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Cadmus Announces 50% Revenues Growth

Cadmus Announces 50% Revenues Growth

AUCKLAND, 29 August 2005 - Advanced payment solutions company, Cadmus Technology Limited (NZX: CTL), today announced a 50% increase in sales to $19.967 million (2004: $13.125 million) with an increased operating profit (EBITDA) to $2.83M. This moved the net surplus, after minority interests, from a loss in 2004 of $490,000 to a Net profit of $349,000, for the 12 months ended 30th June 2005.

At the last AGM, shareholders confirmed that they expected the company strategy to be focused on growth and the key to Cadmus' 2005 result is the aggressive investment in people, product development, product certifications, acquisition of distribution channels and an investment in a finance company.

The investment in intellectual property will continue and provide the company with an asset that has international value and will create opportunities to grow via joint ventures, and partnerships, combined with ongoing direct sales to new markets.

Cadmus will continue to grow its trans-Tasman market share with the expansion if its Australian branch office, roll out its product in markets in Asia, as well as expanding its network of distribution channels both locally and internationally," says Ian Bailey, Managing Director for Cadmus Technology.

"These channels will include joint ventures and/or partnerships with established entities in the target markets."

Furthermore, Bailey says Cadmus is poised to benefit from its immediate opportunities such as the mandatory adoption by card acquirers of the EMV (Eurocard, Mastercard, Visa) standard in the NZ market.

"Our focus remains on positioning Cadmus to capitalise on EMV as well as locking in future revenue streams, continuing our lead in product certification, and investing in a strong management capability with international focus,"says Bailey.

"For example, in 2005 Cadmus was among the first terminal providers to achieve New Zealand 5.1 EMV certification. Cadmus has also succeeded in obtaining approvals in the Indian market which should open opportunities in the future. The fact that all Cadmus products are certified is a huge competitive advantage arising from the work of our dedicated certification team."

"Our 49% owned finance company, Product Rentals Limited (PRL) has a EFTPOS rental finance book which we decided was worth investing in given the sustained returns this will deliver Cadmus and its shareholders. The company also holds an option to increase this holding to 100% in the next 12 months."

"From a purely accounting standpoint the treatment of our finance investment made PRL an 'in substance subsidiary' which required a full consolidation of revenues and the depreciation of assets from the date of acquisition. The changes to the handling of both revenues and depreciation are also a requirement of the new accounting standard (IFRS) that all companies will need to adhere to by 2008. By this acquisition, the company has locked in a future renewable revenue stream, reducing the risk to shareholders."

"However, whilst the accounting changes have no material impact on cash within the company, we have increased levels of inventory in preparation for the replacement to the new EMV standard in the NZ market and debtors are higher due to a large export shipment just prior to balance date".

In addition, Bailey says the appointment in 2005 of four key senior managers has significantly strengthened the operational ability of the business going forward.

"These appointments bring a crucial level of decisive managerial experience to Cadmus' operations. These appointments cover New Zealand and Australia country management, product development and scalable manufacturing using local and international manufacturers. Moreover it also allows the board and senior management team to spend more time to identify and act on other strategic opportunities."

Bailey says the focus of Cadmus management and the board remains on driving growth across all parts of the business in order to continue future increases in its revenues, EBITDA and operating cash flows.


About Cadmus Technology
Cadmus Technology Limited (NZX: CTL) designs, develops and implements innovative point-of-sale payment solutions for merchant businesses worldwide. The company is New Zealand's largest manufacturer and exporter of payment terminals, with an increasing customer base developing internationally. The company offers payment and data management solutions, including EFTPOS and data capture terminals, loyalty programs and customer relationship management solutions. Cadmus also provides end-to-end payment solution and data management services for retail, business payment and transactional processing requirements.
Clients include Bank of New Zealand, TAB, Wellington Combined Taxis, On-Q Business Systems Pty Ltd, eScience Systems Malaysia, Paysys (M) SDN BHD, Coles Myer Australia, Caltex Australia, Harvey Norman Australia, Bi-low, Priceline and Franklin's.

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