Dublin tech firm records losses of US$3.1m

22 Feb 2007

Despite increasing revenues and scoring a major European deal with one of the world’s biggest issuers of debit and credit cards, Dublin-headquartered FreeStar Technology made losses of US$3.1m in its second quarter.

The company, led by Terenure-bred Paul and Ciaran Egan, is an international card payments processor and technology company that in the last six months processed more than 10.2 million credit and debit card transactions for companies like Ikea and Finnair.

In recent weeks it emerged that FreeStar secured a high-profile agreement with China Unionpay, the world’s largest issuer of debit and credit cards to enable Chinese travellers into Europe user their domestic cards.

The company in recent months acquired a 50pc stake in Project Lifecycle Partners, which has won a lucrative deal with O2 Ireland to supply engineers to help transform the mobile operator’s network.

However, these deals failed to offset continuing losses at the company. Second-quarter losses increased 77pc to US$3.1m, up from US$1.3m a year ago.

Second-quarter revenues rose 40pc to US$811,90s from US$577,946 last year.

FreeStar said the increase resulted from revenue generated by the company’s recently acquired subsidiary Project Lifecycle Partners, which was acquired 41 days before the end of the quarter.

During the quarter the company said it began shipping its own-branded transaction processing terminals, which helped to bolster revenues.

CEO Paul Egan said the company continued to experience steady organic growth in its core processing business, and now expects processing volumes to accelerate.

In the second quarter the company’s credit card transaction volumes increased 9.6pc to 5.3 million transactions.

Egan said: “We shipped 200 terminals by year end, producing both hardware sales revenue as well as processing revenue. The sales, which are accounted for upon payment, were partially recognised during the last quarter. The balance will be taken into revenue in the fiscal quarter, ending 31 March.

“We have already ordered 1,500 more terminals, which we expect to receive this month and expect to place several more orders of this magnitude by June 30,” Egan said.

FreeStar’s chief financial officer Ciaran Egan explained that 54pc of the quarterly loss of US$3.1m stemmed from non-cash charges such as compensation and depreciation.

He added that the company was sticking to its policy of conserving cash, whenever possible.

Commenting on the deal with China UnionPay, Egan said: “The emergence of China UnionPay into the European retail market is one of the most exciting developments in the payment industry in decades.

“We have achieved a major milestone and we believe our relationship with China UnionPay will prove to be well worth the years of work and substantial investment we have devoted to it,” Egan said.

By John Kennedy