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OZEQUITIES NEWSLETTER FEATURE Week's Special ICP: MAIDEN PROFIT FOR STATE OF THE ART ATM COMPANY ON MASSIVE GROWTH PATH IN AUSTRALIA, KOREA AND CHINA By Jenny Prabhu and Gerald Stanley iCash Payment Systems Limited is a specialist hardware and software ATM (Automatic Teller Machines) manufacturer/provider with established operations in Australia, Korea and China. In Korea, it has links with global industrial and financial institutions, and recently announced a $30 million contract with Lotte Group, a Korean top 10 listed Company. In China it secured a relationship with Yunnan Nantian Electronics Information Company Limited (Nantian) Nantian is China’s largest business banking machine manufacturer and distributer listed on China’s main exchange Business plans and first orders were announced late last year. iCash is headquartered in Australia and is one of two listed ATM companies, alongside its larger rival Customers. iCash Payments - the subject of this report iCash Payment Systems Limited is an R&D based ATM hardware and software manufacturer/provider with innovative products making great strides in the marketplace. Among recent milestones: During 2009 ICP introduced the cashPod ATM designed for Australia with a built in harm minimisation program known as iREP (Responsible Entertainment Pack) which was developed in consultation with gaming industry stakeholders. It is already smartcard enabled. It requires only a phone call from iCash to activate the technology, whereas more significant hardware and software upgrades could be required on some competitor machines. *ICP developed the world's first PCI compliant PINpads for ATMs. *ICP's cashPod Go is being installed on buses in Korea. *It launched the ReMoCon, the Remote/Mobile Connectivity solution which resulted in Cruise liner deployment via satellite communication. In Australia ICP has about 900 installations. The group has installed over 10,000 devices worldwide. ICP is headed by executive chairman James Manny, a merchant banker, a director since 2005. Although ATM deployment in Australia could perhaps be doubled before reaching saturation point , ICP has already well established links in the South East Asian area with its vast opportunities and has already a proven track records of success , particularly in Korea which will serve as the model for China expansion ICP made a maiden profit this year, it has very low debt levels and trading at just 6c due mainly to market unfamiliarity with the group, it provides a remarkable opportunity well worth considering.
ICASH PAYMENTS - A SNAPSHOT iCash Payment Systems Limited, a name change for International Concert Attractions Limited in September 11 2007, is a conglomerate of ATM companies with operations and sales in the US, Korea and China, put together by International Concert Attractions when it decided to change direction in 2006. The first acquisition International Concert Attractions made was ATMONE Pty Ltd in Australia, acquired in July 2006 for scrip - ATMONE was an ATM products and services company that had been founded in 1995. Then in February 2007 ICP acquired the Transact Group from vendor Sonic Communications Pty Ltd. The Transact Group at that time operated around 650 ATMs across Australia using Pulse International Pty Ltd technology. This was followed soon after by the purchase of 60% of Neo Technology Inc, a Korean ATM manufacturer with existing sales and contracts in China. In May 2007 ICP sold 8% of its 60% stake in NeoTech to LG N-Sys a banking machine and solutions company within the LG group, LG N-Sys later increased its stake in NeoTech to 16%. Neotech later changed its name to NeoICP to reflect the iCash group branding. In September 2007 it made an investment in an ATM and banking security software provider in China, Beijing Yinkatong Technology Co Ltd. So that from inception the company had sales, R&D and manufacturing operations in three countries. Milestones *During 2009 ICP introduced the cashPod ATM designed for Australia with a built in harm minimisation program known as iREP (Responsible Entertainment Pack) which contemplates future changes to gaming regulations . It will require no significant additional spend to enable it to comply with any new operational standards. It was designed by iCash in Australia and engineered and built by its majority owned ATM manufacturer Neo ICP Korea Inc. It is already smartcard enabled. It requires only a phone call from iCash to activate the technology, whereas more significant hardware and software upgrades could be required on some competitor machines. Also iCash clients can request specific modifications to device operation and utility. The CashPod ATM has received approval to be added to the CECS approved device list with no conditions. *ICP's cashPod Go is being installed on buses in Korea. *In May this year it announced through it subsidiary NeolCP Inc Korea it had been awarded a KRW 28.6 billion (approximately $A30.6 million) contract to supply a range of high functionality cash deposit and cash dispensing ATMs to LotteCo Ltd, one of the largest industrial groups in Korea. This will be supported by NeolCP's Back Office automated cash handling and accounts settlement system. Roll out commenced in August. *ICP launched the ReMoCon, the Remote/Mobile Connectivity solution being trialled by a major cruise liner group. *In July iCash Payment Systems entered into an agreement with Optus to deploy the Symstream wireless communications technology for use on its ATM fleet in Australia. Using either the Optus GSM or 3G networks, Symstream's wireless connectivity simplifies the installation process, is 2 or 3 times faster than General Packet Radio Service channels and supports remote operation. It is particularly important in countries where land line services are scarce but cellular service is widely available and affordable. *In April iCash Payment Systems through its subsidiary NeoICP Inc in Korea acquired the ATM assets and business of Taenam AMC Co Ltd, that had been established in May 2000 and is based in Seoul. The cost of the transaction was $A700,000, its sales for the year ended June 30 2009 was $A3.1 million. Its assets were vended into a new company WIZ Mechatronics Inc, 51% owned by NeoICP Korea Inc and 49% owned by existing shareholders, ex Taenam management and staff.
*In November 2008 ICP was awarded a contract for ATM system development and operation by Yunnan Nantian Electronics Information Company Ltd, China's largest business banking machine provider for an initial order of 6000 units to be deployed in mainland China. iCash has established a branch in Beijing. *Also last year NAB selected iCash as its Referral Partner to provide white label ATMs and ATM solutions to NAB customers. Other R&D advances The company has designed and delivered technical solutions with real world applications in driving down management and maintenance costs whilst maximising device uptime and therefore revenues for clients. These include: *Remote and self diagnostic functions for ATMs that provide managers with a graphic display of device service issues and repair procedures, ensuring maximum uptime and minimum service call outs. *iCash through its subsidiary NeoICP has developed a range of machines that in some cases have no known competitors. For example the NeoICP Back Office which is a secure automated cash sorting and settlement device designed for organisations with large numbers of cashiers or tellers. This device frees up the workload of 3 employees and recovers its investment cost in around 3 months. It also provides sales income and recurring service agreement revenues. Its product range, designed and manufactured by ICash includes ATMs, multi function kiosks, automated cash sorting devices, complete public transport ATM solutions and integrated settlement and back office automation systems. Its payments infrastructure includes transaction processing, switching, interchange systems and software/middleware solutions. Manufacturing Capacity iCash through its subsidiary NeoICP maintains two manufacturing and assembly lines capable of producing up to 1000 machines per month. This meets all current and immediate future manufacturing demands. Management however, anticipate that as the China strategy gains traction, the economic case to migrate some or all of its manufacturing capacity to China may be compelling. Plans are already well advanced to exploit Nantian's manufacturing infrastructure should this plan be implemented. Technical personnel and the sales force Technical heads include Kim Stewart, CEO Australian Operations and Mr Steave Ham. ICP has restructured its sales force and has some of the most qualified and respected personnel in the industry. The Competition In an industry where the barrier to entry is fairly low, R&D based innovation as well as marketing is of prime importance. Indue is one of Australia's leading providers of white labeled and tailored co-branded banking and transactional products, providing low cost back end services to organisations for more than 40 years. It specialises in deploying dial up, lobby style ATMs, and can own, manage and operate ATMs at any location with the customer's own branding. Cashcard Australia in 2002 acquired Electronic Banking Solutions (EBS), the largest deployer of merchant ATMs in Australia with Cashcard Australia the third largest deployer. Listed Customers Ltd (market cap $420 mln) has some 5,500 ATMs. It formed a j/v with Bendigo Bank and MasterCard to establish Strategic Payment Services (SPS) which will have over 100 million transactions each year.
iCASH PAYMENTS LTD FINANCIALS Last Traded price 5.9 cents Shares Issued 720 mln Market Cap $42.5 mln Directors: James Andrew Manny, Executive Chairman. Mr. Manny's career in the banking and financial services industry spans over 25 years in Australia and overseas at top levels of management and directorship of major organisations. His experience includes treasury operations, IPO project management and capital raising. From1996 to 2006James was Managing Director of the Credit New Holland Group Limited. He currently holds a non executive director role at Credit New Holland Group Limited. He has been the Executive Chairman of iCash Payment Systems Limited since August 22, 2006 and a Director since September 28, 2005. Sin Pyng Teng executive director and company secretary. Mr Teng has held senior accounting and management positions with substantial companies across a range of industries. Since 1990 he has been a consultant involved with Merger and Acquisitions and Restructuring also having a crucial role in capital raising. Mr Teng is a CPA, Fellow of Australian Institute of Company Directors and an Associate Fellow of the Australian Institute of Management. Kim Adrian Stewart, executive director, CEO Australian Operations . Mr Stewart has held senior marketing and management positions with substantial local and international companies across a variety of industries. He has been involved in the electronic transaction industry for over 20 years primarily in Australia, Asia and Europe
STL Price at posting:
64.0¢ Sentiment: Hold Disclosure: Held