Stargroup: Indue Transaction Successfully Executed and Scale of Assets Acquired Revised Upward

Company Name: Star Payment Systems

Announcement Date: 26/05/2017
Announcement Category: Merger/acquisition
Announcement Content:

Stargroup Limited (ASX: STL) (“Stargroup or the Company”) is pleased to announce that it has
successfully executed the transaction to acquire Indue Limited’s Automatic Teller Machine (ATM)
switching, settlement, processing, telecommunications, and reseller businesses.

The Company is also pleased to update the market on the scale of the Indue asset base since the
transaction was first announced. As of April, Indue has 2,414 ATMs under management (previously
1,700) and is processing approximately 15,922,920 transactions on an annualised basis (previously
12,000,000), representing a greater than 30% larger business than anticipated since negotiations
began.

At the time of negotiations, the largest customer of Indue’s switching, settlement and processing
business was out of contract. Further, another sizeable customer had also been acquired by a
Stargroup competitor in the month prior to the acquisition and hence the anticipated size of the business
was as previously advised to the market.
Stargroup is pleased to advise that the largest customer has in fact agreed to commercial terms to
remain and this will have a significant impact on the scale of the operations and forward revenues of the
StarLink business at little to no extra cost to the business. Stargroup is also pleased to advise that it is
well advanced in attracting other independent ATM deployers to StarLink.

Stargroup provided total consideration of $6,500,000 million in cash for the assets, with the Company
making a part cash payment in April before completing an oversubscribed capital raising to fund the
balance of the transaction, which was settled on Friday 5 May 2017.

The Company raised $3,490,000 through the issue of 129,137,508 fully-paid ordinary shares to existing
shareholders, as well as new professional and institutional investors at a price of $0.028 per share, with
Stargroup directors also electing to participate in the placement to contribute a further $112,000, subject
to shareholder approval at a soon to be convened meeting in June.

The acquisition of the Indue assets was initially expected to increase Stargroup’s forward revenues by
$4,100,000 and the combined group’s EBITDA by $1,700,000. However, the Company expects to
positively revise these estimates following advice from Indue on the number of active ATMs under
management and transactions being processed.

Mr Todd Zani, Stargroup’s CEO and Executive Chairman said although the Indue acquisition was
delayed due to a switch from an all-debt funding model to a part-equity funded transaction, the headline
numbers and economies-of-scale delivered by the deal remained compelling.

“The purchase price of the Indue assets represents an acquisition multiple of just 3.83 times forward
earnings at the time of the deal and we are already beginning to realise additional revenue growth
opportunities through engagement with Indue’s client base during our due-diligence process,” Mr Zani
said.

“With this transaction now complete, the Board and management team can move to integrate and
capitalise on the vertical integration of these Indue assets, while also continuing to deliver on the
organic growth opportunities presented by our existing strategic partnerships in the financial services
and technology sector. The vertical integration will see one of our key operating costs reduce by a
further 15%.”

“Although we were required to change strategy during the execution of this transaction, I am very
pleased that we have been able to introduce several significant institutional investors to the Stargroup
registry during the capital raising process.

“We will positively revise our FY18 revenue estimates and further update our shareholders at the
meeting in June which will be convened to approve the options offered as part of the recently
oversubscribed placement to existing shareholders, new high net worth and institutional investors.”

Announcement URL: http://clients3.weblink.com.au/pdf/STL/01855198.pdf
About Star Payment Systems:

Financial technology company Stargroup Limited is the only ASX listed company deploying ATM machines in Australia and importantly, the only listed ATM company having a direct ownership interest in the manufacturer of its ATM technologies, namely NeoICP, a South Korean private company.

Stargroup Limited became the exclusive distributor of the cashPod ATM range including the recycler ATM, back office and payment technologies in Australia for the next 5 years on 7 August 2015.

Stargroup Limited, via its wholly owned subsidiaries, StarPOS and StarApps, is also an EFTPOS and payWave technologies provider and developer of the source code in its terminals via its 5 year distribution agreement with West International AB, a Swedish NASDAQ listed company, to distribute next generation EFTPOS payment terminals and solutions in Australian and New Zealand.

Go to Company Profile for: Star Payment Systems

Announcement Contact: [email protected]