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Cadmus Enters Into Strategic Alliance

Cadmus Enters Into Strategic Alliance With Card Processng Services Limited.

Auckland, 26 October 2006 - Advanced payment solutions company, Cadmus Technology Limited (NZX: CTL) today announced that it has entered into a strategic alliance with Card Processing Services Limited (CPS) which will see CPS license Cadmus' host-based software and services and agree to purchase over $1 million of Cadmus terminals over the next 12 months.

As part of the license agreement, CPS will take over the ownership, ongoing development and management of Cadmus' host-based transaction processing, data management and payment systems network (known as the TP business).

CPS is 35 percent owned by listed prepaid payments company SmartPay Limited, who are also a major user of the TP business and they supply prepaid mobile phone top up services via its merchant base of more than 2,500 merchants.
Cadmus is a small shareholder in SmartPay and has been allocated a further 1.2 million shares in that company in consideration for the non-exclusive licensing rights to the software, the host systems supporting the software, customer base and goodwill of the TP business. Most of the staff related to this business segment will also transfer to CPS.

Ian Bailey, Managing Director of Cadmus Technology says that the focus of Cadmus is in increasing the scalability of its core terminal business by rapidly increasing terminal volume sales, and the TP business is not core to Cadmus' growth plans on an international level.

"The reality is that the TP segment is a small part of Cadmus' overall revenue base, and is not scalable as an international product. Moreover, the TP business was not getting the focus it needs to allow it to flourish in the New Zealand market, so it is logical to enter into an alliance with a company who can more effectively manage and grow the operation" says Bailey.

"CPS has a dedicated, highly-skilled management team with a keen focus in transaction processing and data management sector, and so fully intends to further expand the business into new markets".

Bailey also says that CPS has agreed to continue to provide the same high standard of services that Cadmus' existing customers already receive and has agreed to invest in infrastructure as well as add new services over time.

In addition, Bailey says that the agreement with CPS also provides for them to purchase over $1 million of EFTPOS terminals over the next 12 months.

"The CPS deal is a win-win for Cadmus, as it fits in very neatly with our overall growth strategy of working with partners to grow our distribution channels, but retains the relationships with current customers and provides for ongoing wider distribution of our products."

"Moreover, the deal between Cadmus and CPS may also see future joint opportunities for both companies by leveraging off each others' strengths," says Bailey.

ENDS

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