Cadmus takes hit on eftpos terminals

Cadmus chief executive Ian Bailey says the benefits of depreciating equipment now could be seen in future profits. Picture / Fotopress

Revenue is up but profits are down at listed payment solutions company Cadmus Technology after the firm wrote down the value of its eftpos terminals.

Revenue growth was driven by international demand and the sale of equipment to meet new security standards, said managing director Ian Bailey.

But net profit was down 51 per cent after the company chose to fully depreciate its rental assets in one hit.

The impact on the half-year result was dramatic with more than $2 million of depreciation, compared to $533,000 for the same period last year.

Early depreciation was a conservative approach to the life-cycle of its rental equipment in light of the potential for ongoing upgrades to meet new security standards, the company said.

"It's our view that if the product hasn't got absolute certainty that it can be used in three to four to five years [time] then we should depreciate it now," Bailey said.

But the benefit of depreciating now could be reflected in future profits.

Operating profit (Ebitda) was $4.1 million, up from $1.4 million.

Bailey did not expect revenue to fall back as the nationwide upgrade of terminals to meet Europay Mastercard Visa standards progressed.

During the next two years a further 50,000 terminals would need upgrading, he said, "then you're looking at the international market where there's about 35 million terminals that will need replacement".

Although Australia and New Zealand account for 80 per cent of revenue, Cadmus also sells its technology in Asia, India and Africa.

Shares closed steady at 22c.