An indicative BOE analysis on the impact of transitioning the NZ...

An indicative BOE analysis on the impact of transitioning the NZ fleet from rentals to transaction acquiring.

AU margin per terminal (all NZD)

• FY23 Australian acquiring revenue: $60.5m (actual)

• Ave terminals throughout the year: 12.6k
• Revenue per terminal: $4,800
• Acquiring GP margin: 55 to 60% (lets call it 55%)
• Gross profit per terminal: ~$2,600

NZ margin per terminal (all NZD)

• FY23 NZ service income (rentals): $13.7m (my estimate)

• Ave terminals: 30,500
• Revenue per terminal: ~$450
• Rental GP margin: 85 to 90% (lets call it 90%)
• Gross profit per terminal: $400

Face value differential: $2,200 multiple that by the number of NZ terminal fleet (30,500) and you get an obscenely large uplift in incremental gross profit ($67.1m - yikes!)

Of course that will probably prove to be an impossible outcome....lower purchasing power NZ (ttv per terminal) together with the of the payments industry could mean margins would be structurally lower in NZ. And not all the NZ fleet maybe suitable for Smartpay's acquiring product.

Sensitivity analysis

• Assume a 50% discount to to the margin differential per terminal: $1,100

• Assume 50% of the NZ fleet is suitable
• Incremental GP uplift: $16.8m
• Or - assume 25% of the NZ fleet is suitable: $8.4m (half the above)

Those are very indicative and just to get a feel for the potential range of outcomes. The other thing to consider would be what the additional TTV pulled through from converting the NZ rental fleet to transaction acquiring would do to the switching fees paid to Cuscal. As SMP brings in more TTV it achieves lower switching fees. This has the potential to add a huge sum of TTV so its possible SMP's AU switching fees could fall further depending on how the letter of intent with Cuscal is structured. It's possible it is ringfenced to NZ with fees starting high and falling as as TTV grows as is the agreement in Australia.

Then incremental ongoing overheads, marketing and project costs. And the phasing of costs and eventual revenue.

Or it could all prove too hard and not come to anything.

Either way - exciting times as an existing holder!