Merchant services provider SmartPay has come a long way since racking up a $2.4 million half-year loss in November. It's now cash positive, raising new funds for further development and acquisiton and in line for its first profit.

The company has announced that it had successfully raised $490,000 through a share placement to private investors and managing director Ian Bailey tells NBR the money will be used to build up the financial ability for further acquisitions and strengthen the balance sheet.

“While we are looking good for a profitable result in the near future, there is still a lot of goodwill and intangible assets on the balance sheet that needs to be sorted out.”

SmartPay expanded its telecommunications business last month with the purchase of All Talk Communications, soon after it announced it had reached a cashflow positive position, four months ahead of schedule.

Mr Bailey, who founded Cadmus technology and served as managing director there before moving to SmartPay last year, says the company has been “quietly beavering away” on improving its business since November’s loss and was now on target for its first-ever profitable result.

“Eighteen months ago SmartPay was burning through huge amounts of cash, but over the past six months we’ve refocussed the business and cut down on costs as much as possible. Considering we’re in one of the worst credit environments anybody has ever seen, it’s been a challenge, but we’re getting there.”

The restructure also saw increased emphasis on SmartPay’s core business capabilities of telecommunications (including eftpos terminal connectively through its IP-POS product), in-store radio (which includes music, messaging and video) and transactional processing (both prepaid and taxi industry payment processing).

He says the company used the $3.7 million raised from a fully-subscribed rights issue last year to get it on a “level playing field” and it could now take another look at further acquisitions, although he would not be drawn on which companies SmartPay has in its sights, or whether any further capital raising will be required.

“We are continuing to identify other potential acquisitions that relate directly to our core business of telecommunications, transactional processing and audio/video messaging. There is still a lot of risk in the industry, but now that we’re in that cash positive position at an operating level, we feel we’re finally heading in the right direction.”