Tax rulings aid Customers ATM

A pair of tax rulings supported the profit of Customers Limited in the December 2010 half year, a period in which average ATM transactions declined and more competitors crowded into the market to feast on the seemingly attractive fees that sustain the sector.

Revenue increased six per cent to $63 million in the half year, the firm said. EBIT increased 29 per cent to $12 million.

Net profit increased only two per cent, to $11.8 million, and then only with the benefit of a GST refund of $1.5 million in the current half.

The company is also benefiting from a private ruling from the Australian Taxation Office, over the treatment of merchant contracts, which will save $6 million in tax paid in the 2011 financial year, the company said, in an investor presentation yesterday.

Customers said its fleet increased by four per cent, to 5850 ATMs, partly through the takeover of small operators. Transactions per ATM declined six per cent.

Subdued retail sales and rising interest rates were two reasons cited for this trend, though there are secular changes in the market tied to the introduction of direct charging by ATM owners two years ago.

One change is the effort by smaller competitors to crowd into the niche, which is dominated by Customers and along with Cashcard.

Two of these operators achieved ASX listings in recent months: GRG and MyATM, both of which are yet to report their own financials.

The rise in rebates paid to merchants matched the rise in transaction revenue collected by Customers, and which helps explain the increase in pricing that the firm has adopted.

ATM fees on many Customers ATMs are now $2.50, up from $2, a change introduced late in 2010.