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Strong results through volatile times
19 February 2009
Cuscal's 2008-2009 half year operational result of $10.4m post-tax represents a solid performance amid volatility in financial markets, increasing competition and industry consolidation.
Cuscal's transaction and settlement services were resilient with transactional volumes generally in line with expectations. Prudent balance sheet management and successful execution of trading strategies over the half year were also contributors to growth in profits.
Cuscal has declared an interim dividend of 3.5 cents per share, maintaining the good record of dividends. Return on average equity is 11.0%, up from 9.6% for the December 2007 half year and Cuscal's half year operating profit after tax of $10.4m is up 20% up on the December 2007 half year result.
Major activity within the half year included Cuscal's response to ATM reform. Expansion of ATM deployment and the development of the rediATM brand is a key part of Cuscal's strategy. The newly established rediATM network will enable financial institutions without a strong ATM channel to offer cardholders access to ‘direct charge' free ATMs.
Another highlight for the period in review was when Standard and Poor's reaffirmed Cuscal's counterparty credit rating as AA-/Stable/A-1+ in October 2008.
Cuscal's Managing Director, Craig Kennedy, said: "while we are positioned reasonably well, no one is immune from the far-reaching impact of the tough economic conditions."
Cuscal's top three immediate challenges to maintaining performance include:
1. Continued consolidation of its client base.
2. Ongoing reductions in the official cash rate reducing earnings on capital; and
3. Maintaining a strong balance sheet through prudent risk management.
"The urgency to evolve our business and bring on new revenue, via both business development and acquisition, is now more important than ever,” said Kennedy. “Consolidation among Cuscal's client base will continue and the competition for fewer numbers of remaining new customer targets will increase. Our new business activities will require discipline, focus, and persistence, but I'm confident we can make good progress."
Cuscal's performance in the second half is expected to be impacted by lower interest rates, further consolidation in the mutual industry and increased investment in ATMs.
Given these factors, and the economic conditions, it is likely Cuscal's second half results will be muted. However, with a strong core business the expected results are likely to be sustained at or near the levels achieved in 2008.
Ends
For further information contact:
Rachel Price
Senior Manager Marketing
Cuscal
Phone: (02) 8299 9899
Mobile: 0423 827 573