Wellington, March 4 NZPA - Smartpay Ltd is forecasting an annual operating profit for the year to March 31, 2010 and has sourced $3.05 million of working capital.

The Eftpos terminal provider is forecasting earnings before interest, tax, depreciation and amortisation (Ebitda) of between $1.5m and $2m in the year to March 31, 2010, which is a turn around from the loss of $2.5m in the same period last year.

The company said it was continuing to investigate ways to strengthen its balance sheet and retire short-term debt.

Smartpay purchased a business six times its size when it acquired the ProvencoCadmus payments division from receivers last year. The earnings guidance included six months trading of the ProvencoCadmus business.

Smartpay is using Melbourne-based Holland Corporate as an adviser and Holland helped it source $3.05m of working capital for a term of nine months. The company raised $6m to buy ProvencoCadmus from similar sources.

The facility was negotiated at short notice and has an interest at 16 percent per annum. Smartpay is also issuing 61 million options to subscribe for one ordinary share at 5c per share, on or before October 14, 2010 to the facility's providers. Smartpay shares were trading at 4.2c each this afternoon.

"We will be looking for bank funding and better terms as we go forward," said managing director Ian Bailey.

Should all options currently issued be exercised, the company would have additional equity of $5.15m by November this year.

SmartPay, in conjunction with Holland Corporate, was working on a programme, during the course of 2010, to refinance existing debt facilities into traditional bank arrangements.

The SmartPay business model allowed for ongoing and recurring revenues compared to the internationally focussed "box moving" strategy of ProvencoCadmus.

The company has said it expected Ebitda of between $7m and $10m in the 2011 financial year.