ThinkSmart : Notice of General Meeting and Circular

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document or the action you should take, you are recommended to seek your own independent financial advice from a stockbroker, bank manager, solicitor, accountant or financial adviser who is authorised under the Financial Services and Markets Act 2000 (as amended). If you are outside the UK, you should immediately consult an appropriately authorised independent financial adviser. This document does not contain nor should its contents be construed as legal, business or tax advice and you should consult your own solicitor, independent financial adviser or tax adviser (as appropriate) for such advice. No person has been authorised to give any information or make any representations other than those contained in this document and, if given or made, such information or representations must not be relied on as having been authorised by ThinkSmart Limited (the "Company").

If you have sold or otherwise transferred all of your Ordinary Shares in the Company, you should pass this document without delay to the purchaser or transferee, or to the stockbroker, bank or other person who arranged the sale or transfer so that they can pass this document to the person who now holds the Ordinary Shares. If you have sold or otherwise transferred part only of your holding of Ordinary Shares in the Company, you should retain this document and consult the stockbroker, bank manager or other agent through whom the sale or transfer was effected.

Persons who are not resident in the United Kingdom should read the paragraph headed "Non-United Kingdom Shareholders" in the letter from the Chairman of the Company set out in Part 1 of this document and should inform themselves about, and observe, any applicable legal or regulatory requirements in their jurisdiction.

ThinkSmart Limited

(incorporated and registered in Australia with registered number ACN 092 319 698)

PROPOSED DISPOSAL OF THINKSMART EUROPE LIMITED'S

INTEREST IN CLEARPAY FINANCE LIMITED

AND

NOTICE OF GENERAL MEETING

Notice of a general meeting of the Company to be held virtually at 4.30p.m. (AWST) and 8.30a.m. (GMT) on Friday 14 January 2022 is set out at the end of this document. You are requested to complete the Form of Proxy in accordance with the procedures set out below by no later than 4.30p.m. (AWST) and 8.30a.m. (GMT) on Wednesday 12 January 2022.

This document does not constitute an offer to buy, acquire or subscribe for, or the solicitation of an offer to buy, acquire or subscribe for, any securities or an invitation to buy, acquire or subscribe for any securities.

This document should be read in its entirety. Your attention is drawn to the letter from the Chairman of the Company which is set out in Part 1 of this document and which recommends you vote in favour of the Resolutions (as defined in Part 2) to be proposed at the General Meeting (as defined in Part 2).

Forward Looking Statements: This document contains indications of future developments and other forward- looking statements that are subject to risk factors. These factors could adversely affect the Company's results, strategy and prospects. Forward-looking statements involve risks, uncertainties and assumptions. They relate to events and/or depend on circumstances in the future which could cause actual results and outcomes to differ materially from those currently anticipated. No obligation or duty is assumed (except as required by the AIM Rules, the Disclosure Guidance and Transparency Rules, the rules of the London Stock Exchange and by law) to update any forward-looking statements, whether as a result of new information, future events or otherwise.

CONTENTS

	Page
EXPECTED TIMETABLE OF EVENTS	3
PART 1 LETTER FROM THE CHAIRMAN OF THINKSMART LIMITED	4
PART 2 DEFINITIONS	8
NOTICE OF GENERAL MEETING	9

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EXPECTED TIMETABLE OF EVENTS

Date of this document:	21 December 2021
Last date for return of Form of Proxy:	4.30p.m. (AWST) and 8.30a.m. (GMT) on Wednesday 12 January 2022
General Meeting:	4.30p.m. (AWST) and 8.30a.m. (GMT) on Friday 14 January 2022
Completion of the Disposal:	Monday 17 January 2022 (subject to Shareholders approving Resolution 1)

The timetable assumes that the General Meeting will not be adjourned as a result of there being no quorum, or for any other reason. If there is an adjournment, all subsequent dates are likely to be later than those shown. Any changes will be notified to Shareholders by an announcement on the Regulatory News Service of the London Stock Exchange.

Completion of the Disposal is conditional on the approval by Shareholders of Resolution 1.

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PART 1

LETTER FROM THE CHAIRMAN OF THINKSMART LIMITED

Directors:	Registered Office:
Ned Montarello (Executive Chairman)	Suite 5,
Gary Halton (Chief Financial Officer)	531 Hay Street,
Peter Gammell (Independent Non-Executive Director)	SUBIACO,
David Adams (Senior Independent Non-Executive Director)	WA 6008,
	Australia
21 December 2021
To the holders of Ordinary Shares
Dear Shareholder

Proposed disposal of ThinkSmart Europe's interest in Clearpay Finance Limited and Notice of General Meeting

1 Introduction

The Company announced on 20 December 2021 that it and its subsidiary, ThinkSmart Europe, have entered into a conditional agreement with Afterpay pursuant to which ThinkSmart Europe has agreed to sell the Clearpay Shares to Afterpay in consideration of the issue and allotment to it of the Consideration Shares.

As a consequence of the size of the consideration arising from the Disposal relative to the Company's market capitalisation, pursuant to Rule 15 of the AIM Rules, the Disposal is deemed to constitute a disposal resulting in a fundamental change of business of the Company, which requires the approval, by way of an ordinary resolution, of the Shareholders at the General Meeting.

The purpose of this Circular is to provide you with the background to, reasons for and details of the Disposal, as well as the Company's ongoing strategy, and to explain why the Directors consider the Disposal to be in the best interests of the Shareholders as a whole. The Directors unanimously recommend that you vote in favour of the Resolutions.

2 Impact of COVID-19 on the General Meeting

Due to the uncertainty caused by the evolving COVID-19 situation the General Meeting will be held in accordance with the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth) and the Company will conduct the General Meeting via live videoconference with shareholders (and their proxies) being able to cast votes in real time during the General Meeting via Lumi voting software. Alternatively, Shareholders may vote by lodging a Proxy Form by the required cut-off time set out in the Notice of General Meeting set out on page 9. Depositary Interests ("DIs") Holders may attend the Meeting via the live videoconference but will not be permitted to vote at the General Meeting. For their votes to be counted, DI Holders must submit their CREST Voting Instruction to the Company's agent by the required cut-off time set out in the Notice of General Meeting set out on page 9. Alternatively, DI holders can vote using a Form of Instruction as per the instruction set out in the Notice of General Meeting set out on page 9.

3 Background to and reasons for Disposal

Pursuant to the terms of a sale and purchase agreement dated 22 August 2018 and made between Afterpay, ThinkSmart Europe and the Company (the "Clearpay SPA"), ThinkSmart Europe sold 90 per cent. of its shareholding in Clearpay to Afterpay for a consideration of 1,000,000 shares in the capital of Afterpay (which at the time of the 23 August 2018 announcement was valued at AUD $18.55m) and retained the Clearpay Shares. The retained Clearpay Shares were subject to a put and call option in the Clearpay SPA which was disclosed in the Company's 23 August 2018 announcement and various announcements subsequent to that date.

The value of the Afterpay group and of the Clearpay Shares has risen significantly since then as Shareholders have seen by the increase in fair value that the Directors have recognised in recent financial statements published by the Company, and earlier this year Afterpay agreed the terms of a takeover by Block, Inc. (formerly Square, Inc. "Block") such takeover to be effected by way of the Scheme.

Under the Clearpay SPA, there was a put and call option relating to the Clearpay Shares which enabled Afterpay or ThinkSmart Europe to buy or sell the Clearpay Shares in certain circumstances. As announced on 2 August 2021, the

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planned takeover of Afterpay by Block will give Afterpay the right to bring forward its call option and exercise it anytime following the change of control occurring. If Afterpay has not exercised the call option by 23 February 2024, then ThinkSmart Europe could exercise the put option after that date.

However, Afterpay has approached the Company with a view to agreeing the terms on which the Clearpay Shares can be sold to Afterpay outside of the terms of the put and call option in the Clearpay SPA, and I am pleased to be able to let you know that Afterpay, ThinkSmart and ThinkSmart Europe have now agreed that Afterpay will acquire the Clearpay Shares in consideration for the issue and allotment to ThinkSmart Europe of the Consideration Shares, being 1,650,000 fully paid ordinary shares in the capital of Afterpay. The parties have entered into the ThinkSmart SPA to give effect to this agreement. The Disposal removes uncertainty regarding the timing of when Afterpay may exercise its call option and the exercise price that may be determined at that time from the valuation process, together with any impact that any post- takeover restructuring may have on the future value of Clearpay. The Disposal also removes the uncertainty and possible delay that could arise under the terms of the valuation mechanism set out in the put and call options.

Based on the closing share price of Afterpay on 17 December 2021 of AUD$82.67 (and using 1.8575 AUD: 1 GBP) the Consideration Shares would have a market value of £73.4m. Pursuant to the terms of the Scheme, Afterpay's shares will be converted to Block shares at the ratio of 0.375 Block shares for each Afterpay share on implementation of the Scheme. At this ratio and based on the Block closing share price on 17 December 2021 of US$167.06 (and using 1.3239 USD:1 GBP) then the Consideration Shares equate to a value of £78.1m. These latest available closing prices reflect the recent fall in the value of both Afterpay and Block's share price, as experienced by most fintech stocks. Using instead the average volume weighted Block share price since the proposed takeover of Afterpay was announced on 2 August 2021 of US$238 (and using 1.3239 USD:1 GBP) then the Consideration Shares equate to a value of £108m. Despite this recent reduction in the value of Block shares the Directors believe there is significant potential for future value accretion.

Based on the closing share price of ThinkSmart on 17 December 2021 of 81pence this equates to a market capitalisation of £86.3m, or £79.8m excluding cash and other assets of £6.5m (being £9.5m at 30 June 2021 less the £3m capital and dividend return paid on 8 December 2021). The accounting fair value of the Clearpay Shares is a book value of £125m based on the 30 June 2021 valuation, however there has been a 31 per cent. reduction in the Afterpay GBP equivalent share price from 30 June 2021 to 17 December 2021. As noted in ThinkSmart's FY21 annual report, Afterpay valued its put option liability at AUD$99.9m (c£54.2m) at 30 June 2021.

Provided that ThinkSmart shareholder approval is obtained, the Consideration Shares will be issued to ThinkSmart before the earliest possible record date for the Scheme, being 21 January 2022, which means that the Consideration Shares will then be acquired on implementation of the Scheme and ThinkSmart Europe will become a shareholder in Block.

The Disposal is not subject to or conditional upon the implementation of the Scheme. However, if ThinkSmart does not obtain shareholder approval for the Disposal on or before 17 January 2022 the ThinkSmart SPA cannot be completed and the put and call option contained in the Clearpay SPA will remain in force on its current terms. Similarly, on completion of the ThinkSmart SPA the put and call option will expire and be of no further force and effect. If Shareholder approval is obtained but the Scheme is not implemented, ThinkSmart Europe will retain the Consideration Shares and remain a shareholder in Afterpay.

In addition, whilst under the terms of the Clearpay SPA there was a requirement for ThinkSmart Europe to share up to 35 per cent. of the consideration received under the Clearpay SPA with the holders of options under the ESOP, it should be noted that as part of the Disposal it has been agreed that any options granted under the ESOP for Clearpay shares will be satisfied by the issue and allotment of new shares in the capital of Afterpay by Afterpay and will not impact the Consideration Shares. As a result, ThinkSmart will have no obligations with regards to the ESOP following completion of the Disposal.

The Board therefore believes the Disposal represents a strong outcome for ThinkSmart shareholders in terms of the number of Afterpay shares being received and also by removing the uncertainties referred to above whilst giving ThinkSmart the ability to continue to benefit from any future accretion in the value of Afterpay, and Block post implementation of the Scheme, with the flexibility to realise this value at any time. There are no restrictions on ThinkSmart Europe's ability to sell the Consideration Shares and any shares derived therefrom as part of the Scheme.

In agreeing to these terms, the Board is looking through the current market volatility and is focusing and prioritising on both the volume and the ratio of shares in the exchange. The final ratio of shares agreed is equivalent to that prevailing at the point of the announcement of the Block takeover of Afterpay.

In accordance with the disclosure requirements of Schedule 4 of the AIM Rules the particulars of the Disposal and the name of the buyer of the Clearpay Shares have been summarised earlier in section 2 of this Circular. The assets which are subject to the Disposal are the Clearpay Shares, and the profits attributable to the Clearpay Shares are a £71.37m non-cash fair value gain reported in the Company 30 June 2021 annual financial statements. The value of the Clearpay Shares in accordance with the Disposal is £73.4 million (based on the closing price of Afterpay shares on 17 December

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