Stargroup MOU paves the way for sharp uptick in revenue

Published at Sep 29, 2016, in Technology

Stargroup (ASX:STL) announced on Thursday morning that it had signed an exclusive Memorandum of Understanding (MOU) with Indue Limited to purchase various assets relating to a national ATM switching, settlement, processing, telecommunications and ATM reseller business.

The MOUs will enable Stargroup and Indue to undertake due diligence and negotiate to enter into binding asset sale agreements and other contractual documentation in relation to the transaction.

This is an important development for STL, Australia’s only listed ATM company, having a direct ownership interest in the manufacture of its ATM technologies, namely NeolCP, a South Korean private company. STL is also the only ASX listed company deploying ATM machines in Australia.

Highlighting the diversified income streams that the company generates, via its wholly-owned subsidiaries, StarPOS and StarApps, STL is also an EFTPOS and payWave technologies provider and developer of the source code in its terminals via its five-year distribution agreement with West International AB, a Swedish NASDAQ listed company, to distribute next generation EFTPOS payment terminals and solutions in Australia and New Zealand.

Having this infrastructure in place and established relationships across the industry, the MOU carries significant upside. Upon completion of the MOU, Stargroup will provide ATM switching services for 70 ATM deployers, 1700 ATMs and 1350 modems, processing approximately 12 million transactions per annum.

The consideration of $6.5 million will be paid in cash and the acquisition will be fully funded by debt. The latter is important for the company as it will not result in earnings per share dilution.

Management is forecasting that this transaction will generate annualised revenues of $4.1 million and EBITDA of $1.7 million.

It should be noted that earnings projections may not be met. Consequently, professional financial advice should be sought if considering an investment in this stock.

To put this in perspective, it represents an immediate increase of more than 50% at the revenue line with management expecting organic growth to result in income increasing from $11.6 million in fiscal $2016 to $15 million in fiscal 2017.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Australian ASX Small Cap stocks | Why Finfeed.com is Australia’s leading small cap publication

Founded seven years ago, Finfeed.com is Australia’s leading and longest standing website for investor and finance news, education and expert opinion.

Published by StocksDigital, Finfeed was created to report daily on the comings and goings of ASX listed stocks in the small cap market.

As the first digital publication dedicated specifically to this space, Finfeed soon became the most trusted publication in the market, quickly garnering over two million page views – a number that continues to rise.

Finfeed.com provides its readers with informative articles that tackle the latest in market moving #ASX small cap news, plus exclusive content you won’t find anywhere else. It is aimed at those with an interest in investing, market education, company performance, start-ups and much more.

Finfeed.com is the only media organisation operating under the strength of a Financial Services License and is backed by leading journalists and analysts all with brands of their own.

The website aims to inform, educate and entertain with content that drills down into the heart of financial matters.

Finfeed is a leading source of investor and market information, with everything investors need to know about how to invest written in a way that anyone can understand. 

Over the years, the website has expanded beyond exclusively reporting on small caps, to profile Australia’s leading ASX listed small, mid and large caps as well as some of the country’s most successful CEOs and business leaders to find out what makes them tick.

Every day you will find fresh content covering:

Fast Facts

Over 4,000 articles published

Over 2.3 Million Page Views and counting

Over 10,000 followers on social media

Subscriber list growing by 2% monthly

Thanks for subscribing!

X