Peter Jenkins
BrookesNews.Com
Monday 14 June 2004

Do you know which company has been Australia's fastest growing business? — that's the question accountancy firm Deloittes seeks to answer every year with its prestigious Deloitte Technology Fast 50 awards.

And the winner for 2004 is electronic payments and billing network systems company DialTime trading as BillExpress. DialTime is a subsidiary of the public company Australian Pure Fruits (ASX: AFL $1.40).

Reflecting its new classification as an emerging growth stock par excellence, AFL is currently one of the best performers on the Australian Stock Exchange, showing a 12-months return of 700% in rising from 18c a share to around $1.40.

Revenues have grown from $9m in 2002 to $127m in 2003 and this year ending June 30 will be more than $300m.

Bill Express is benefiting from the productivity gains afforded by technological improvement and concomitant changes in consumer behaviour taking place, particularly in the mobile telephone industry.

Truly the days of limited competition and monopoly pricing come to an end. This might not be good for corporate cultures like Telstra and Australia Post but it's great for consumers and investors. Investors are taking the view that Bill Express will represent a real challenge to Australia Post which had monopolized the market for in-person bill payments.

Post-privatization Australia Post's 4000-strong chain of retail shops nationwide is considered by some observers to have retained some of the culture of a government-owned bureaucracy, not expecting competition to arise.

Bill Express is carving out a profitable niche at the expense of Australia Post. Just as ATM machines enabled banks to cut the costs of doing suburban banking, so likewise are Service ATMs taking transactions away from Australia Post’s shops.

Why stand in line at the Australia Post shop to pay bills when you can pay your bills when you do the shopping at the supermarket or visit your local newsagent which is something most people do regularly?

Bill Express is installing terminals at newsagents and supermarkets for consumers to buy pre-paid mobile-phone vouchers. This is of special help to people who want to avoid running up out-of-control phone bills.

AFL acquired DialTime and Bill Express in August 2002 and has since installed terminals in 4500 outlets including Caltex service stations, various Coles Myer group stores, IGA supermarkets, Harvey Norman and MobileTronics stores.

"We set out hoping we could get a corner of the market, and immediately exceeded expectations," Peter McDougall said. "We had no idea how big the market was likely to be or how quickly we could grow it."

The accelerating demand for this service was highlighted in the leading article of the May 2004 issue of Choice magazine investigating mobile phone plans.

"If your plan includes a number of call credits and you overestimate your mobile phone usage, you won't use them up; if you underestimate you may end up paying higher per-minute call rates than you would in a heavier-use plan."

The solution? A prepaid card. "With prepaid you buy a starter kit — with or without a handset — which gives you access to the phone network and a dollar amount of call credits. When that runs out, you can 'recharge' your call credits and extend network access.

"A prepaid service gives you tight control over call expenditure and is ideal if you’re watching your budget or if the phone is for a youngster. If this is your first mobile phone, using a prepaid plan will give you a rough idea of how much you'll use it … Prepaid tends to be the cheapest option for people who don't make many calls."

Australia's telephone users are waking up to the fact that these heavily marketed, seemingly cheap monthly plans don't actually work out all that cheap in the end. The way to go is with a prepaid telephony card, where you use only what you pay for and pay for only what you use. So where do you top up your credit? That's where Bill Express comes in.

Bill Express has been extraordinarily fast in setting up a new network system for bill payment, recruiting more than a thousand newsagents to act as its agents in less than a year while aiming to double the number by year-end.

"Research has shown that 70 per cent of Australians visit a newsagent at least once a fortnight," says Bill Express spoke Julian Little. "We believe the people who pay bills at Australia Post outlets are the same people who also visit their local newsagents frequently."

Little says: "We find that when companies see half of their revenue is being collected by a single organisation, they are naturally keen to support a second supplier."

Australian Newsagents Federation chief executive Paul Waite says: "We have 2790 members and some 1400 have signed with Bill Express. We see this as an opportunity to offer our customers a service. They can pay their bills when they are in a newsagency. The idea is to attract more customers to newsagencies. Our core product is selling newspapers but since deregulation of the industry, our members are finding a need to add new items to their business."

That is why newsagents now sell many items from tobacco to Tattslotto not just newspapers and magazines. Most of Australia's billion-dollar companies — mostly utilities and telephone companies — have done due diligence on the small firm and given it the OK. Companies have several payment options, including BPay, Australia Post's Postbillpay, direct debit, internet payment and so on.

About half of all council, utility and telco bills are now paid at Australia Post outlets. According to its last annual report, Australia Post processed 171 million bills, valued at $73.1 billion, in 2002-03. Over the past decade Australia Post has cornered the bill payment business, having made a timely move to tap into rapid growth.

According to BPay, about 300 million bills were generated in Australia in 1997 — when it first came into service — and the number has now doubled to 600 million bills a year. BPay general manager Andrew Arnott says the volume will continue to grow as the range of services offered to consumers changes and broadens. Indicative of bill payment growth is the expansion of BPay itself.

"We started with nine financial institutions and 35 billers. Today, we have 124,000 biller codes and every financial institution in Australia now participates in BPay." The widespread use of mobile phones is one reason for the explosion in bills. As the switch to monthly rather than quarterly billing is almost complete and rationalisation among utility companies has also ended, the industry expects the rapid growth in bill payment to begin to plateau.

A decade ago utilities companies had shop-fronts for retail sales where customers were able to pay their bills. These retail outlets have virtually disappeared. Still, about 47 per cent of Australians prefer to pay their bills in person, followed by the telephone and internet.

The really important thing is the way internet payment is being accepted. In the past 12 months, internet payments grew 20 per cent — the fastest growing segment in bill payment. He says that as Australians become more comfortable with the internet, they will start to pay their bills through that medium.

Bill Express' do-it-yourself, multifunction, stand-alone ServiceATM machine, installed now in most Coles supermarkets, incorporates prepaid telephony and electronic bill payment services. Newsagents are also putting in these machines.

The ServiceATM permits consumers to purchase prepaid products such as prepaid telephony vouchers, and to scan bills electronically to capture the bill details and then make payment using a debit or credit card or charge card.

ServiceATMs also feature a high-quality full-colour flat-screen monitor for promotional advertising and for messages that increase consumer awareness of a brand or a special sale, while also showing consumers how to use the ATM.

Investors are taking the view that Bill Express will represent a real challenge to Australia Post which had monopolized the market for in-person bill payments. Post-privatization Australia Post's 4000-strong chain of retail shops nationwide is considered by some observers to have retained some of the culture of a government-owned bureaucracy, not expecting competition to arise.

Every month AFL's electronic prepaid telephony system is making record sales: $29m for March, up 33% year-on-year. Some 7,250 terminals are now in place across Australia. Recent new billing customers include Trading Post, Primus, Western Australia's Water Corporation, Optus and Primus Telecom.

Municipal governments like the Gold Coast City Council and the City of Casey in Victoria have also joined the BillExpress network. AFL has now concluded an agreement with Flight Centre travel agencies to roll out its prepaid and electronic product distribution software to Flight Centre's corporate division.

Note that the big US ATM company First Data has recently taken over Cashcard for A$255m. AFL profits are not far behind Cashcard, yet AFL's market capitalization (valuation) is just $50m, less than a fifth of the price First Data paid for Cashcard.

See www.billexpress.com.au, www.dialtime.com.au, www.australianpurefruits.com.au, www.motorlink.com.au, www.cash4biz.com and www.onq.com.au.

Retail Network Company DialTime Wins Deloitte Fast 50 By ITNews Fullstory:http://www.itnews.com.au/storycontent.asp?ID=1&Art_ID=19760

E-payment and billing network provider DialTime has been named by business consultancy Deloitte as the fastest-growing Australian technology company for 2004.

Victoria-based DialTime was listed by this year's Deloitte Fast 50 list as growing its revenue 56,303 percent in the last year. The top growth rate last year was 1406 percent.

The company, run by Hal Christiansen, claims to have 7250 networked terminals scattered through 4000 Australian postcodes. Main customers of DialTime include large retailers such as Coles Myer and Caltex.

"The last 12 months have seen a marked improvement in the global technology sector," Deloitte said in this year’s Fast 50 report. "The average three-year revenue growth of this year's Deloitte Technology Fast 50 winners was an impressive 1383 percent, with combined 2003 revenues for the companies exceeding $1.1 billion."

DialTime is a private company held by On Q Group, the electronic warehousing division of ASX-listed Australian Pure Fruits. Second place went to web-based information control and tracking systems Aconex, run by Robert Phillpot and Leigh Jasper. Victoria-based Aconex targets the construction and property management industries. Aconex revenue grew 1252 percent — a score which would have won it the top slot in 2003.

Third place went to WA-based software and service provider Empired, helmed by Justin Miller, which grew 1092 percent by revenue. Empired provides human capital software and managed services to large clients, including government.

Accountants at Deloitte also singled out software firms Protocom Development Systems and Infomedia and biotech's CDS Technologies for special praise. All three had made the Fast 50 list for four years in a row. Fifteen of the firms on this year's list scored revenue greater than $20 million. Only six passed the $20 million mark in last year’s Fast 50.

Victoria had 36 percent of the companies on the list, followed by South Australia and NSW, which each had 24 percent. Some 30 percent of companies on the list were software-related, 28 percent internet-based, 16 percent centred on communications, 10 percent on semiconductors, 8 percent computers and peripherals and a further 8 percent from the life sciences.

Deloitte also named Red Oxygen, eLabtronics and SportingPulse as rising stars not yet on the list. In its report, Deloitte said that business now understood IT better. Seasoned entrepreneurs and managers were making sustainable decisions about IT purchases, based on genuine business benefits.

"Equity markets have also seen an increase in the value of many technology stocks and globally, investors' perceptions of technology-based companies is now on the rise," Deloitte said. "Emerging technologies — such as VoIP, intelligent transport systems, RFID tags [and] WLAN — global IT outsourcing, and the development and penetration.