Final Results
Datacash Group PLC
17 April 2007
Not for release before 7.00am, Tuesday 17th April 2007
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 2006.
Financial Highlights
• Adjusted Group pre-tax profit* up 270% to £7.8m (2005: £2.6m)
• Adjusted earnings per share of 8.0p (2005: 4.1p)
• Group turnover increased by 168% to £16.41m (2005: £6.12m)
• Cash balance of £15.28m** (17p per issued share)
(2005 £4.90m - 11p per issued share)
• Dividend payment increased by 33% to 1p per share recommended (2005: 0.75p)
which is payable on 18 July 2007 to shareholders on the register at
22 June 2007.
* before goodwill amortisation, National Insurance provision on share option
gain and exceptional items.
** including security deposits of £4.0m.
Operational Highlights
• Acquisition of Proc-Cyber Services (UK) Limited ("PCS").
• Transactions with a cash value of over £7.3bn processed through the Group's
systems in 2006 (2005: £5.2bn).
• Growth achieved by both the original DataCash business and PCS
(now DataCash Services Limited).
• High profile contract wins, including the first outsourced solutions for
retailers - allowing them integrated payment processing through
e-commerce sites, high street shops and contact-centres.
• Accelerated marketing efforts into the European, Asian and South American
markets.
• Board looks forward to an interesting and exciting year in 2007.
Contacts:
Paul Burton Chief Finance Officer, DataCash Group Plc 0870 7274760
Tim McCall Managing Director, MJ2 Business Communications 020 74917776
Chairman's Statement
2006 was an important year for DataCash. We acquired ProcCyber Services (UK)
Limited ("PCS"), won our first cardholder present contracts and continued to
grow the business rapidly.
For clarity and ease of understanding, as the acquisition of PCS has only been
accounted for since June 1st 2006, this statement highlights the performance of
the different elements of the business. In future we will only report on the
Group as a whole.
Including the contribution from PCS from June 1st 2006, DataCash Group produced
total revenues of £16.75m with pre-tax profits, before amortisation of goodwill,
NI provision on share option gains and exceptionals ("Adjusted pre-tax profits")
of £7.8m. Adjusted diluted earnings per share, on average capital grew by 95%
to 8.0p (2005: 4.1p). Cash balances (including security deposits) grew from
£4.90m to £15.28m. The Board is pleased to recommend a final dividend for the
year of 1p (2005: 0.75p).
The Group has now utilised all its accumulated tax losses and we expect to pay a
full tax charge in 2007.
The original DataCash business saw good growth in 2006, driven by a 46% increase
in transaction volumes to 92m. Revenues increased by 30% (from £6.1m to £8.0m)
and Adjusted, pre-tax profits, increased by 44% to £3.50m (2005: £2.36m). Our
strategy of providing a complete outsourced solution for retailers, allowing
them integrated payment processing from their e-commerce sites, high street
shops and contact-centres gained increasing traction and was adopted by major
brands including Laura Ashley and Odeon Cinemas. There are a number of further
opportunities which are currently under discussion and this remains a good
source of growth for the Group.
Other recent notable contracts were signed with FlyBe (to include BAConnect),
Arcadia (CNP), Lucky8, Mansion and MedicExchange. We have also announced that
Lloyds Bank has awarded preferred Payment Service Provider status to the Group.
PCS (now DataCash Services Limited) had an excellent year, seeing very strong
growth. It contributed £8.4m to revenue and £3.94m to Adjusted pre-tax profits
for the 7 months included in the period under review. As announced in October
2006 and in our trading update in January 2007, the Group was adversely impacted
by the Safe Ports Act in the United States, which forced us to withdraw from
processing US originated gaming related payments towards the end of last year.
While this will inevitably impact our growth in 2007 it is also providing added
impetus to our development plans. Non-US related revenues grew strongly
throughout 2006, but with the additional marketing focus being applied by our
gaming merchants to non-US activities we expect even faster growth from this
area in 2007.
Unfortunately, the impact of the Safe Ports Act resulted in some necessary
reductions in headcount in our Cape Town operation, and I would like to thank
all our staff for their professionalism and understanding of a situation beyond
our control.
The DataCash Group as a whole processed "value" (i.e. the cash value of
transactions processed through our systems) in excess of £7.3bn in 2006 (2005:
£5.2bn). Our model of using this aggregated business flow to ensure the best
rates for our customers is a key to our future success.
The changes to the Group in 2006 added significant new capabilities and
challenges to the Group. With the majority of staff in Cape Town, but also with
associated businesses in Cyprus and China, which were part of the PCS
acquisition, our horizon broadened significantly, and we now employ 276 staff.
The enlarged Group has a different business model to the original DataCash
business, offering a number of middle and back office services to our customers
as well as the payment processing function. In particular, we now have a Risk
Management capability that is a key differentiator to the future of the enlarged
business.
DataCash has delivered world class service in both performance and reliability.
This is a testament to our staff and technology and we are confident that we can
continue to scale the business. We continue to invest in our infrastructure and
technology and have a number of initiatives in 2007 targeted at enhancing our
efficiency and scalability as well as permitting faster integration of new
payment types to extend our geographical reach. This, we believe, will increase
our competitiveness as more customers seek to offer their products and services
across international borders. We are confident our blend of local and
international payments support will attract increasing numbers of customers to
our services.
Our strategic goal is to provide a world-wide platform to enable our customers
to process payments efficiently and cost effectively anywhere in the world. The
realignment of marketing activity by our gaming customers away from the USA has
accelerated our efforts into the European, Asian and South American markets.
Gaming revenues as a percentage of our total revenues are expected to fall,
which is strategically beneficial as it diversifies our markets.
In February 2007 we entered into an agreement with NetGiro International AB ("
NetGiro International") to acquire the issued share capital of NetGiro Systems
AB, a Swedish based PSP, ("SPA"). As previously announced, the Board of DataCash
decided to terminate the SPA on 13 April 2007 due to breaches of the SPA by
NetGiro International. DataCash now intends to take legal action against NetGiro
International to seek damages as a result of these breaches and also intends to
take legal action against one of the shareholders of NetGiro International
arising out of the conduct of that shareholder in the period leading up to the
extraordinary general meeting of NetGiro International held on the 30 March 2007
("EGM") and at the EGM itself.
2007 will be an interesting and exciting year for the Group, with many decisions
to be made as to priorities and how best to grasp the opportunities that are
open to us. We are firmly of the belief that we have the staff and the
management to take this company forward strongly, and the challenges of the past
six months have only reinforced this belief. We look forward to reporting on
progress as the year evolves. The Board is confident that the Group can continue
to deliver robust and sustainable, cash generative growth.
Ashley Head
Chairman
Consolidated Profit & Loss Account
For the year ended 31 December 2006
Continuing
Operations Acquisitions Restated
Year ended 31 Year ended 31 Year ended 31 Year ended 31
Dec 2006 Dec 2006 Dec 2006 Dec 2005
£'000 £'000 £'000 £'000
Turnover : group and share of joint ventures 7,957 8,793 16,750 6,116
Less:share of joint venture - (345) (345) -
Turnover 7,957 8,448 16,405 6,116
Administrative expenses
Amortisation of Goodwill (1,975) (4,203) (6,178) (1,975)
National insurance on share option charge (2) - (2) (34)
Share option charge (34) - (34) (34)
Severance payments - (73)
Aborted acquisition costs - (402)
Other operating expenses (4,462) (4,471) (8,933) (3,720)
Total administrative expenses (6,473) (8,674) (15,147) (6,238)
Group operating profit/(loss) 1,484 (226) 1,258 (122)
Share of operating loss in joint venture (6) -
Total operating profit/(loss) 1,252 (122)
Interest receivable and similar income 351 167
Profit on ordinary activities 1,603 45
before taxation
Taxation (2,070) (687)
Loss on ordinary activities after taxation (467) (642)
Basic loss per share - note 2 (0.65)p (1.43)p
Diluted loss per share - note 2 (0.65)p (1.43)p
Operating profit for the year arises from the groups' continuing operations.
Consolidated Statement of Total Recognised Gains and Losses
For the year ended 31 December 2006
Restated
Year ended Year ended
31 December 31 December
2006 2005
£000 £000
Loss for the financial year (467) (642)
Currency translation differences on foreign currency net investments (121) -
Total recognised gains and losses relating to the year (588) (642)
Prior year adjustment (34)
Total Recognised gains and losses since last annual report (622)
Consolidated Balance Sheet
As at 31 December 2006
Restated
Note 31 December 31 December
2006 2005
£000 £000
Fixed assets
Intangible assets 74,184 8,337
Tangible assets 1,000 161
Investments in joint ventures:
Share of gross assets 323 -
Share of gross liabilities (329) -
Investments 163 -
75,341 8,498
Current assets
Debtors 8,380 966
Debtors - deferred tax asset 128 522
Cash at bank and in hand 11,280 4,895
19,788 6,383
Creditors
Amounts falling due within one year (4,129) (1,225)
Net current assets 15,659 5,158
Total assets less current liabilities 91,000 13,656
Provisions for liabilities and charges (179) (148)
90,821 13,508
Capital and reserves
Called up share capital 908 449
Share premium account 10,192 9,811
Foreign Currency Translation Reserve (121) -
Share option reserve 1,081 34
Other reserve 95,116 18,765
Profit and loss account (16,355) (15,551)
Equity shareholders' funds 5 90,821 13,508
Consolidated Cash Flow Statement
For the year ended 31 December 2006
Year ended 31 Year ended 31
December 2006 December 2005
£000 £000
Note
Net cash inflow from operating activities 3 6,901 1,775
Returns on investments and servicing of finance
Interest received 351 167
Net cash inflow from returns on investments and servicing
of finance 351 167
Taxation (991) (17)
Capital expenditure and financial investment
Purchase of tangible fixed assets (432) (73)
Net cash outflow from capital expenditure and financial
investments (432) (73)
Equity dividends paid (337) (224)
Acquisitions and disposals
Investment in subsidiary undertakings (1,710) -
Cash acquired with subsidiaries 2,404 -
Net cash inflow from acquisitions and disposals 694 -
Net cash inflow before management of liquid resources and
financing 6,186 1,628
Management of liquid resources
Increase in short term bank deposits (2,251) (3,289)
Net cash outflow from management of liquid resources (2,251) (3,289)
Financing
Issue of ordinary share capital including premium 199 61
Net cash inflow from financing 199 61
Increase/(decrease) in cash in the year 4,134 (1,600)
Reconciliation of Net Cash Flow to Movement in Net Funds
For the year ended 31 December 2006
Year ended 31 Year ended 31
December 2006 December 2005
£000 £000
Increase/(decrease) in cash in the year 4,134 (1,600)
Cash inflow from management of liquid resources 2,251 3,289
Movement in net funds 6,385 1,689
Opening net funds 4,895 3,206
Closing net funds 11,280 4,895
Notes to the Financial Statements
For the year ended 31 December 2006
1. Basis of Preparation
The results for the year ended 31 December 2006 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 2005 with
the exception of the prior year adjustment explained below.
The adoption of FRS 20 - share based payments requires a prior year adjustment
to be made in respect of unexercised employee share options. This has decreased
the profit and loss reserve by £68,000. Of this amount £34,000 is attributable
to the year ended 31 December 2005.
The consolidated financial information for the year ended 31 December 2006 has
been prepared on a basis consistent with the previous year and in accordance
with applicable UK accounting standards. The preliminary announcement does not
constitute the Group's statutory financial statements within the meaning of
s.240 of the Companies Act 1985.
The financial information included in this announcement has been extracted from
the un-audited financial statements for the year ended 31 December 2006 and the
audited financial statements for the year ended 31 December 2005.
The Group's 2006 Annual Report and Financial statements are to be delivered to
the Registrar of Companies following the Company's Annual General Meeting on 29
June 2007. The Group's 2005 accounts, which contain an unqualified audit
report, have been filed with the Registrar of Companies.
2. Earnings per Share
The basic and diluted loss per share is based on the loss on ordinary activities
after tax of £467,000 (2005: £642,000 loss). The weighted average number of
ordinary shares outstanding during the period used in the calculation of basic
loss per share was 71,768,371 (2005: 44,816,905).
The fully diluted earnings per share, which assumes the full exercise of share
options, has been calculated on 72,033,691 (2005: 45,795,910) Ordinary Share.
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 31 Year ended 31
December 2006 December 2005
£000 £000
Loss on ordinary activities after taxation (467) (642)
Amortisation of Goodwill 6,178 1,975
Provision for national insurance on share option gains 2 34
Share option charge 34 34
Severance payments - 73
Aborted acquisition costs - 402
Profit on ordinary activities before goodwill, NI on share option 5,747 1,876
gains and exceptionals
2006 2005
No. of shares No. of shares
Weighted average number of shares 71,768,371 44,816,905
Dilutive effect of options 265,320 979,005
72,033,691 45,795,910
Diluted Adjusted Earnings per share 7.98p 4.10p
3. Reconciliation of operating profit/(loss) to operating cash flows
Year ended 31 Year ended 31
December 2006 December 2005
£000 £000
Operating profit / (loss) 1,258 (122)
Amortisation 6,178 1,975
Operating profit before exceptional charges 7,436 1,853
Depreciation 282 102
Exchange movements 77 -
Increase in debtors (977) (225)
Increase in creditors 742 22
Increase in provisions 31 23
Net cash inflow from operating activities 6,901 1,775
4. Analysis of Net Funds
At 1 At 31
January December
2006 Cash Flow 2006
£000 £000 £000
Cash in hand and at bank 717 4,134 4,851
Short term bank deposits 4,178 2,251 6,429
Total 4,895 6,385 11,280
5. Reconciliation of movement in shareholders' funds
Restated
Year ended 31 Dec Year ended 31 Dec
2006 2005
£000 £000
Loss for the year (467) (642)
Prior year adjustment - (34)
As restated (467) (676)
Dividend paid (337) (224)
Issue of Ordinary Share Capital including premium 840 61
Foreign currency translation reserve (121) -
Other reserves 76,351 -
Share scheme charge 1,047 34
Net movement in shareholders' funds 77,313 (805)
Opening shareholders' funds 13,508 14,313
Closing shareholders' funds 90,821 13,508
NOTE
A copy of the full accounts will be sent to shareholders on the Register Of
Members as at 22 June 2007 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 29th June 2007 at 12.00 noon at Descartes
House, 8 Gate Street, London WC2A 3HP
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