SmartPay Buys Ethos Platform & Looks On Track For $7m To $10m EBITDA
Friday, October 09, 2009
SmartPay (NZX:SPY), New Zealand's leading Merchant Services
provider today announced that SmartPay Ethos Limited, a
wholly-owned subsidiary of SmartPay Cadmus, has entered into an
unconditional agreement to purchase the ETHOS operating system
software from Cadmus Developments Limited (CDL) (in Rec.)...
Smartpay Buys Ethos Platform
SMARTPAY BUYS ETHOS PLATFORM & LOOKS ON TRACK FOR $7M TO
$10M EBITDA
New Zealand's largest EFTPOS Company Issues Profit Guidance for
Financial Year beginning April 2010
AUCKLAND, 9 October 2009 - SmartPay (NZX:SPY), New Zealand's
leading Merchant Services provider today announced that SmartPay
Ethos Limited, a wholly-owned subsidiary of SmartPay Cadmus, has
entered into an unconditional agreement to purchase the ETHOS
operating system software from Cadmus Developments Limited (CDL)
(in Rec.) SmartPay Cadmus previously used the software under
license from CDL. The purchase enables SmartPay Cadmus to control
all aspects of its product delivery and development.
Ian Bailey, Managing Director of SmartPay says that the purchase
price will be a minimum of $2M.
"This will be paid over three years on a per unit fee basis for
each EFTPOS terminal produced by SmartPay Cadmus. The purchase
price is capped at $7.5M over the three year payment term," says
Bailey.
Bailey adds that the ETHOS operating system is a core aspect of
the SmartPay Cadmus software development environment.
"The purchase allows SmartPay Cadmus to have total control over
its future developments. Furthermore, the agreement will provide
CDL with the ability to make payments to its note holders over
time," says Bailey.
In addition, Bailey notes that the purchase of the ETHOS operating
system makes a big difference to future profitability, as there
will no longer be a royalty payment built into the overall cost of
terminals produced. This will positively impact SmartPay's profits
going forward.
SmartPay Cadmus recently purchased the payments division of
ProvencoCadmus (in Rec.) for $6M, and has completed the integration
of that business into SmartPay, along with the relocation of all
its operations to the old Cadmus offices at 182 Wairau Road,
Glenfield.
Bailey adds that SmartPay also recently announced it had achieved
an unaudited net profit of $224K for the first quarter of the
current financial year.
"With the acquisition of the ProvencoCadmus payments business, and
based on current sales forecasts, appropriate profit guidance for
the SmartPay Group is expected to be in the range of $7m to $10m
EBITDA for the financial year commencing 1 April 2010," says
Bailey.
"Prior to the merger of Provenco and Cadmus in 2008, Cadmus was
reported as making circa $7M EBITDA on $25M revenues and with a
base of around 15,000 customers. SmartPay now has approximately
30,000 customers and the model has reverted back to the one
implemented by Cadmus prior to its merger with Provenco."
Bailey adds that the profit guidance of $7M to $10M EBITDA will
result from a combination of completing a major restructuring,
leading to a streamlined business model, better overall margins, as
well as major synergies from the ProvencoCadmus acquisition.
"SmartPay intends to maintain its growth strategy through organic
expansion as well as key acquisitions," says Bailey.
- ENDS -
For further information contact:
Ian Bailey, Managing Director, SmartPay Limited, Mobile +64 21 664
941
Julien Leys, JML Communications, Mobile 021 655 598, Ph +64 9 358
2828
Peter Wales, Commercial Manager, SmartPay Limited, Mobile +64 21
0255 2978