Smartpay first-half profit rises from smaller staff wage bill

Smartpay Holdings says it has made "significant progress" in the first half of the financial year, as lower wages boosted net profit and offset a drop in sales, while a takeover proposal progresses to due diligence stage.

Net profit rose to $900,000 in the six months ended Sept. 30 from $500,000 a year earlier, the listed payment terminal supplier said in a statement. That was largely due to lower employment costs, which fell to $3.5 million from $3.7 million, while occupancy costs slipped to $397,000 from $564,000. The company employed 126 people as at March 31, but didn't update headcount in the latest accounts.

Smartpay's revenue fell to $10.4 million from $10.7 million a year earlier. The company gave annual guidance for revenue between $20.5 million and $22.5 million, and net profit between $2 million and $3 million. In 2017, it reported $20.9 million in revenue and a $2.2 million profit.

"The company has made significant progress in the first half of this financial year," Smartpay said. "We expect to see continuing growth in revenue and profits as we continue to execute our strategy."

The company received a takeover proposal from Sydney-based investment firm Pemba Capital Partners in August which would see it buy all its shares at 23.5 cents per share, an 11 percent premium when it was announced. Earlier this month, Smartpay said it granted Pemba access to undertake due diligence on Smartpay, but there was "no certainty that the proposal will result in a binding offer for Smartpay."

The company said today's increased profit was due in part from steady growth in Australian terminal numbers, which it expects to hit 5,000 this month and to have its growth rate increase due to its recent introduction of acquiring capability.

"This is a significant milestone for the company as it allows us to offer a complete end-to-end eftpos offering without the limitations of our previous reliance on third party pricing for the core component of our eftpos market offering," Smartpay said. "We are progressing with a staged implementation program which will see us progressively release a number of acquiring products over the coming months."

The introduction of the acquiring products will be staged over the latter part of the current financial year, meaning positive revenue impacts will fall mostly into the next financial year, it said.

The revenue drop was due to its development team focusing on internal projects rather than external software development which can be billed to customers, and slightly lower revenue from its corporate customers in New Zealand, it said.

The shares last traded at 22 cents, up 29 percent this year.

(BusinessDesk)