Customers
Customers Limited (ASX:CUS) is an Australian Electronics Payments Systems Company which is listed on the Australian Securities Exchange. With 5,000 active ATMs, Customers is Australia’s leading independent ATM business.
Customer's vision is to maximise shareholder value by rapidly growing the business and extracting benefits from scale, market position and combined services. The overall strategy is to build Australia's leading listed payments business through organic growth as well as via acquisitions. We will participate in retail payments areas such as ATMs and EFTPOS.
In less than two years Customers has become one of the largest owners and operators of merchant ATMs in Australia; formed a Joint Venture with Bendigo Bank and MasterCard to establish Australia's newest payments processing business, Strategic Payments Services (SPS). SPS will have committed values on day one exceeding 100 million transactions per annum.
Customer's Direct ATM Charging to breathe new earnings into Customers
One of Customer's most important and beneficial assets is Customers’ exclusive contractual rights at over 5,000 convenience venues for the delivery of cash to consumers from their financial institution accounts. Standard contracts are locked in for 60 months.
Currently, Customers is the only independent provider with bank branding option and, in addition to St.George Bank, it owns and operates ATMs for an increasing number of key partners including: Bank of Queensland; Citibank; BP; Travelex; and, most recently, Arab Bank Australia for which it is rolling out 40 to 50 new ATMs over the next six months.
Other initiatives
- Customers also has a joint venture with MasterCard and Bendigo Bank for processing of ATM and EFTPOS transactions.
- Customers established a strategic foothold in the New Zealand market, after signing an agreement to acquire a 25% stake in NZ ATM Services Limited (NZ ATM) for NZ$1 million.
- During the year under review, Customers signed an agreement with St.George Bank to brand 200 Customers-owned ATMs located at BP company-owned stores across Australia. The agreement reflects a key element of Customers’ growth strategy to develop third party business opportunities with key partners.
- Customers is looking at other initiatives. These include providing pre-paid mobile phone top-ups and offering advertising and branding on Customers ATM machines.
Recents Developments
In the year ended June 2008, Customers reported EBITDA of $12.8 million, up from $6.1 million in the previous year. At the end of June 2008, Customers had net debt of $46.2 million, down from $47.1 million a year earlier. Gearing was 30.6 percent, up from 26.0 percent. Customers is reviewing assets to establish whether from a long-term perspective there is a need to retain ownership, proceeds would reduce debt.
Fortress Credit Corporation of NY has exercised its option expiring on 1 September 2008 to acquire 40,000,000 fully paid ordinary shares in the Company. The exercise price was $2,000,000 and Customers Limited has received that amount. These funds received would be used to further reduce debt. Fortress had provided Customers with bridging finance for a purchase of ATM's and elected to "roll-over" the loan into shares in Customers.
First Look comment by Andrew McCrea
March 2009 will be a significant date for Customers as it heralds the first time that independent ATM owners will not have to share user fees with banks for each transaction at an ATM convenience venue. Evidence suggests an initial reduction in transaction volumes, which should eventually recover to historical volumes in two to three months.
We believe Customers has investment prospects beyond March 2009. At present, net debt levels are high but post June 2009, we would expect growing net cash flows to rise significantly for Customers and that debt levels will start to come down as borrowings are repaid. Fortress's election to roll over debt into Customers shares was a posiive sign. Exiting unprofitable Asian businesses, a new management that is ticking every box, Customers bears close watching as it exhibits signs of a significant turnaround in 2009/10
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