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Intellectual Property for Payment Technologies

Cadmus Acquires Intellectual Property for Payment Technologies

AUCKLAND – Payment solutions company, Cadmus Technology Limited (NZX: CTL), today announced it has entered into an agreement to purchase all the shares in technology company, Aurium Systems Limited. Aurium has worked with Cadmus for the last six years in the development of its payment technology platform.

Total consideration is $300,000 in cash and the issue of 11 million ordinary Cadmus shares.

Under an agreement signed in 1998, Cadmus and Aurium jointly owned some of the intellectual property used by Cadmus for use in its terminal products. Under that agreement Aurium received royalty payments for each unit sold to enable it to recover its investment. As a consequence of the purchase these royalty payments will cease, adding considerable value to Cadmus for the future.

“This deal gives Cadmus complete control over all remaining aspects of the key intellectual property used in the development and manufacture of its state-of-the-art payment solutions,” says Cadmus Managing Director Ian Bailey. “Buying back these intellectual property rights means we’ll be in an even better position to capitalise on the industry’s move towards the new EMV and 3DES standards.”

This purchase also completes the “tidy up” of the ownership structure of all Cadmus intellectual property, which started with last year’s purchase from Trustpower of the intellectual property for home based payment systems.

The potential market value for replacing old payment terminals to EMV compliant systems is estimated to be approximately $150 to $200 million in New Zealand alone, with 75,000 – 85,000 merchant terminals due to undergo replacement by 2008.

“To enable Cadmus to take the lion’s share of domestic business and maintain its strong international market position it is imperative that we continually invest in technology to improve our payment systems products,” adds Bailey.

As part of this agreement we have also entered into a long-term contractual development relationship with the core staff at Aurium, thereby ensuring ongoing support and development services for the next five years. Upon completion of the purchase the vendor cannot sell more than 3,666,667 CTL shares in any 12-month period, subject to certain exceptions.

Following the acquisition Cadmus will directly benefit by not having to pay royalties previously paid to Aurium.

“Bringing 100 per cent of intellectual property back in-house will enable Cadmus to fully enjoy the benefits of any further development whilst removing existing royalty payment costs,” says Keith Phillips, Cadmus’ Chairman.

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