Transcription of Finance News Network Interview with BPS Technology Limited (ASX:BPS) CEO, Trevor Dietz Natalie MacDonald: BPS Technology Limited
(ASX:BPS) is a provider of trading and payment platform technology via its Bartercard, TESS and bucqi divisions. I’m Natalie MacDonald and joining me at the CEO Sessions in Brisbane is Chief Executive Officer, Trevor Dietz. Trevor, welcome to FNN.
Trevor Dietz: Natalie, thank you very much for having me here.
Natalie MacDonald: Can we start firstly by introducing the company?
Trevor Dietz: BPS Technology is a new company to the market, it’s just a year old, BPS handles payment systems. And the DNA of our company is all about how you bring a customer to a merchant, make a transaction happen and charge a fee. So the revenues that we produce within the group are all about transaction fees that we’ve been able to create by bringing a consumer to a merchant.
Natalie MacDonald: What then have been some of the highlights of your first year as a listed company?
Trevor Dietz: BPS has done fairly well in this first year. It’s been a very productive year for us. In terms of headline numbers for example, our revenues came in at $48.1 million. Our EBITDA was $10.1 million, which was actually above our prospectus forecast of $9.9 million. Our NPAT came in at $7.9 million, which was 22 per cent against the prospectus forecast, so again, a pleasing result. Earnings per share again, beat the prospectus forecast. Everything that we’ve done this year has been a very positive year.
We’ve also purchased back a lot of our existing franchise areas, which have been sort of grown into a period where they had restrictive agreements around them. We couldn’t actually grow those businesses. So by buying these back, it’s actually allowed us to be able to expand the business, getting it ready for the rollout of bucqi.
Natalie MacDonald: Let’s take a look then at each of your technology divisions, starting firstly with Bartercard. How does this technology work and also how widely accepted has Bartercard been?
Trevor Dietz: Bartercard’s been in existence since 1991, so it’s not new to the market from that viewpoint, but it’s certainly new in the public arena. We led a management buyout, my partners and I, of the Australian operation in 2007. We bought the international parent in 2012 and then we listed the company in 2014. And as part of that listing, we paid out in full the existing debts of the group. It allowed us to actually transform the business and bring it back actually into the 21
st century, doing a lot of technological improvements.
We are the biggest of our type in the world. We’re acknowledged as being the most advanced from a technology viewpoint, but we’ve done a lot more in terms of being able to record electronically, what each of our members do. Both what they earn and what they spend, and the frequency associated with that. So we’re using that data now, to actually enhance the quality of service and product offerings that we make to our members. That increases the transactional volume.
Now we do more than $600 million worth of transactions each year, 1.8 million across eight countries. We have 75 offices, 600 staff; it is a very sizeable business. We are the biggest in the world, but the world’s stage is phenomenal. The barter industry has more than 2,500 exchanges in it and it’s estimated at $20 billion a year industry. You know we’re the gorilla in the room at $600 million, so we want to be able to get a little bit more of that $20 billion target.
Natalie MacDonald: Can you also tell us then about the TESS and bucqi platforms?
Trevor Dietz: I’ll start with TESS to start off with. Now TESS is our software arm. And effectively what we’ve done there, is to take the existing technology that underpins Bartercard, which is recognised as being some of the most advanced in the world, and we’ve white labelled that. And we’ve scaled it according to the size of an exchange and their needs. So if you think about what the Xero has done for the accounting package and that particular industry, well they offer accounting packages in small, medium and large, we’re doing the same thing for the barter industry.
IRTA estimates that there’re more than 2,500 barter exchanges in the world. IRTA being the International Reciprocal Trade Association, it’s a world governing body. And they decided two years ago that they wanted to establish a common set of payment rails and technology across the world. That doesn’t exist in our industry currently. And they did a two-year search for a software provider to do this. We won that tender. But as part of that, we had to create a separate division and we fulfilled that test, it’s a separate company. We have a Board member from IRTA sit on that Board of that company.
And it now provides that technology around the world. We just launched it last month in North America at the World Congress for Exchanges. We’ve already got 13 expressions of interest to take that technology up. So it’s very popular, it’s seen as best practise, it has all the great features. But what it means for trade exchange earners over there, is that they can have good technology that’s backed up by a professional organisation, with a dedicated software team that we have set up.
It becomes a very sticky business from our viewpoint, because the clients need to stay with us, because we now maintain their data. We do it in a very professional way and it’s a good value proposition. We earn 0.5 per cent of the transactional volume that each of those trade exchange members do, across the platform. So we’ve got just 10 per cent of the $20 billion of transactional volume, the revenues for us are in the millions.
And our ability to be able to roll TESS forward, we do everything across the Internet. We don’t physically have to be in country to do it and we’re very experienced to do it. I’ve got a full team who are capable of doing that, so from that it’s good. Bucqi is a lot different. Barter at $600 million is about five per cent of the average SMEs business, and the other 95 per cent is cash. So we said well look, there’s an opportunity for us to get some of that. So if we could actually go in to just get 10 per cent of that 95 per cent of the other business, to us we would more than double the revenues within what we currently do, at $48 million.
The other thing that we saw that SMEs wanted to do was to be able to manage loyalty programs. And they wanted to be able to have transparency around points, because it was all very difficult. For the average consumer out there, there’re all these different loyalty programs. They’ve got these cards, there’s not enough space in my wallet, I know you wouldn’t have enough space in your purse I’m sure. So all of these things are a problem for most SMEs to be able to have loyalty programs.
So we now provide a loyalty program, managing that on a mobile device and for the consumer, it’s free to use. The points that are used and paid to consumers are actually trade dollars. It goes from a merchant’s account in trade dollars and gets paid to the consumer as a buck. And what’s a buck, a buck is worth a dollar. So now people have portability of points. They can go to any of the various merchants that are listed on the app, and they can get goods and services and they can either be receiver reward, or they can be able to redeem their bucks.
And what people wanted was portability of points, transparency of value and being able to be able to use their points and cash environment, in a safe and secure way. And bucqi does all of that. In bucqi as a consumer, you can add up to five debit or credit cards, half the card information is kept on the app and half is on the bucqi server. It’s very secure. If you lose your phone, your credit card information is not going to get compromised.
So we’re now in the process of rolling that out. We’ve launched it in Southport, we’ve launched it in Toowoomba and we’ve launched it in Cairns, and we will do this all around Australia. And the way, in which we take this out to the consumer market is that we work with three to five not-for-profit organisations, like footy clubs and netball clubs and charities in the local area. And we get their supporters to download it and start to use it. And for every transaction that those people do, one per cent of the face value goes back to the charity. It’s a good way of giving back to the community that supports us.
Natalie MacDonald: Last question then Trevor. What are your goals for BPS Technologies in the next 12 months?
Trevor Dietz: We want to be very much that continuation of a global business. We are very much in this payment space. We want to move very much more strongly into the B to C environment, than just B to B. We look to do mergers and acquisitions, both vertically and horizontally in our business. And we see we are already in discussions with a number of groups that should provide some real positive traction, for our business going forward.
Natalie MacDonald: Trevor, many thanks for the update.
Trevor Dietz: Natalie, thank you for having me.
Ends
