Final Results
Datacash Group PLC
06 April 2004
DataCash Group Plc: DATA / Index: AIM / Sector: Support Services
DATACASH GROUP PLC ('DataCash' or 'the Company')
FINAL RESULTS
DataCash Group Plc, the AIM listed payments service provider, announces its
results for the 12 months to 31 December 2003.
• Turnover up 32% to £3.58m (2002: £2.70m)
• Profit before tax of £735,000, before exceptional items and goodwill
amortisation (2002: loss of £391,000) - equivalent to an EPS of 1.67p
• Strong cash balance of £1.55m (2002: £667,000)
• Continued expansion of on-line payments contracts particularly with
High Street retailers and on-line gaming companies
• Ongoing investment to develop new products and update existing systems
• Good prospects emerging in the travel and ticketing markets
• Agreement to provide secure out-sourced payments to the Government's
new Gateway internet initiative
• Historical focus on the Cardholder Not Present (CNP) market but now
launching into the Card Holder Present market (CHP), which accounts for 98%
of retail sales
• Recent agreement with IBM and other partners in a group which offers
an inexpensive and efficient multi-channel CHP and CNP credit and debit
card processing package for mid-tier retailers
CHAIRMAN'S STATEMENT
Review
2003 was a very positive year for DataCash. After becoming profitable during the
second half of 2002 and consistently cash generative throughout 2003, we
delivered our first profitable full year results (before Goodwill amortisation).
The Company also made impressive additions to both its customer base and its
product range.
The audited results for the year ended 31 December 2003 show turnover up 32% to
£3.58m (2002: £2.70m), with a profit of £735,000, before tax, exceptional items
and goodwill amortisation (2002: loss of £391,000). The exceptional items
relate to the release of a provision against two potential legal claims against
a former subsidiary, Platima Licensing Ltd, of £729,000, both of which were
settled during the year. In addition, we made full exceptional provision of
£160,000 against an investment related to Internet plc, within Auxinet
Investments Ltd, giving a net credit of £569,000. After goodwill amortisation of
£1.975m, and a tax credit of £930,000 the net attributable profit was £259,000
(2002: £2.366m loss).
In accordance with FRS19 the Group has this year recognised a deferred tax asset
of £930,000. This has also been credited to the P&L account.
Cash grew throughout the year as the group has a minimal working capital
requirement, so that at the year end DataCash had cash balances of £1.55m (2002:
£667,000) and we expect the Group to be further cash generative in 2004.
DataCash saw continued strong transaction growth in 2003, with a particularly
good performance in the last quarter. This largely reflected the success of the
on-line activities of High Street retailer clients. While there was a seasonal
peak in the run-up to Christmas, it is encouraging that there continues to be an
underlying shift towards on-line buying. The gaming sector, where DataCash is
particularly strong, continued to grow well, benefiting from the growth of
on-line casinos and poker.
On-line retailing continued growing at a much faster rate than High Street
retail sales and DataCash is benefiting from this growth. Recent estimates
suggest that e-commerce now represents 1.9% of retail sales and grew by 36% last
year. The IMRG has forecast e-commerce to reach 10% of all purchases within five
years
We continued to invest in the operational infrastructure of DataCash, both in
developing new products and improving the stability and reliability of the
system infrastructure. The mission critical nature of our service, especially to
the gaming industry drives us in the pursuit of world-class system performance.
Being both profitable and cash generative assists us in this endeavour.
The Group's main focus during 2003 continued to be in meeting demand from the
Cardholder Not Present market which remains an important part of our overall
business, and generated all our revenue in 2003. However, the introduction of
"Chip and Pin" into the High Street, bank mandated from January 2005, represents
a significant new avenue of opportunity and has spurred us into moving into the
Card Holder Present market, which accounts for the other 98% of retail sales.
Prospects
2004 has begun well, with good prospects emerging in the travel and ticketing
markets, while growth in retail and gaming underpin the exciting prospects ahead
for the Group. We are increasingly working with partners in some of these areas,
where we obtain the advantage of their marketing and relationships, as well as
access to additional services that may be of interest to clients in other
sectors.
In January we announced an agreement to provide secure out-sourced payments to
the Government's new Gateway internet initiative through ATOS Origin. Although
there are only a small number of government agencies currently using the system,
this is expected to grow substantially as this area of activity develops.
We also recently announced that we have joined forces with IBM and other
partners in a group, which will offer a comprehensive, inexpensive and efficient
credit and debit card fraud processing package for mid-tier retailers. This is
an important breakthrough into the High Street Cardholder Present market for us
and it is hoped that it will bring significant new revenue streams in 2005 and
beyond, although 2004 is expected to bear costs rather than revenue from this
activity. DataCash has the capacity to absorb the extra transaction volume that
may be generated from this new service with only modest increases in its costs.
As such, any additional revenue should quickly drop through to the bottom line.
Our business, and the profile and activities of our customers are evolving and
changing at a rapid pace. Our challenge is to be alert to the needs of our
customers, and to continue to invest in supporting them and in the development
of the DataCash service. We cannot do this without the dedication and commitment
of our staff and I would like to take this opportunity to thank them for their
efforts in 2003.
We are confident that we can generate value by utilising our skills in the
development of DataCash as we move from the Cardholder Not Present market into
the Cardholder Present market. We remain committed to generating good returns
for our shareholders and are optimistic about the future of the Group.
Dividends
A number of investors have asked about the prospect of a dividend payment. The
company has limited distributable reserves and accumulated tax losses. We also
have a large number of shareholders with holdings of less than 100 shares, which
would mean that the cost of sending out dividend cheques to those individuals,
if it were paid, could exceed the value of the dividend itself. In the
circumstances, the board has decided that a dividend from 2003 earnings would
not be justified, but will continue to keep the position under review.
David Bailey
Chairman
DataCash Group plc
Consolidated Profit and Loss Account
For the year ended 31 December 2003
Year ended Year ended
31 December 31 December
2003 2002
£000 £000
Turnover 3,575 2,703
Administrative expenses
Amortisation of Goodwill (1,975) (1,975)
National insurance on share option charge/(credit) (17) 10
Release of provisions - exceptional 729 -
Other operating expenses (2,846) (3,123)
----------- ----------
Total administrative expenses (4,109) (5,088)
=========== ==========
Operating loss (534) (2,385)
Interest receivable and similar income 23 19
Amounts written off investments - exceptional (160) -
----------- ----------
Loss on ordinary activities before taxation (671) (2,366)
Taxation 930 -
----------- ----------
Profit/(loss) on ordinary activities after taxation 259 (2,366)
=========== ==========
Basic and diluted earnings/(loss) per share 0.59 p (5.44) p
Adjusted basic and diluted earnings/(loss) per share 3.82 p (0.92) p
Consolidated Balance Sheet
As at 31 December 2003
31 December 31 December
2003 2002
£000 £000
Fixed assets
Intangible assets 12,287 14,262
Tangible assets 126 170
Investments - 160
---------- ----------
12,413 14,592
---------- ----------
Current assets
Debtors 653 641
Debtors - deferred tax asset 930 -
Cash at bank and in hand 1,548 667
---------- ----------
3,131 1,308
---------- ----------
Creditors
Amounts falling due within one year (908) (959)
---------- ----------
Net current assets 2,223 349
---------- ----------
Total assets less current liabilities 14,636 14,941
Provisions for liabilities and charges (22) (789)
---------- ----------
14,614 14,152
========== ==========
Capital and reserves
Called up share capital 447 436
Share premium account 9,701 9,509
Share scheme reserve - 4
Merger reserve (124) (124)
Other reserve 18,889 18,889
Profit and loss account (14,299) (14,562)
---------- ----------
Equity shareholders' funds 14,614 14,152
========== ==========
Company Balance Sheet
As at 31 December 2003
31 December 31 December
2003 2002
£000 £000
Fixed assets
Tangible assets - 22
Investments 472 472
---------- ----------
472 494
---------- ----------
Current assets
Debtors 8,812 9,922
Cash at bank and in hand 1,383 551
---------- ----------
10,195 10,473
---------- ----------
Creditors
Amounts falling due within one year (95) (126)
---------- ----------
Net current assets 10,100 10,347
---------- ----------
Total assets less current liabilities 10,572 10,841
Provisions for liabilities and charges - (784)
---------- ----------
10,572 10,057
========== ==========
Capital and Reserves
Called up share capital 447 436
Share premium account 9,701 9,509
Share scheme reserve - 4
Profit and loss account 424 108
---------- ----------
Equity shareholders' funds 10,572 10,057
========== ==========
Consolidated Cash Flow Statement
For the year ended 31 December 2003
Year ended Year ended
31 December 31 December
2003 2002
£000 £000
Net cash inflow/(outflow) from operating activities 736 (357)
Returns on investments and servicing of finance
Interest received 23 19
Net cash inflow from returns on investments ---------- ----------
and servicing of finance 23 19
---------- ----------
Capital expenditure and financial investment
Purchase of tangible fixed assets (79) (67)
Decrease in investment loans - 50
---------- ----------
Net cash outflow from capital expenditure and financial investments (79) (17)
---------- ----------
Net cash inflow/(outflow) before management
of liquid resources and financing 680 (355)
Management of liquid resources
(Increase)/Decrease in short term bank deposits (453) 364
---------- ----------
Net cash (outflow)/inflow from management of liquid resources (453) 364
---------- ----------
Financing
Exercise of share options 201 71
---------- ----------
Net cash inflow from financing 201 71
---------- ----------
Increase in cash in the year 428 80
========== ==========
Reconciliation of Net Cash Flow to Movement in Net Funds
For the year ended 31 December 2003
Year ended Year ended
31 December 31 December
2003 2002
£000 £000
Increase in cash in the year 428 80
Cash inflow/(outflow) from management of liquid resources 453 (364)
---------- ----------
Movement in net funds 881 (284)
Opening net funds 667 951
---------- ----------
Closing net funds 1,548 667
========== ==========
DataCash Group plc
Notes To the Financial Statements
For the year ended 31 December 2003
1. Basis of Preparation
The results for the year ended 31 December 2003 have been prepared on accounting
bases and policies which are consistent with those used in the preparation of
the financial statements of the Group for the year ended 31 December 2002
The above financial information does not constitute statutory accounts as
defined by section 240 of the Companies Act 1985. It is an extract from the 2003
financial statements which have not yet been filed with the Registrar of
Companies. The Auditors' Report, dated 06 April 2004, on the financial
statements for the year ended 31 December 2003, which received an unqualified
opinion, does not contain a statement under section 237(2) or (3) of the
Companies Act 1985. The comparative information is an extract from the statutory
accounts for the financial year ended 31 December 2002. Those accounts, on which
the Auditors issued an unqualified opinion, in accordance with section 235 of
the Companies Act 1985, have been filed with the Registrar of Companies.
2. Loss per Share
The Basic and Diluted Loss Per Share is based on the profit on ordinary
activities after tax of £259,000 (December 2002: loss £2,366,000). The weighted
average number of ordinary shares outstanding during the period used in the
calculation of Basic Loss Per Share was 43,981,347 (December 2002: 43,522,134).
The effect of all potential ordinary shares is antidilutive.
An adjusted earnings per share figure is presented below. The directors believe
that the adjusted Earnings Per Share figure assists in the presentation of the
group's underlying performance.
Year ended Year ended
31 December 31 December
2003 2002
£000 £000
Profit/(Loss) on ordinary activities after taxation 259 (2,366)
Amortisation of Goodwill 1,975 1,975
Provision for national insurance on share option gains 17 (10)
Release of provisions - exceptional (729) -
Provision for investment - exceptional 160 -
___________ __________
Profit/(loss) on ordinary activities before Administration items 1,682 (401)
Weighted average number of shares 43,981,347 43,522,134
3. Reconciliation of operating loss to operating cash flows
Year ended Year ended
31 December 31 December
2003 2002
£000 £000
Operating loss (534) (2,385)
Amortisation 1,975 1,975
Depreciation 123 185
(Profit) / loss on disposal of fixed assets - 24
(Increase)/decrease in debtors (12) 88
Decrease in creditors (51) (507)
(Decrease)/increase in provisions (765) 263
__________ _________
Net cash inflow/(outflow) from operating activities 736 (357)
NOTE
A copy of the full accounts will be sent to shareholders on the Register Of
Members as at 06 April 2004 or can be obtained from the Secretary, DataCash
Group plc, Descartes House, 8 Gate Street, London WC2A 3HP.
ANNUAL GENERAL MEETING
The Company's AGM will be held on Wednesday, 18 May 2004 at 12.00 noon at
Descartes House, 8 Gate Street, London WC2A 3HP
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