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SmartPay acquires ETHOS, announces profit guidance

SmartPay (NZX:SPY) acquired the ETHOS software used in its EFTPOS terminals from ProvencoCadmus this month.  Analysts from McDouall Stuart expect the acquisition to have a material positive effect to the future profitablility of SmartPay.  SmartPay previously paid royalties on the software.  The purchase price is spread over three years via payment of a per-unit fee, with a total price between $2 million and $7.5 million.

"With the ETHOS system, and the similarly opportunistic acquisition of ProvencoCadmus' payments division in August, SmartPay has cemented its now leading position in the New Zealand payments industry at very low cost," says McDouall Stuart.

"Together with its telecommunication and media offers, SmartPay provides an integrated offer to merchants that no other company provides.  This makes SmartPay's offer more attractive than the alternatives and serves to encourage a partnership-like relationship between SmartPay and its customers."

If SmartPay can achieve its forecast of between $7 million and $10 million EBITDA for the year ending March 2010, "it will leave its current market cap of less than $25 million behind."

If it maintains its existing customer retention rate and secures the funding it needs to complete its recent purchases, "SmartPay's future looks very positive."

See announcement here

Disclosure: NATCOM is a significant shareholder in SmartPay Limited.

 

 

 

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