme Booklet, none of BidCo or its Associates have given, or offered to give or agreed to give a benefit to another person where the benefit was likely to induce the other person or an Associate to:

(1)           vote in favour of the Scheme; or

(2)           dispose of Scheme Shares,

where the benefit was not offered to all ThinkSmart Shareholders.

(c)          Benefits to current ThinkSmart officers

Other than as disclosed in this Scheme Booklet, none of BidCo or any of its Associates will be making any payment or giving any benefit to any current director, secretary or executive officer of ThinkSmart or any of its related bodies corporate as compensation or consideration for, or otherwise in connection with, their resignation from their respective offices if the Scheme is implemented.

(d)          No other material information

Except as otherwise disclosed in this Scheme Booklet, there is no other BidCo Information that is material to the making of a decision in relation to the Scheme by ThinkSmart Shareholders, being BidCo Information that is within the knowledge of the directors of BidCo, at the date of this Scheme Booklet, which has not previously been disclosed to ThinkSmart Shareholders.

7.1         Introduction

In considering the Scheme, ThinkSmart Shareholders should be aware that there are a number of risk factors, both general and specifically relating to ThinkSmart, which may affect the future operating and financial performance of ThinkSmart and the price and/or value of ThinkSmart Shares.

If the Scheme proceeds, ThinkSmart Shareholders will receive the Scheme Consideration, will cease to hold ThinkSmart Shares and will also no longer be exposed to the risks set out in this section 7 (and other risks to which ThinkSmart may be exposed).

If the Scheme does not proceed, ThinkSmart Shareholders will continue to hold ThinkSmart Shares and continue to be exposed to risks associated with an investment in ThinkSmart.

In deciding whether to vote in favour of the Scheme, ThinkSmart Shareholders should read this Scheme Booklet carefully and consider the following risk factors. These risk factors do not take into account the individual investment objectives, financial situation, position or particular needs of ThinkSmart Shareholders. In addition, this section 7 is a summary only and does not purport to list every risk that may be associated with an investment in ThinkSmart now or in the future. There also may be additional risks and uncertainties not currently known to ThinkSmart which may have a material adverse effect on ThinkSmart's assets and liabilities, financial position, profits and prospects and the ability to make future distributions to ThinkSmart Shareholders, and the price and/or value of ThinkSmart Shares.

Whilst the ThinkSmart Independent Board Committee unanimously recommends that ThinkSmart Shareholders vote in favour of the Scheme in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of ThinkSmart Shareholders (other than the Excluded Shareholders), ThinkSmart Shareholders are encouraged to make their own independent assessment as to whether to vote in favour of the Scheme.

7.2         Specific risks relating to the business and operations of ThinkSmart

There are a range of business-specific risks associated with your current investment in ThinkSmart Shares, as set out below.

You will only continue to be exposed to these risks if the Scheme does not proceed and you retain your investment in ThinkSmart Shares. While ThinkSmart has in place what it considers are appropriate policies and procedures to help manage these risks, there is no guarantee that ThinkSmart will be able to manage these risks completely. Furthermore, certain aspects of these risks (or ThinkSmart's ability to respond to and manage them) may be partly or wholly outside of ThinkSmart's control.

(a)          Risks associated with Block Shares

ThinkSmart's main asset is its holding of 618,750 Block Shares.

Block is a global fintech company incorporated in Delaware. Block's Class A Shares are listed on NYSE under the symbol SQ. Block has a market capitalisation of approximately US$33 billion as at the close of trading on NYSE on the Last Practicable Date. There is no public trading market for Block Class B Shares.

Founded in 2009, Block builds tools that aim to empower businesses and individuals to participate in the economy. Sellers use Block to reach buyers online and in person, manage their business, and access financing. Individuals use Block's Cash App to spend, send, store, and invest money. Block owns a majority ownership stake in TIDAL, a global music and entertainment platform that expands Block's purpose of economic empowerment to artists. Block also recently launched TBD, a bitcoin-focused business established to build an open developer platform with the sole goal of making it easy to create non-custodial, permissionless, and decentralised financial services.

Block has offices in the United States, Canada, Japan, Australia, Ireland, Spain, Norway, and the United Kingdom.

Section 5.2 of this Scheme Booklet explains the background to ThinkSmart becoming a holder of Block Shares.

The effect of ThinkSmart's main asset being shares in Block is that the trading price of ThinkSmart Shares is correlated to the price of Block Shares. This also means that the various risks associated with a holding in Block Shares apply to holders of ThinkSmart Shares. Broadly, these risks include:

·                 business and industry risks, including Block's ability to maintain, protect and enhance its brand, and Block's ability to retain existing sellers and customers, attract new sellers and customers, and increase sales to both new and existing sellers and customers;

·                 operational risks, including real or perceived improper or unauthorised use of, disclosure of, or access to sensitive data, and real or perceived security breaches or incidents or human error in administering Block's software, hardware, and systems;

·                 economic financial and tax risks, including a deterioration of general macroeconomic conditions and the ongoing COVID-19 pandemic and measures intended to prevent its spread;

·                 legal, regulatory and compliance risk, including extensive regulation and oversight in a variety of Block's areas of business, and complex and evolving regulations and oversight related to privacy and data breaches; and

·                 risks related to ownership of Block's common stock, including the dual class structure of Block's common stock, and volatility of the market price of Block's Class A common stock.

Further detail of the risks associated with a holding in Block Shares can be found in:

·                 Block's Annual Report (SEC Form 10-K) for the year ended 31 December 2021, filed with the SEC on 24 February 2022; and

·                 Block's Quarterly Report (SEC Form 10-Q) for the quarter ended 30 June 2022, filed with the SEC on 4 August 2022.

Block's SEC filings are available to the public at the SEC's website at www.sec.gov and at Block's website at www.block.xyz.

(b)          Costs associated with managed wind down

As noted in section 5.2, ThinkSmart's legacy leasing business operations are currently in managed wind down following the cessation of new leasing volumes origination in February 2021. As at 30 June 2022, the ThinkSmart Group's finance lease receivables had a gross receivable balance of £0.7 million and an average term outstanding of seven months (with a maximum term outstanding of 28 months).

Whilst the managed wind down has yielded positive cash flows to date, due to the ThinkSmart business' declining revenues associated with the wind down and the fixed costs associated with maintaining an AIM listing and related corporate overhead cost, the ThinkSmart business is now entering a period of being cash flow negative.

Following the A$4.4 million (£2.5 million equivalent[17]) capital return and dividend payment on 15 July 2022, the ThinkSmart Group's cash balance as at the Last Practicable Date is approximately £2.8 million and the ThinkSmart Independent Board Committee expects that this balance will continue to reduce as a result of ongoing operational and corporate costs exceeding its income, transaction costs relating to the Scheme and the eventual costs of liquidating the ThinkSmart Group.

(c)          Risk of default or fraud by customers

The credit quality of previously accepted customers and the potential for payment defaults has an impact on ThinkSmart's financial performance through impairment. Historic robust credit checking and collection processes combined with development of ThinkSmart's intellectual property capability in this area assist in managing and mitigating this risk, but there is a risk that deteriorating UK macroeconomic conditions (including rising inflation, supply shortages, rising cost of living, high energy prices and tightening monetary policy) may increase the likelihood of payment defaults in relation to ThinkSmart's remaining receivables from its legacy leasing business (which is now in wind down).

(d)          Clearpay support contract

Following the sale of Clearpay to Afterpay (now Block), ThinkSmart continues to provide an outsourced call centre customer support service to support the Clearpay business. Under this arrangement, ThinkSmart currently generates approximately £0.9 million in annual revenue.

This contract can be terminated for convenience at any time by either party with 3 months' notice. Accordingly, there is a risk that this contract may be terminated by Block (eg if Block establishes its own customer support service for Clearpay), which would negatively impact ThinkSmart's future cash flow.

(e)          COVID-19

Thanks to operating in a less affected sector of the economy, robust business continuity processes, proactive management and timely access to government support, ThinkSmart has so far been only minimally impacted by COVID-19.

Prior to the outbreak of COVID-19, ThinkSmart already had in place a robust risk management structure which has been augmented by the adoption of a specific COVID-19 risk assessment and associated updates to operating procedures. In line with UK government guidance, ThinkSmart facilitated remote working for all staff and supported a safe working environment with a focus on staff health and wellbeing. ThinkSmart has in place adequate measures to mitigate the impact of COVID-19 on the wind down of its business.

(f)           Changes in government policies

Government policies (of both the UK and Australia) are subject to review and change on a periodic basis. Such changes are likely to be beyond the control of ThinkSmart and may adversely affect its operating and financial performance. At present, ThinkSmart is not aware of any reviews or changes that would materially affect its business.

(g)          The consumer credit industry is subject to extensive regulation, and companies operating in this sector are generally required to obtain authorisation from the FCA

The industry in which ThinkSmart operates is subject to a range of legislation and regulation. The FCA is the regulatory body responsible for the consumer credit industry in the UK. ThinkSmart's activities are regulated by a regulatory framework based on a combination of the Financial Services and Markets Act 2000 and its secondary legislation, the provisions of the Consumer Credit Act 1974 and the FCA Rules. The volume and demands of regulation, and the regulatory scrutiny have increased since the transfer of regulatory powers from the UK Office of Fair Trading to the FCA in 2014. Further regulation in the form of a new regime referred to as Consumer Duty is currently being implemented in the UK, which focuses on enhancing overall consumer protection but will further increase the regulatory demands on consumer credit providers.

(h)          Dependency on information technology

ThinkSmart relies on information technology in relation to its lease contracts and benefits from software developed for this purpose. The successful operation of ThinkSmart's business depends on maintaining the integrity of its computer, communication and information technology systems. These systems and operations are vulnerable to damage, breakdown or interruption from events which are beyond ThinkSmart's control, such as fire, flood and other natural disasters; power loss or telecommunications or data network failures; improper or negligent operation of systems by employees, or unauthorised physical or electronic access; and interruptions to internet system integrity. Whilst ThinkSmart's legacy leasing business is in wind down, any such damage or interruption could cause significant disruption to the operations of ThinkSmart, its ability to trade and its reputation.

(i)           Key personnel risk

ThinkSmart's continued success has depended on its ability to retain current key members of the senior management team, with their experience and knowledge of the business. While ThinkSmart endeavours to retain key management personnel, there can be no guarantee that its key management personnel will continue in their employment. Any loss of key members of the senior management team would disrupt ThinkSmart's operations and may also have a material adverse effect on ThinkSmart's ability to conduct an orderly wind down.

7.3         General risks relating to the business and operations of ThinkSmart

ThinkSmart is exposed to a number of general risks that could materially adversely affect its assets and liabilities, financial position, profits, prospects and potential to make further distributions to ThinkSmart Shareholders, and the price and/or value of ThinkSmart Shares. General risks that may impact on ThinkSmart or the market for ThinkSmart Shares include:

·                 changes in general business, industry cycles and economic conditions including inflation, interest rates, exchange rates, employment rates and consumer demand;

·                 natural disasters, catastrophes and disease or pandemic (including the outbreak, escalation or any impact of, or recovery from, COVID-19 or any COVID-19 Measures) and other macroeconomic occurrences, including but not limited to geopolitical events such as outbreak of hostilities, acts of terrorism and declarations of war;

·                 changes to government policy, legislation or regulation, both domestic and global, which may restrict or otherwise impact the business operations and activities of ThinkSmart;

·                 variations in recommendations by securities analysts and brokers;

·                 changes in investor sentiment and perceptions, market fluctuations and overall performance of the international stock markets;

·                 the operating and trading price performance of other comparable listed and unlisted entities;

·                 changes to accounting standards and reporting standards;

·                 changes to the current tax regime;

·                 claims, litigation, industry complaints, regulatory investigations and other disputes, which may be with or without merit, giving rise to, among other things, costs of defending and resolving such disputes, heightened public scrutiny and potential reputational harm;

·                 general operational and business risks; and

·                 other risks and uncertainties which may not currently be known to ThinkSmart.

Some of these factors could affect the value of ThinkSmart regardless of ThinkSmart's underlying operating performance.

7.4         Risks relating to the Scheme

(a)          Risks relating to implementing the Scheme

The implementation of the Scheme is subject to certain conditions precedent, which are summarised in section 4.3 and are set out in full in clause 3.1 of the Scheme Implementation Deed.

ThinkSmart will only apply to the Court for orders approving the Scheme if each of the conditions precedent (except Court approval of the Scheme) are satisfied or waived (if capable of waiver) prior to 8.00am (Perth time) on the Second Court Date. As such, failure to satisfy or waive, or a delay in satisfying or waiving, any of the conditions precedent may delay or prevent implementation of the Scheme. The failure of a condition precedent to be satisfied or waived (if capable of waiver) may also give rise to a right of either ThinkSmart or BidCo to terminate the Scheme Implementation Deed.

There is a risk that the ThinkSmart Shareholders do not approve the Scheme by the Requisite Majorities or do not approve the Financial Assistance Resolution or Financial Benefit Resolution. There is also a risk that the Court may not, at the final court hearing, approve the Scheme, or may only be willing to approve the Scheme subject to conditions that ThinkSmart and/or BidCo (as applicable) are not prepared to accept. There is also a risk that some or all of the aspects of the ThinkSmart Shareholder and Court approvals required for the Scheme to proceed may be delayed.

There is also a risk that the FCA rejects the change in control notification submitted on behalf of BidCo. This notification to the FCA is required because BidCo, by virtue of it acquiring all the ThinkSmart Shares, will become a controller of RentSmart Limited (an FCA regulated company in the ThinkSmart Group). Under Part 12 of the UK's Financial Services and Markets Act 2000, prospective controllers of a regulated business must seek approval from the FCA before acquiring control over a business that is authorised by the FCA. Failure to gain such prior approval is a criminal offence. If the FCA rejects BidCo's change in control notification, it could prevent implementation of the Scheme.

(b)          Risks relating to deferred payment of Cash Consideration

If the Scheme becomes Effective, ThinkSmart Shareholders will transfer their ThinkSmart Shares to BidCo on the Implementation Date. However, ThinkSmart Shareholders entitled to receive Cash Consideration will not receive their Cash Consideration until after the Implementation Date and the amount of Cash Consideration will be determined by the price at which the Block Sale Shares can be sold for following Implementation.

This means that the exact amount of Cash Consideration to be received by each ThinkSmart Shareholder will not be known until after the Implementation Date (and therefore after ThinkSmart Shareholders are required to vote on the Scheme). There is a risk that the price of Block Shares falls between the date ThinkSmart Shareholders approve the Scheme and the date the Block Sale Shares are sold, which will directly impact the amount of Cash Consideration received. In addition, as the proceeds from the sale of the Block Sale Shares will be converted from United States Dollars to Australian Dollars and Pounds Sterling (in accordance with section 4.1 of this Scheme Booklet), the amount of Cash Consideration received by Scheme Shareholders will depend on the applicable exchange rate at the time of conversion.

ThinkSmart makes no representation that either the sale price of Block Shares or any exchange rate received will be the best price or rate available.

As noted in section 4.1 of this Scheme Booklet, if the Scheme becomes Effective, the Broker appointed by ThinkSmart and BidCo will sell the Block Sale Shares on-market on the New York Stock Exchange as soon as practicable on the next Trading Day following the Implementation Date (and, in any event, within 3 Trading Days following the Implementation Date). There is a risk that, at the proposed time of sale, Block Shares are suspended from trading or otherwise unable to be traded on market (for example, due to an outage of the New York Stock Exchange as a result of an emergency event). This may result in the sale of the Block Sale Shares being delayed.

There may also be tax implications for Australian tax resident non-corporate ThinkSmart Shareholders who have held their ThinkSmart Shares for more than 12 months if any material Block Share price movement occurs between the Implementation Date and the date the Cash Consideration is received by Scheme Shareholders. See section 8 of this Scheme Booklet for further details.

In exchange for being transferred the ThinkSmart Shares on the Implementation Date, BidCo has agreed in the Scheme Implementation Deed and Deed Poll to undertake certain steps so that the Block Sale Shares will be sold in accordance with section 4.1 of this Scheme Booklet and the Scheme Implementation Deed. The proceeds from this sale will be used to fund the Cash Consideration.

To further support the obligation to pay the Cash Consideration to ThinkSmart Shareholders, BidCo and ThinkSmart have entered into the following contracts:

·                 Broker Agreement with the Broker, under which the Broker is irrevocably appointed to sell the Block Sale Shares and is obliged to remit the proceeds back to ThinkSmart; and

·                 Funds Flow Deed, which sets out the flow of proceeds to ThinkSmart Shareholders once the Block Sale Shares have been sold, including the applicable currency conversions.

ThinkSmart Shareholders should note the performance risk which may arise in relation BidCo failing to pay the Cash Consideration (which would be in breach of its obligations under the Scheme Implementation Deed, Deed Poll and Funds Flow Deed) in circumstances where Scheme Shareholders will have already transferred their Scheme Shares to BidCo on the Implementation Date and where there is no other security being provided by BidCo in relation to the payment of the Cash Consideration. In such circumstances, Scheme Shareholders will have an unsecured claim against BidCo under the Deed Poll in relation to the payment of the Cash Consideration.

In addition, as a practical matter, under the terms of the Scheme Implementation Deed, the members of the ThinkSmart Independent Board Committee will remain on the ThinkSmart Board until after the Cash Consideration has been despatched to Scheme Shareholders, and so, the ThinkSmart Independent Board Committee will assist with overseeing the payment of the Cash Consideration to the Scheme Shareholders in accordance with the Scheme.

(c)          Implications for ThinkSmart and ThinkSmart Shareholders if the Scheme is not implemented

If the Scheme does not become Effective and is not implemented, ThinkSmart Shareholders will not receive the Scheme Consideration and ThinkSmart will continue, in the absence of a Superior Proposal, to operate as a standalone entity and remain listed on AIM.

Unless ThinkSmart Shareholders choose to sell their ThinkSmart Shares or ThinkSmart Depositary Interests, ThinkSmart Shareholders will continue to hold ThinkSmart Shares and be exposed to both the risks (including those set out in this section 7) and potential future benefits in retaining exposure to ThinkSmart's business and assets.

The ThinkSmart Share price will also remain subject to market volatility and may fall in absence of a Superior Proposal.

(d)          Implications for ThinkSmart and ThinkSmart Shareholders if the Scheme is implemented

If the Scheme becomes Effective and is implemented, Scheme Shareholders (other than Excluded Shareholders receiving Scrip Consideration) will cease to hold ThinkSmart Shares and will forgo any benefits that may result from being a ThinkSmart Shareholder.

This will mean that Scheme Shareholders will not participate in the future performance of ThinkSmart or retain any exposure to ThinkSmart's business or assets or have the potential to share in the value that could be generated by ThinkSmart in the future. However, there is no guarantee as to ThinkSmart's future performance, or its future share price performance, as is the case with all investments.

ThinkSmart Shareholders may also consider that it would be difficult to identify or invest in alternative investments that have a similar investment profit to that of ThinkSmart, or may incur transaction costs in undertaking any new investment. In this respect, however, ThinkSmart notes that ThinkSmart Shareholders could make a direct investment in Block Shares to retain economic exposure to ThinkSmart's main asset.

(e)          Tax consequences for Scheme Shareholders

If the Scheme becomes Effective, there will be tax consequences for the Scheme Shareholders which may include tax being payable.

For further detail regarding the general tax consequences of the Scheme, refer to section 8 of this Scheme Booklet. It is noted that if the Block Share price does not materially change between the Implementation Date and the sale date for the Block Shares, then practically the Cash Consideration under the Scheme is expected to have similar Australian and UK tax consequences to an on-market sale for Australian and UK tax resident Scheme Shareholders respectively. However, the tax consequences may vary depending on the nature and characteristics of Scheme Shareholders and their specific circumstances. Accordingly, you should seek professional tax advice in relation to your particular circumstances.