The company has turned cash positive after years of reporting losses, his business is growing across the Tasman and New Zealand customers are renewing their contracts.
He talks to business editor Dene MackenzieTAKING a photograph of SmartPay Cadmus managing director Ian Bailey was the hardest part of the interview.
Walking up and down Lower Stuart St and into Moray Pl, Mr Bailey took a while to find an eftpos machine he was happy to be photographed with.
But at least he found he had plenty of business opportunities in that small part of the Dunedin central business district.
Mr Bailey felt nearly all of the eftpos machines he saw needed upgrading.
SmartPay Cadmus is a major provider of technology services for merchants and retailers in New Zealand and recently announced it was expanding its operations in Australia and could seek an ASX listing.
A heads of agreement had been reached with Australia's Generate Group for the provision of integrated eftpos and value-added services into Australian clubs and the hospitality sector.
Generate provided end-to-end market-leading automated information systems which accurately controlled all aspects of an Australian club's business, including point-of-sale systems, software, knowledge management and performance management services, he said.
As part of the agreement, Generate would also integrate its "club rewards" loyalty programme with SmartPay's eftpos applications.
"This effectively allows SmartPay and Generate Group to market these products to independent merchants who have affiliations with clubs in their immediate vicinity.
"With more than 200 clubs all over Australia already using Generate products, each with on average 15 merchants servicing the local club community, the agreement gives SmartPay the ability to market to well over 3000 new merchants throughout Australia over the next 12 to 18 months."
Generate was a good example of how SmartPay could and was licensing its technology and IP to drive extra revenue, Mr Bailey said.
Mr Bailey was in Dunedin as part of a nationwide tour to meet brokers and investors.
There had been a perception that the company was too small for many brokers to bother with but recent developments had meant a growing interest in SmartPay and its services.
SmartPay started by providing the software to allow merchants to sell prepaid mobile credits to customers.
That provided the company with high revenue but low margins.
In August 2008, the company was burning cash and was looking at a way to restructure, he said.
Supplying the hardware and the software to merchants was an appealing option, along with gaining the subscription revenue from retailers.
SmartPay supplied most New Zealand taxis with equipment and software to conduct eftpos transactions.
The opportunity to expand further came when ProvencoCadmus came on the market through a receivership.
In August 2009, SmartPay had bought the payments business of ProvencoCadmus, mainly through debt, and had increased business about five-fold.
The move paid dividends, Mr Bailey said.
By September 2009, SmartPay had moved into the black in its earnings before interest, tax, depreciation and amortisation (ebitda).
The high debt at high interest rates prompted a recent equity-raising requirement, he said.
SmartPay now owned the hardware and the software that ran on it, and had an expanded customer base.
"The business is going along nicely with our 24-month to 36-month plan."
For the year ended March 31, 2010, SmartPay Cadmus reported a 16% growth in revenue to $39.4 million and an improved ebitda to $2 million.
It was forecasting ebitda of between $7 million and $10 million for the end of March next year.
SmartPay already had 15% of the taxi market in Australia but was keen to grow that share further, Mr Bailey said.
The company was not abandoning New Zealand but it could see the Australian economy was lending itself to business opportunities.
Mr Bailey was surprisingly modest about the growth of the company, saying it was not difficult to do.
SmartPay provided good sales and service, provided updated software and services and the customers kept renewing their contracts.
However, half the staff were sales and half IP developers.
Staff worked hard to provide their customers with the best products and services, he said.
SmartPay owned a wide range of products it supported and the development of which it financed, he said.
