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Cadmus Announces Strong Revenue & EBITDA Growth

Media Release For Immediate Release

Cadmus Announces Strong Revenue & EBITDA Growth

Auckland, 1 August 2006 – Cadmus Technology (NZX:CTL) New Zealand’s leading advanced payment solutions company and Deloitte / Management Magazine Emerging Enterprise of the Year today announced an audited 30 percent increase in sales revenue to $25.681 million for the 12 months ended 30 June 2006 ($19.665 million in June 2005).

In addition Cadmus also boosted its earnings before interest, taxation and depreciation and abnormals (EBITDA) to $6.723 million which is a significant 137 percent increase over 2005 ($2.830 million).

Ian Bailey, Managing Director of Cadmus Technology says that the result is a very encouraging validation that the business strategy to achieve growth and increased revenue was delivering as expected.

“It is clear that the three segments of the business being, terminals, finance and transactional processing services, all need to reach critical mass as fast as possible to ensure the maximisation of shareholder value,” says Bailey.

On the terminal distribution front, Cadmus has acquired the remaining shareholding in EFTPOS Connect Limited and Cadmus Direct (Waikato) as part of the company’s expanding sales and distribution strategy. Other consolidations are also envisaged over time to further strengthen the distribution channels for Cadmus terminal products.

“The acquisitions of both these companies gives Cadmus one of the largest “Direct to merchant” sales team in NZ and the consolidation will result in considerable cost savings to the company as we remove duplication of administration and support costs” says Bailey.

Cadmus will also be continuing to develop the same infrastructure for distribution in the Australian market and has associated itself with the Bank of Bendigo as advised in the recent announcement.

“In the Singapore market, Cadmus signed a strategic collaboration agreement with that country’s premier technology company ST Electronics (Info-Comm Systems) Pte Limited which will provide a significant platform for growth in the wider Asian market – this includes our multi-million dollar contract to supply Singapore’s Comfort Cabs giving us a 75 percent share of the taxi market in the territory”.

“The next stage is about the increase in overall terminal volumes to further reduce the cost of goods and increase market share on a worldwide basis. Therefore the next logical move is to drive for larger terminal volumes by taking advantage of much larger opportunities such as the recently announced proposed merger with Intellect Holdings,” says Bailey.

“The proposed merger, if approved by shareholders, will put Cadmus in the top ten EFTPOS terminal suppliers worldwide plus expand our product range into the growing unattended payments markets. Cadmus will continue looking at more acquisitions, to add further value to the Cadmus business and shareholders.”

On the financing side, Cadmus has focused its resources on reaching critical mass in terms of its rental book by the purchase of the Hanover and Dorchester EFTPOS rental books.

“This strategy allowed us to grow our finance business by 170 percent and correspondingly Cadmus is now much stronger. The company is now able to negotiate more commercially favourable financing rates to compete in the wider market place as well as having a viable working model which we can take into any of our other markets. “

Bailey also says that Cadmus Transactional Processing Services division, whilst currently only a small part of the total revenues, also continues to grow, albeit at a much slower pace than the balance of the business due to the longer term nature of this segment.

“Customers typically take longer to make a decision and the final delivery of the service typically also includes a significant development component to meet the customer specific requirements. There is a plan to identify methodologies to increase it rapidly in line with the balance of the business growth.”

“As advised in the half-year report, due to the changing certification requirements of the banks, Cadmus decided it was a prudent and conservative measure to undertake a faster depreciation regime on its increased EFTPOS rental book products,” says Bailey.

The next stage for Cadmus is to further streamline its core design, development, distribution and financing operations to maximise profits, and to further grow the business.


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