Smartpay Cashflow Positive Ahead Of Forecast

Smartpay Cashflow Positive Ahead Of Forecast

Auckland, 3 March 2009– Leading electronic product distribution and payments processing provider SmartPay Ltd (NZX: SPY) announced today that it has been cashflow positive for the last two months at an operating level, and based on present indications, this trend is expected to continue into the new financial year.

SmartPay is also expecting to be EBITDA profitable in the short-term, based on current indications of forward sales. This confirms the positive benefits arising from the Company’s recent restructuring with increased emphasis on its core business capabilities of Telecommunications (including EFTPOS terminal connectively via its IP-POS product), In-Store Radio (music, messaging and video) and transactional processing (both prepaid and taxi industry payment processing).

Ian Bailey, Managing Director of SmartPay, says the turnaround from an operating cash burn to cash positive position has been largely due to the refocusing on the Company’s competitive advantages, combined with the restructure and recruitment of experienced sales staff in the corporate and merchant sales areas.

“SmartPay has a leading range of products and services that have been well received by the market, which importantly also provides us with ongoing and renewable revenues and margins. The Company’s recent restructuring has put us in a uniquely strong position where we can improve our operating margins by focusing on our core business strengths and unique intellectual property, combined with a streamlined business model and staffing structure,” says Bailey.

Bailey adds that SmartPay’s recent successfully completed rights issue raised $3.7 million and, combined with the confirmed funding lines from a third party financier, has placed the Company in a position to capitalise on market opportunities.

“SmartPay is well placed in the current market. Our recent acquisition of rental company MIPS Financial Services, together with entering into agreements with funders for the expansion of the Group‘s rental book, has provided funds for the ongoing growth of the business.”

Bailey also says that SmartPay is particularly encouraged by these cashflow positive results given the present market conditions.

“While this is one of the tightest markets we have seen in a long time, we have still managed to turn SmartPay around which we are very pleased about because it means that our business strategy going forward is gaining traction. Whilst there is still potentially significant risk in the business, due to current market conditions, there are also significant upside opportunities for our products and services in the market at this time. Also we intend to continue to look for acquisition opportunities that add value by growing our customer base and increasing margins and revenues. We are working on a number of initiatives at present and expect to have some announcements soon in this regard.”

Further, SmartPay is looking at various methods to raise additional working capital to strengthen its balance sheet and to generate more cash resources, says Bailey.

“In this current market, we see some exciting acquisition opportunities opening up at reasonable prices, and we intend to take advantage of these as they present themselves.”

ENDS

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