Stargroup (ASX:STL) has executed the asset sale agreement for the acquisition of the Indue Ltd automatic teller machine (ATM) switching, settlement, processing, telecommunications and reseller business.
Indue provides services to 70 ATM deployers, 1,700 ATMs, 1,350 modems and processes 12 million transactions per annum.
The ATM Switch, ATM Telco and ATM Sales business will increase the current annualised revenue from the ATM division from $8million to $12.1million.
This is expected to grow to circa $18 million organically in the 2018 financial year.
Todd Zani, CEO and chairman, commented: “This is an important acquisition and further vertically integrates our ATM business which has been through a truly transformational year.”
“We look forward to completing this acquisition and accelerating our blue sky EFTPOS business opportunities in 2017.”
Background
Stargroup is a dual listed technology company that owns a 350+ ATM network in Australia and provides EFTPOS and payWave technologies, and has a 11% interest in NeoICP Korea Inc, the manufacturer of cashPod ATMs, back office and casino settlement solutions.
Stargroup offers two key products - ATMs and EFTPOS terminals.
Group revenues for the December quarter are on target to eclipse $2 million for the first time.
Catalysts to be delivered in FY2017
Significant catalysts to be delivered in 2017 include:
- Major cost savings of >50% since 1 July 2016;
- Launch of new EFTPOS technologies in early 2017;
- The intelligent deposit ATM launched in October 2016 into remote communities;
- A significant % increase in revenue and EBITDA forecast for FY17; and
- Maiden dividend payment earmarked for June 1 2017.
Analysis
Execution of the asset sale agreement marks an important milestone for the continued vertical integration of Stargroup’s ATM business.
Furthermore, the $15million debt facility that was setup to fund this acquisition will enable Stargroup to look at other merger and acquisitions in 2017 without any further dilution.
Stargroup is set for yet another record breaking quarter, expecting revenues of over $2 million for the December quarter.
Considering FY2016 total gross revenue was $3.6 million, the company is continuing to exhibit impressive growth from its ATM and EFTPOS divisions.