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.
Customers' trading well, upbeat on ATM Direct Charging in 2009
Customer's Chairman Gregory Monaghan said at the company's AGM today, "Customers is trading well despite today’s extraordinary market environment. It is continuously improving underlying operations, the core business is handling economic conditions and a major positive change to the trading environment – Direct Charging - is just months away."
In 2008, Customers reached nearly 5,500 ATMs providing scale, and market leading position. Operations were streamlined and consolidated and a re-focused strategic direction on the core Australasian market. "With new contract wins with St. George Bank, Bank of Queensland and Arab Bank Australia – more are in train. Transaction volumes and revenues remain strong despite economic conditions," Mr Monaghan said today.
Revenue in 2008 was $80.4m, up 90%. Underlying EBITDA was $16.7m, up 143% with a $2m one-off charge booked – restructuring and consolidation. The sale of Fintronics stake - $14.7m repatriated, was applied to debt.
Post 2008, "agreement has been reached with Bendigo Bank for a $5 million loan on attractive terms and conditions." The proceeds will be applied to reduce CBA Senior debt, and is secured solely by 14.2% SPS shares (CUS holds 33.3%). The facility is repayable by cash or shares by 31 July 2009. Customers’ current intention to re-pay by transfer of shares. Advanced negotiations with another party on sale of the remaining stake for similar value.
Direct Charging
In March 2009, a once-in-a-generation industry change will occur where the full ATM fee will be passed on to ATM owners (instead of shareing fees with banks). This has Reserve Bank of Australia support. Customers will be a major beneficiary with broadest spread of ATMs nationally. Customers is the only independent ATM provider with bank-branding options. Customers forecasts a significant uplift to revenue & margins anticipated.
Consolidation of shares
Following shareholder approval, the share capital of Customers Limited will be consolidated by converting every ten fully paid ordinary shares on issue into one fully paid ordinary share. This is expected to be completed by 5 December 2008.
Debt Reduction
Customer's banking facility requires debt reduction of $10m by 31/12/08. Of this, $3.2m has already been reduced at 30/9/08. The remaining $6.8m reduction required by 31/12/08 will be met via Bendigo Bank loan secured by SPS shares with the remainder met via expected trading surplus and/or asset sales.
Outlook for 2009
- Customers is well positioned for Direct Charging
- Customers trading soundly in challenging economic conditions
- Sale of Strategic Payment Services stake is planned to complete
- Continuing reduction in debt
- Renegotiation of banking facilities
- Increased margins from Convenience Fees are expected to generate significant cash
- Review of capital management opportunities in light of results of Direct Charging