SmartPay confident profit will hit guidance

Wednesday 13th October 2010

SmartPay, the merchant services provider that snapped up the failed Provenco Cadmus assets last year, expects to hit the bottom end of its forecast earnings.

Managing director Ian Bailey, who headed up Cadmus before the company collapsed, told a briefing in Wellington he's "very comfortable" with the bottom of the $7 million to $10 million forecast for earnings before interest taxation depreciation and amortisation.

Debt is a concern for the company and it's working on bringing that down, he said.

It's used mezzanine finance by securitising its revenue streams to fund expansion.

Bank lending is hard to come by, but two banks are interested in providing it with a facility and overdraft next year, Bailey said. "I'm very comfortable on the $7 million (forecast), and we've got forward orders underpinning that," he said.

"We've got $11 million of forward orders repaying our working capital."

Bailey's on a nationwide tour to lift the company's profile as it embarks on growing its business in Australia and New Zealand, and tries to shift investors' mindsets away from thinking that the company's revenue streams come from hardware.

The company, which services taxi fleets, is also expecting to launch software compatible with Infratil's Snapper debit card payment system.

SmartPay is reviewing how to access capital on the Australian Stock Exchange, with a dual-listing likely as a means to help fund further expansion across the Tasman, and Bailey said the company will undergo a 1-for-10 share buyback before the end of the year to boost its share price.

The shares were unchanged at 3.5 cents in trading today, and have dropped 26% this year.

Businesswire.co.nz

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