CMSPI – strong operating performance but refinancing weighs on the bottom line

CMSPI, a payment consultancy which specialises in reducing processing costs for top-tier merchants, has reported its inaugural annual results since securing a significant debt and equity investment. The group’s 2021/2 financial statements revealed a robust operating performance offset by substantial losses following interest expenses and goodwill amortisation.

The Manchester-based firm, founded over 25 years ago by CEO Brendan Doyle, has become one of the world’s leading payment consultancies. There are economies of scale in this business. The more clients, the more data. And the more data, the the more money CMSPI can save its customers. Here’s a good example in which CMSPI helped Victoria’s Secret make “a high six figure” annual saving on its debit routing. 

In 2021, the company secured a minority investment from Inflexion, a private equity group, and substantial debt funding from Blackrock, with the financing intended to facilitate global expansion and provide management with a potential exit.

For the year ending April 2022, CMSPI generated total revenue of $37.9m, largely driven by its rapidly growing US practice. The consultancy has established three offices in North America and has recently launched operations in Singapore. The German office is also reportedly trading well.

Cost of sales was $2.4m, resulting in gross profits of $35.6m. Administrative costs, which primarily comprised employee expenses, were $17.5m, covering the firm’s 102-strong workforce. On average, each staff member $138k but generated $372k in revenue.

CMSPI delivered an operating profit of $17.7m, boasting an impressive operating margin of 47%. However, the company incurred $21.4m in goodwill amortisation linked to its acquisition, along with $24.5m in interest related to loans procured to fund the purchase. Consequently, the group reported a pre-tax loss of $28.2m. The company’s debt has now reached $224m, of which $77m is secured, with interest cover on the secured debt at 4 times EBITDA at year-end.