Interim Results
Cashbox PLC
27 March 2008
Press Release 27 March 2008
Cashbox Public Limited Company
('Cashbox' or 'the Company')
Interim Results for the six months ended 31st December 2007
Cashbox (AIM:CBOX), the independent Automated Teller Machine ('ATM') installer
and operator, announces its interim results for the six months ended 31 December
2007 (H1 07/08).
------------------------ ----------- ----------- -----------
H1 07/08 H2 06/07 H1 06/07
6m ended 6m ended 6m ended
31 Dec 07 30 Jun 07 31 Dec 06
unaudited unaudited unaudited
Machines installed at period end 1,820 1,442 1,245
Turnover £ 000 2,271 2,137 2,243
Gross Margin % 36% 27% 26%
EBITDA * + £ 000 (1,119) (2,199) (1,311)
Loss before exceptionals* £ 000 (1,609) (2,431) (1,625)
Loss after exceptionals £ 000 (1,609) (5,116) (1,625)
Loss per share before exceptionals (p)* (1.9)p (3.7)p (2.6)p
Loss per share after exceptionals (p) (1.9)p (7.9)p (2.6)p
Net debt + (£000) 5,022 1,340 2,204
------------------------ ----------- ----------- -----------
* before exceptional items in H2 06/07 of £2,000,000 relating to settlement of
litigation and £685,000 lease termination penalties.
+ A non GAAP measure, these are defined in note 14.
Highlights
• Installed machines reach 1,820
• Transaction revenues increased by 5% over H2 and 15% over H1 06/07
• Gross profits increased and gross margin improved to 36%
• Losses measured by EBITDA, operating loss, loss for the period, and loss per
share all improved
• Hanco litigation settled in October 2007 at a cost of £1.8m bringing the
total settlement to £2.0m.
• New funding of £1.0m in December 2007
CHAIRMAN'S STATEMENT
I am pleased to present my first interim report to shareholders as the Chairman
of Cashbox PLC. For the six months to December 2007 your Company incurred a loss
of £1.6m on turnover of £2.3m. The loss was incurred principally due to the
slower than expected roll out of ATM's due to delays from suppliers in the first
quarter and the delayed refinancing at the end of last year. However, Cashbox
has seen a reduction in losses before exceptional items and an encouraging
increase in gross margins.
Although this has been a difficult period in your Company's history there is
much to give encouragement. The new executive management team has worked hard to
rid Cashbox of distractions to its core business; including the necessary
settlement of the Hanco litigation.
Installations in Q1 2007 were 104 rising substantially to 274 for Q2, bringing
the total to 378 ATM's for the period. The total number of ATM's in Cashbox's
estate was 1,820 at the end of December 2007. Cashbox now has the 5th largest
ATM estate in the UK.
Moving forward we are focusing all our efforts on increasing the number of new
installations initially to 100 per month with the intention of exceeding this
number from the summer onwards. This is made possible by the new banking
facilities secured from Bank of Scotland and the additional £1.0m of convertible
debt and unsecured debt funding raised in December 2007.
As with all businesses at the same stage of Cashbox's evolution there needs to
be an ever vigilant approach to cost controls and I am pleased to report that
after a review of operations carried out during the period annual overheads have
been reduced.
The increased focus on installations with the 'Placement Model', in which
Cashbox receives a larger proportion of the transaction revenues has resulted in
nearly half the estate being in that category. This has brought about increased
margins and bodes well for future profitability.
Increasing the number of ATM's in our estate is a primary focus, however the
performance of existing machines is constantly assessed and wherever possible
those ATM's that appear to have a low number of transactions are removed and
placed on sites where utilisation levels will be materially higher.
Your Board and management are confident that opportunities are available to
continue to increase market share. The excellent systems that have been
developed coupled with the customer service that this affords give distinct
competitive advantage. This is clearly evidencing itself as we increase our
penetration of major organisations who value this level of professionalism.
Hanco Litigation Update
In October 2007 we agreed a full and final settlement with Hanco in respect of
the litigation between the two companies. In the settlement, Cashbox ATM Systems
Limited will pay an additional £1.8m, on top of the £200,000 already paid.
Cashbox ATM Systems Limited has the benefit of a joint and several indemnity
from Carl Thomas and Anthony Sharp in connection with this litigation, which the
directors intend to enforce to recover the £2m. The Board did not believe that
continuing with the litigation was in the best interests of shareholders.
Financing
In December 2007 we raised additional operating capital through the issue of a
convertible loan at the same time as restructuring our arrangements with Bank of
Scotland. This increased the headroom on the financial covenants while the
facility was reduced from £8m previously agreed to £6m but extended through to
December 2009 when repayment is due to commence. This has the effect of giving
additional flexibility for the financing of machines. In March 2008 we are
finalising arrangements to raise further operating capital as set out in the
Annual Report and at the AGM. The holders of the convertible loan have given
notice that they intend to convert on 1 April 2008 thereby further reducing the
Company's gearing.
Board Update
As advised in the Annual Report, a number of Board changes took place following
the AGM on 22 January 2008. Matthew Thomas, CTO, and Andrew Wilmot, Technical
Director, stepped down from the PLC Board to concentrate upon the organic growth
of the business, and sit on the Board of Cashbox ATM Systems Limited.
Stephen Brown, Non-Executive Director, and John Maples, Chairman, stepped down
from the Board after successfully assisting with the stabilisation of the
business.
The Board of Cashbox PLC now comprises Robin Saunders as Non Executive Chairman,
Ciaran Morton (Chief Executive), David Auger (Chief Financial Officer) and
William Hughes as a non executive director.
Outlook
Shareholders have reason to feel optimistic about Cashbox's prospects as we move
into 2008. A number of significant hurdles, not least the Hanco litigation and
the re-financing of the business, have been successfully completed. This now
enables the management to concentrate upon two key areas: the organic growth of
the core business, and deriving value from a consolidating market. The Board and
the Executive Management teams remain wholly focussed upon these primary goals,
and are confident that the business will demonstrate accelerated growth in
installations and revenues in the second half of the year.
Robin Saunders
Non Executive Chairman
27 March 2008
For further information:
Cashbox plc
David Auger, Chief Financial Officer Tel: +44 (0) 1256 441 000
dauger@cashboxplc.co.uk www.cashboxplc.co.uk
----------------------
Seymour Pierce Limited
Jonathan Wright Tel: +44 (0) 20 7107 8000
www.seymourpierce.com
------------------------
Fairfax I.S. PLC
Ewan Leggat Tel: +44 (0) 20 7598 5368
www.fairfaxplc.com
Media enquiries:
Threadneedle Communications
Josh Royston / Graham Herring Tel: +44 (0) 20 7936 9606
www.threadneedlepr.co.uk
INTERNATIONAL FINANCIAL REPORTING STANDARDS
This is the first interim report of the Group produced in accordance with
International Financial Reporting Standards ('IFRS'). The transition date for
the adoption of IFRS is 1 July 2006. All comparative data in this report has
been restated accordingly and a reconciliation is included in note 15.
OPERATING AND FINANCIAL REVIEW
Performance for the current period, the six months ended 31 December 2007 (H1 07
/08) is measured against both the comparable period being the first half of the
prior year being the six months ended 31 December 2006 (H1 06/07) and the period
immediately preceding the period under review being the six months ended 30 June
2007 (H2 06/07). The comparison to the second half of the prior year is
considered to be meaningful as the Company is growing with the installation of
new ATMs increasing the size of the installed base.
The installed base of ATMs increased to 1,820 machines by 31 December 2007
compared to 1,442 machines at 30 June 2007 and 1,245 machines at 31 December
2006. The average number of machines in the first half of the year was 21%
higher than the preceding six months and 42% higher than the comparable period
following the acceleration of installations, particularly in the second quarter.
Surcharging transactions for the six months were 1.3 million, up on both the six
months ended June 2007 H2 06/07, 1.2 million, and December 2006 H1 06/07, 1.2
million, following the increase in the size of the ATM estate which offset a
slight decline in transactions per machine.
Turnover for the first half of the year was £2.3m, up 6% on the preceding six
months H2 06/07 and 1% on the comparable period H1 06/07. Transaction income was
up 5% and 15% respectively as the increased installed base of machines
contributed, offsetting the decline in transaction volumes per machine seen
during the period.
Gross margins improved to 36% as a result of the higher margins on transaction
fee revenues compared to ATM sale revenues as well as the increase in the
proportion of 'Placement model' ATMs where ownership of the ATM is retained by
the Cashbox Group in return for a higher share of the transaction revenues. At
31 December 2007, Placement machines represented just under half of the total
estate. This resulted in the gross profit for the period being £0.8m, up on the
£0.6m for both the six months ended December 2006 and June 2007.
Administration costs were slightly lower then the preceding period but up on the
same period last year. Excluding depreciation, which increased following the
greater number of owned machines, the administration costs were £2.0m, a
reduction on prior periods with the benefits of the cost saving measures being
felt. Salary costs, including related items such as recruitment costs, were
inline with prior periods despite the increase in headcount from 39 in H1 06/07
to 50 in H2 06/07 (giving average of 44 for the year ended June 2007) to 52 for
the current six months. Professional fees remain higher than would be liked as a
consequence of the costs associated with reaching settlement with Hanco ATM
Systems Limited, the financing undertaken towards the end of the half year and
the pursuit of Anthony Sharp and Carl Thomas under the indemnity given by them
at the time of the flotation of the Company on AIM.
Earnings before interest, tax, depreciation and amortisation, share based
payments and exceptionals, EBITDA, for the period was a loss of £1.1m, a
significant improvement from the £2.1m loss in H2 06/07 and £1.3m loss in H1 06/
07.
Total operating loss was £1.4m for the period, an improvement on prior periods
of £1.6m in H1 06/07 and £4.4m in H2 06/07 with the higher gross profits and
lower administration costs.
Interest costs were up with the increased debt financing from Bank of Scotland,
and included interest on the Hanco settlement monies, resulting in a loss before
tax for the period of £1.6m.
Net cash from operating activities was an outflow of £1.9m with adverse
movements in working capital principally being the payment of creditors.
Purchase of fixed assets was £0.9m as placement machines were installed during
the period. The outflows were financed by draw downs on the Bank of Scotland
facility and the issue of the convertible loan in December 2007. Overall there
was a decrease in cash of £0.9m during the period.
CONSOLIDATED INCOME STATEMENT
For the six months ended 31 December 2007
unaudited unaudited unaudited
6m ended 6m ended Year
ended
31-12-07 31-12-06 30-6-07
Notes £ 000 £ 000 £ 000
Revenue 2 2,271 2,243 4,380
Cost of sales (1,455) (1,655) (3,219)
--------- --------- ---------
Gross Profit 816 588 1,161
Administration expenses 4 (2,217) (2,146) (5,093)
Exceptional items:
Litigation settlement costs 3 - - (2,000)
--------- --------- ---------
Total administration expenses (2,217) (2,146) (7,093)
--------- --------- ---------
Operating loss (1,401) (1,558) (5,932)
--------- --------- ---------
Finance income 27 11 37
Finance costs 5 (235) (78) (161)
Exceptional finance charges 3 - (685)
--------- --------- ---------
(208) (67) (809)
--------- --------- ---------
Loss for the period attributable to
the equity holders of the parent (1,609) (1,625) (6,741)
========= ========= =========
Loss per ordinary share (pence) 6
Basic (1.9)p (2.6)p (10.5)
Diluted (1.9)p (2.6)p (10.5)
Loss for the period excluding
exceptional costs attributable to
the equity holders of the parent (1,609) (1,625) (4,056)
========= ========= =========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 December 2007
unaudited unaudited unaudited
6m ended 6m ended Year ended
31-12-07 31-12-06 30-6-07
£ 000 £ 000 £ 000
Opening shareholders' deficit (3,520) (180) (180)
Loss for the financial period being
total income and expenditure recognised
in the period (1,609) (1,625) (6,741)
Share based payments 73 117 138
--------- --------- ---------
(1,536) (1,508) (6,603)
--------- --------- ---------
Issue of shares including premium - - 3,263
Equity component of convertible loan 38 - -
--------- --------- ---------
Movement in shareholders' funds (1,498) (1,508) (3,340)
--------- --------- ---------
Closing shareholders' deficit (5,018) (1,688) (3,520)
========= ========= =========
CONSOLIDATED BALANCE SHEET
As at 31 December 2007
unaudited unaudited unaudited
31-12-07 31-12-06 30-6-07
Notes £ 000 £ 000 £ 000
ASSETS
Non current assets
Intangible assets 55 10 13
Property, plant and equipment 1,796 1,157 1,077
--------- --------- ---------
1,851 1,167 1,090
--------- --------- ---------
Current Assets
Inventories 56 27 110
Trade and other receivables 7 861 822 850
Cash and cash equivalents 1,160 1,161 1,452
--------- --------- ---------
2,077 2,010 2,412
--------- --------- ---------
TOTAL ASSETS 3,928 3,177 3,502
========= ========= =========
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables 8 3,922 3,392 4,715
Borrowings 9 620 1,473 2
--------- --------- ---------
4,542 4,865 4,717
--------- --------- ---------
Non current liabilities
Borrowings 9 4,404 - 2,305
--------- --------- ---------
TOTAL LIABILITIES 8,946 4,865 7,022
--------- --------- ---------
Capital and reserves attributable to
equity holders of the parent
Share capital 10 832 614 832
Share premium account 10 6,925 3,880 6,925
Merger reserve 10 2,180 2,180 2,180
Equity component of Convertible debt 10 38 - -
Warrants reserve 10 - 37 -
Accumulated losses 10 (14,993) (8,399) (13,457)
--------- --------- ---------
(5,018) (1,688) (3,520)
--------- --------- ---------
TOTAL EQUITY AND LIABILITIES 3,928 3,177 3,502
========= ========= =========
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 December 2007
unaudited Unaudited unaudited
6m ended 6m ended Year
ended
31-12-07 31-12-06 30-6-07
£ 000 £ 000 £ 000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash used in operations 11 (1,927) 863 (2,440)
Interest paid (158) (41) (150)
--------- --------- ---------
Net cash used in operating activities (2,085) 822 (2,590)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property plant and
equipment (857) (623) (687)
Purchase of intangible fixed assets (52) - (6)
--------- --------- ---------
Net cash used in investing activities (909) (623) (693)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of ordinary shares for cash - - 584
Proceeds from convertible loans 584 - -
Proceeds from borrowings 1,500 500 5,600
Repayments of borrowings - - (130)
Capital repayments on finance leases (1) (74) (1,388)
Lease termination costs paid 3 - - (467)
--------- --------- ---------
Net cash generated from financing
activities 2,083 426 4,199
--------- --------- ---------
Net (decrease) / increase in cash (911) 625 916
========= ========= =========
Cash and cash equivalents at the
beginning of the period 1,452 536 536
--------- --------- ---------
Cash and cash equivalents at the end of
the period 541 1,161 1,452
========= ========= =========
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting convention, policies and basis of preparation
These half year 2008 interim consolidated financial statements of Cashbox PLC
are for the six months ended 31 December 2007. The information included within
this document has been prepared on the basis of the recognition and measurement
requirements of applicable IFRS and IFRIC interpretations in issue that either
are endorsed by the European Commission and effective (or available for early
adoption) at 30 June 2008 or are expected to be endorsed and effective (or
available for early adoption) at 30 June 2008, the Group's first annual
reporting date in accordance with IFRS.
In preparing these consolidated interim financial statements, management has
amended certain accounting and valuation methods applied in the 2007 Annual
Report and Accounts to comply with IFRS. The Group accounting policies as set
out in the 2007 Annual Report and Accounts have been revised where applicable to
conform to IFRS.
The restated accounting policies as set out on pages 10 to 13 of these
statements, comprise the Group's complete accounting policies under IFRS. These
policies have been consistently applied to all the years presented. The adopted
IFRS that will be effective (or available for early adoption) in the annual
financial statements for the year ending 30 June 2008 are still subject to the
possibility of change as a result of decisions taken by the European Commission
on endorsement. As a result of such changes the accounting policies cannot be
determined with certainty and therefore may require updating when the annual
financial statements are prepared for the year ending 30 June 2008.
The comparative figures in respect of the year ended 30 June 2007 have been
restated to reflect these adjustments. Reconciliations and descriptions of the
effect of the transition from UK GAAP to IFRS are provided in note 15.
Basis of Consolidation
The consolidated financial statements comprise Cashbox Public Limited Company
together with Cashbox ATM Systems Limited ('principal operating company')
together with Cashbox No 1 Limited, Cashbox No 2 Limited and Cashbox Finance
Limited, all wholly owned either directly or indirectly by Cashbox PLC, for the
six month period ended 31 December 2007 with comparative information for the six
month period ended 31 December 2006 and for the year to 30 June 2007. All inter-
company balances and transactions have been eliminated upon consolidation. The
merger reserve arose on the combination of Cashbox ATM Systems Limited with
Cashbox PLC on 23 March 2006 as the combining entities within the Group were
controlled by the same parties both before and after the combination.
Principal Accounting Policies
The following paragraphs describe the main accounting policies that have been
revised on transition to IFRS and hence supersede the previous accounting policy
detailed in the 2007 Annual Report and Accounts.
Revenue
Revenue represents the value of goods sold and services provided during the
year, stated exclusive of Value Added Tax. Income from the sale of Automated
Teller Machines (ATMs) is recognised when each ATM is installed in its location
and transaction income is recognised in the period in which the transaction took
place.
Foreign currency translation
The consolidated financial statements are presented in pounds sterling ('£'),
which is the company's functional and presentation currency. Transactions in
foreign currencies are translated at the exchange rate ruling at the date of
transaction. Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in the
income statement.
Exceptional items
Exceptional items are those significant items which are separately disclosed by
virtue of their size or incidence to enable a full understanding of the Group's
financial performance.
Website development costs
Expenditure incurred on maintaining websites and expenditure incurred on
developing websites used only for advertising and promotional purposes are
written off as incurred.
Leased assets
Assets that are financed by leasing agreements that give rights approximating to
ownership (finance leases) are treated as if they had been purchased outright.
The amount capitalised is the lower of the fair value of the leased assets and
the present value of the minimum lease payments payable over the term of the
lease. The corresponding leasing commitments are shown as amounts payable to the
lessor. Depreciation on the relevant assets is charged to the income statement
over the shorter of estimated useful economic life and the period of the lease.
Lease payments are analysed between capital and interest components so that the
interest element of the payment is charged to the income statement over the
period of the lease and is calculated so that it represents a constant
proportion of the balance of capital repayments outstanding. The capital element
of the payment reduces the amount payable to the lessor.
All other leases are treated as operating leases. Their annual rentals are
charged or credited to the income statement on a straight line basis over the
term of the lease.
Sale and leaseback
Sale and leaseback arrangements, by means of a finance lease, are accounted for
in the same manner as a standard finance lease agreement. It is not appropriate
to regard an excess of sale proceeds over the carrying amount as income. Such
excess is deferred and amortised over the lease term.
Onerous Leases
Where the unavoidable costs of a lease exceed the economic benefit expected to
be received from it, a provision is made for the present value of the
obligations under the lease.
Finance costs
Finance costs are charged to the income statement over the term of the debt so
that the amount charged is at a constant rate on the carrying amount. Finance
costs include issue costs, which are initially recognised as a reduction in the
proceeds of the associated capital instrument.
Intangible fixed assets
Intangible fixed assets comprise computer software licences acquired and are
capitalised on the basis of separately identifiable costs incurred to acquire
and bring into use specific software less accumulated amortisation and any
impairment in value.
Amortisation on intangible fixed assets
Amortisation is provided on intangible fixed assets which have a finite useful
economic life to write off the cost, less estimated residual values, evenly over
their expected useful lives on a straight line basis. Lives used for this
purpose are:
Computer software 3 years
Property, plant and equipment
Property, plant and equipment are held at cost being the purchase price and
other costs directly attributable to bringing the asset into use less
accumulated depreciation and any impairment in value.
Depreciation on tangible fixed assets
Depreciation is provided on property, plant and equipment to write off the cost,
less estimated residual values, evenly over their expected useful lives on a
straight line basis. Lives used for this purpose are:
Automated teller machines 5 years
Furniture and fittings 3 years
Office equipment 3 years
Impairment of non-financial assets
Assets that are subject to amortisation or depreciation are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the asset's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value less costs to sell and
value in use.
Inventories
Inventories are valued at the lower of cost and net realisable value. Cost is
based on the cost of purchase on a first in, first out basis. Net realisable
value is based on the estimated selling price less additional costs to
completion and disposal.
Financial assets
The group classifies all its financial assets as loans and receivables. These
are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. They are included in current assets. The Group's
loans and receivables comprise 'trade and other receivables' and cash and cash
equivalents in the balance sheet.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less provision
for impairment. A provision for impairment of trade receivables is established
when there is objective evidence that the Group will not be able to collect all
amounts due according to the original terms of the receivables. The amount of
the provision is the difference between the asset's carrying amount and the
present value of estimated future cash flows, discounted at the original
effective interest rate.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with
banks, and bank overdrafts. Bank overdrafts are shown within borrowings in
current liabilities on the balance sheet.
Trade payables
Trade payables are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently stated at amortised cost; any difference
between the proceeds (net of transaction costs) and the redemption value is
recognised in the income statement over the period of the borrowings using the
effective interest method. Borrowings are classified as current liabilities
unless the group has an unconditional right to defer settlement of the liability
for at least 12 months after the balance sheet date.
Borrowings which carry a right or option to acquire shares in the company are
accounted for as separate components with the borrowing element being calculated
with an interest rate equivalent to a debt only borrowing with similar security
and the equity component calculated as the balance in a separate reserve in
Shareholders funds.
Current and deferred taxation
The current income tax charge is calculated on the basis of the tax laws enacted
or substantively enacted at the balance sheet date. Management periodically
evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation and establishes
provisions where appropriate on the basis of amounts expected to be paid to the
tax authorities.
Deferred income tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements. However,
the deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor
taxable profit or loss. Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantially enacted by the balance sheet date
and are expected to apply when the related deferred income tax asset is realised
or the deferred income tax liability is settled. Deferred income tax assets are
recognised to the extent that it is probable that future taxable profit will be
available against which the temporary differences can be utilised.
Pension costs
Contributions to the Group's defined contribution pension scheme are charged to
the income statement in the year in which they become payable.
Reimbursements under Indemnity agreements
Amounts recoverable under indemnity agreements are treated as reimbursements
and, unless virtually certain, are only recognised on receipt.
Share-based employee remuneration
The Group has adopted IFRS 2 'Share based payment'. The Group issues equity
settled share based payments including share options and warrants to certain
Directors and employees and to Bank of Scotland. The fair value of the employee
services received in exchange for the grant of the options is recognised as an
expense. Equity-settled share based payments are measured at fair value at the
date of grant using an appropriate option pricing model. The fair value
determined at the date of grant is expensed to the income statement on a
straight line basis over the vesting period. At the balance sheet date the
cumulative change in respect of each award is adjusted to reflect the actual
levels of options vesting or expected to vest.
Relationship to statutory accounts and audit status
The financial information included in this document is unaudited and does not
comprise statutory accounts within the meaning of section 240 of the Companies
Act 1985. The comparative figures for the financial year ended 30 June 2007 are
not the Group's statutory accounts for that financial year. Those accounts,
which were prepared under UK Generally Accepted Accounting Practices, have been
reported on by the Group's auditors and delivered to the Registrar of Companies.
The report of the auditors was unqualified, did not include references to any
matters to which the auditors drew attention by way of emphasis without
qualifying their report and did not contain statements under section 237(2) or
(3) of the Companies Act 1985.
2. Turnover and Segmental Analysis
Turnover (all arising in the UK) is attributed to the Group's principal activity
of the supply and maintenance of ATMs and the processing of transactions there
from. Although the directors consider that there is only one business segment,
the following analysis of turnover is provided:
unaudited unaudited unaudited
6m ended 6m ended Year ended
31-12-07 31-12-06 30-6-07
£ 000 £ 000 £ 000
ATM sales 41 318 373
Gross transaction revenue 2,199 1,915 4,003
Other 31 - 4
--------- ---------- ---------
2,271 2,243 4,380
========= ========== =========
3. Exceptional Items
unaudited unaudited unaudited
6m ended 6m ended Year ended
31-12-07 31-12-06 30-6-07
£ 000 £ 000 £ 000
Charged in arriving at operating losses:
Litigation settlement costs - - 2,000
========= ========== =========
Charged within interest costs:
Lease termination payments - - 685
========= ========== =========
The litigation settlement costs relate to the full and final settlement costs of
£1,800,000 associated with the agreement reached with Hanco on 23 October 2007
together with the costs order of £199,760 paid on 24 July 2007. This has been
accounted for in the year ended 30 June 2007. The Company's subsidiary, Cashbox
ATM Systems Limited, has a joint and several indemnity in connection with this
litigation. In accordance with IAS 37, the amounts due under the indemnity have
been treated as a reimbursement as described in Note 13.
The £685,000 exceptional costs associated with terminating the lease
arrangements with General Capital Venture Finance included the effective cash
payment of the interest element of future lease rentals, £467,000, plus the non-
cash costs related to the write off of arrangement fees, £189,000, together with
write back of future warrant accretion costs, £29,000. The agreement terminating
the lease arrangements provided for full and final settlement of all outstanding
obligations if the Group purchased the assets legally owned by GCVF and GCVF
agreed to release the debenture held over the Group's assets.
4. Expenses by nature
unaudited unaudited unaudited
6m ended 6m ended Year ended
31-12-07 31-12-06 30-6-07
£ 000 £ 000 £ 000
Employee and associated
staff costs 1,209 1,286 2,691
Depreciation of tangible
fixed assets 203 126 277
Amortisation of intangible
fixed assets 9 4 7
Occupancy
costs 149 160 319
Vehicle costs 145 114 292
Professional
fees 259 219 874
Other costs 243 237 633
--------- ---------- ---------
2,217 2,146 5,093
========= ========== =========
5. Finance costs
unaudited unaudited unaudited
6m ended 6m ended Year ended
31-12-07 31-12-06 30-6-07
£ 000 £ 000 £ 000
Loan interest 211 - 11
Interest on
finance leases 1 73 138
Other 23 5 12
--------- ---------- ---------
235 78 161
========= ========== =========
6. Loss per ordinary share
The calculation of the basic earnings per share is based on the earnings
attributable to ordinary shareholders divided by the weighted average number of
shares in issue during the financial year. The Group also presents an adjusted
earnings per share based on earnings excluding exceptional items which the
Directors believe aid the understanding of the Group's trading performance. For
diluted earnings per share, the weighted average number of ordinary shares in
issue is adjusted to reflect the impact of conversion of dilutive potential
ordinary shares. The potential dilutive ordinary shares consist of the share
options and warrants. However as the Group is currently loss making none of the
potentially dilutive shares are currently dilutive. Adjusted earnings per share
are calculated on the same basis excluding the impact of exceptional items.
7. Trade and other receivables
unaudited unaudited unaudited
31-12-07 31-12-06 30-6-07
£ 000 £ 000 £ 000
Trade
receivables 30 238 11
Corporation
tax - 21 21
Value added
tax 476 54 479
Other
receivables 102 152 85
Prepayments and accrued
income 139 357 122
Impairment of
receivables (6) - (6)
--------- --------- ---------
741 822 712
--------- --------- ---------
Prepayments
greater than
one year 119 - 138
--------- --------- ---------
Trade and
other
receivables 861 822 850
========= ========= =========
Not included in receivables is a principal amount of £1,999,760 plus interest,
due joint and severally from Carl Thomas and Anthony Sharp under the terms of an
indemnity in relation to the settlement of litigation with Hanco ATM Systems
Limited as described in note 3. Under IFRS this has been treated as a
reimbursement and will not be recognised until its receipt is virtually certain.
8. Trade and other payables
unaudited unaudited unaudited
31-12-07 31-12-06 30-6-07
£ 000 £ 000 £ 000
Trade payables 641 924 731
Taxation and social
security 65 307 262
Other payables 1,869 473 2,111
Accruals and deferred
income 1,347 1,688 1,611
--------- --------- ---------
3,922 3,392 4,715
========= ========= =========
Included in other payables is an amount of £1,820,000 (30 June 2007: £1,999,760;
31 December 2006 nil) due to Hanco ATM Systems Limited as a result of the
settlement of litigation as described in note 3.
9. Borrowings
unaudited unaudited unaudited
31-12-07 31-12-06 30-6-07
£ 000 £ 000 £ 000
Current
Bank
overdrafts 618 - -
Amounts due under finance
leases 2 1,473 2
--------- --------- ---------
620 1,473 2
--------- --------- ---------
Non Current
Bank loans 3,854 - 2,300
Amounts due under finance
leases 4 - 5
Convertible
loan note 546 - -
--------- --------- ---------
4,404 - 2,305
--------- --------- ---------
5,024 1,473 2,307
========= ========= =========
The Bank overdraft and loans are secured by fixed and floating charges over the
Group's assets. The Convertible loan note is unsecured.
10. Reconciliation of closing equity
The Group has capital and reserves as follows:
unaudited unaudited unaudited unaudited unaudited unaudited
Share capital Share premium Merger reserve Equity Retained Total
reserves earnings
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000
At 1 July 2006 614 3,880 2,180 37 (6,891) (180)
Loss for the
period (1,625) (1,625)
Share based
payments
(IFRS 2) 117 117
------- ------- ------- ------- ------- -------
At 31
December 2006 614 3,880 2,180 37 (8,399) (1,688)
Issue of
shares May
2007 (net of
costs) 218 3,045 3,263
Cancellation
of GCVF
Warrants (37) 37 -
Loss for the
year (5,116) (5,116)
Share based
payments
(IFRS 2) 21 21
------- ------- ------- ------- ------- -------
At 30 June
2007 832 6,925 2,180 - (13,457) (3,520)
Loss for the
year (1,609) (1,609)
Convertible loan -
equity element 38 38
Share based
payments
(IFRS 2) 73 73
------- ------- ------- ------- ------- -------
At 31
December 2007 832 6,925 2,180 38 (14,993) (5,018)
======= ======= ======= ======= ======= =======
11. Cash used in operations
Unaudited unaudited unaudited
6m ended 6m ended Year ended
31-12-07 31-12-06 30-6-07
£ 000 £ 000 £ 000
Loss before
taxation (1,609) (1,625) (6,741)
Adjustments:
Net finance
costs 208 67 809
Interest
received 27 11 37
Depreciation of tangible
fixed assets 203 126 277
Amortisation of intangible
fixed assets 9 4 7
Accretion for
warrants - - 27
Share based remuneration
charge 70 117 138
Changes in working capital:
Decrease / (increase) in
inventories 54 (5) (88)
(Increase) / decrease in
receivables (11) 834 433
(Decrease) / increase in
trade & other
payables (878) 1,334 2,661
--------- --------- ---------
Cash used in
operations (1,927) 863 (2,440)
========= ========= =========
12. Post balance sheet events
On 14 March 2007 the Company received notice from MBC Investments that the
intention was to convert the convertible loan note issued into shares under the
terms of the loan on 1 April 2008.
13. Contingencies
On 17 July 2007 the Company's subsidiary wrote to Anthony CJ Sharp and Carl J
Thomas (the indemnifiers) under the terms of the deed of indemnity signed on 23
March 2006. The Company's subsidiary has received a reply from Anthony Sharp
informing the Company that he does not consider the indemnity to be binding on
him. The Directors do not accept Mr Sharp's position and having taken legal
advice, believe the indemnity is enforceable. Discussions have been taking place
with the indemnifiers to resolve matters, however, if agreement with the
indemnifiers cannot be reached in the near future then proceedings to recover
monies due under the indemnities will commence.
As a result of Mr Sharp's position disputing the indemnity and concerns relating
to Mr Thomas' ability to pay, the Directors, while believing the indemnity is
enforceable, have treated the receivable as a reimbursement in accordance with
IAS 37, and since receipt is not virtually certain, have not recorded the amount
due of £1,999,760 in the accounts.
Following the initial public offering of the Company it was expected that the
above indemnity would be replaced by a further indemnity from KKR Investment
management SA , ('KKR', a company in which A CJ Sharp was expected to be a
minority shareholder), Annenberg Investment Management SA (a company controlled
by ACJ Sharp) and CJ Thomas severally (the 'Further Indemnity') with sole
recourse (in the case of Annenberg and CJ Thomas) to their respective holdings
of ordinary shares in the Company. The Further Indemnity was intended to come
into effect only once KKR had unconditional finance in place, to the
satisfaction of the Directors and Seymour Pierce Limited (the Company's
Nominated Advisor and Broker) to cover its liabilities under the Further
Indemnity. As part of this agreement, the Company agreed to pay a cash fee in
the amount of £112,500 to KKR in respect of the provision of the Further
Indemnity together with the issue of 187,500 new ordinary shares to KKR. These
shares would only be issued once the Further Indemnity was unconditional.
Pursuant to the deed, unconditional finance has not been put in place.
14. Non GAAP terms
EBITDA is earnings before interest, tax, depreciation, amortisation, exceptional
items, share based payments and minority interests and equals operating income /
loss before exceptional items plus depreciation and amortisation. EBITDA, which
we consider to be a meaningful measure of operating performance, particularly
the ability to generate cash, does not have a standard meaning under IFRS and
may not be comparable with similar measures used by others.
unaudited unaudited unaudited
6m ended 6m ended Year ended
31-12-07 31-12-06 30-6-07
£ 000 £ 000 £ 000
Operating loss (1,401) (1,558) (5,932)
Add back
Depreciation and
amortisation 212 130 284
Exceptional
items (see
note 3) - - 2,000
Share based
payments 70 117 138
--------- --------- ---------
(1,119) (1,311) (3,510)
========= ========= =========
Net debt includes the borrowings of the Group (including bank loans, other
loans, finance leases and overdrafts) less cash and cash equivalents excluding
balances held with the Bank of England for cash withdrawal settlement purposes.
unaudited unaudited unaudited
31-12-07 31-12-06 30-6-07
£ 000 £ 000 £ 000
Cash and cash
equivalents 1,160 1,161 1,452
Less BOE cash
balance (1,158) (1,028) (1,349)
--------- --------- ---------
Cash excluding
BOE balances 2 133 103
--------- --------- ---------
Current
borrowings 779 1,473 2
Non current
borrowings 4,245 - 2,305
--------- --------- ---------
5,024 1,473 2,307
--------- --------- ---------
Net debt 5,022 1,340 2,204
========= ========= =========
15. Adoption of IFRS
In implementing the transition to IFRS, the Group has followed the requirements
of IFRS 1 'First Time Adoption of International Financial Reporting Standards',
which in general requires IFRS accounting policies to be applied fully
retrospectively in deriving the opening balance sheet at the date of transition.
In the Group's case this is 1 July 2006 being the start of the previous period
that has been presented as comparative information. IFRS 1 contains certain
mandatory exceptions and some optional exemptions to this principle of
retrospective application. The adoption of IFRS represents an accounting change
only and does not affect the operations or cash flows of the Group. The
principal area of impact is that purchased computer software costs were
previously recorded as property, plant and equipment as permitted by UK GAAP. In
accordance with IAS 38, all purchased computer software is recorded as an
intangible asset. The impact of this adjustment was to reduce the net book value
of property, plant and equipment by £14,000 as at 30 June 2006, £10,000 as at 31
December 2006 and £13,000 as at 30 June 2007 with a corresponding increase in
intangible assets.
UNAUDITED COMPARATIVE DATA RESTATED IN ACCORDANCE WITH TRANSITION TO IFRS
CONSOLIDATED INCOME STATEMENT FOR YEAR ENDED 30 JUNE 2007
UK GAAP Adjustments IFRS
£ 000 £ 000 £ 000
Revenue 4,380 - 4,380
Cost of sales (3,219) - (3,219)
--------- --------- ---------
Gross Profit 1,161 1,161
Administration
expenses (5,093) - (5,093)
Exceptional
Litigation settlement
costs (2,000) - (2,000)
--------- --------- ---------
Total administration
expenses (7,093) - (7,093)
--------- --------- ---------
Operating loss (5,932) - (5,932)
--------- --------- ---------
Finance income 37 - 37
Finance costs (161) - (161)
Exceptional finance
charges (685) - (685)
--------- --------- ---------
(809) - (809)
--------- --------- ---------
Loss for the period
attributable to the equity
holders of the
parent (6,741) - (6,741)
========= ========= =========
UNAUDITED CONSOLIDATED INCOME STATEMENT FOR SIX MONTHS ENDED 31 DECEMBER 2006
UK GAAP Adjustments IFRS
£ 000 £ 000 £ 000
Revenue 2,243 - 2,243
Cost of sales (1,655) - (1,655)
--------- --------- ---------
Gross Profit 588 - 588
Administration
expenses (2,146) - (2,146)
--------- --------- ---------
Operating loss (1,558) - (1,558)
--------- --------- ---------
Finance income 11 - 11
Finance costs (78) - (78)
--------- --------- ---------
(67) - (67)
--------- --------- ---------
Loss for the period
attributable to the equity
holders of the
parent (1,625) - (1,625)
========= ========= =========
UNAUDITED COMPARATIVE DATA RESTATED IN ACCORDANCE WITH TRANSITION TO IFRS
CONSOLIDATED BALANCE SHEET AT 30 JUNE 2006
UK GAAP Adjustments IFRS
£ 000 £ 000 £ 000
ASSETS
Non current assets
Intangible
assets - 14 14
Property, plant and
equipment 674 (14) 660
--------- --------- ---------
674 - 674
--------- --------- ---------
Current Assets
Inventories 22 - 22
Trade and other
receivables 1,492 - 1,492
Cash and cash
equivalents 536 - 536
--------- --------- ---------
2,050 - 2,050
--------- --------- ---------
TOTAL ASSETS 2,724 - 2,724
========= ========= =========
LIABILITIES AND EQUITY
Current liabilities
Trade and
other payables 2,053 - 2,053
Borrowings 172 - 172
--------- --------- ---------
2,225 - 2,225
--------- --------- ---------
Non current liabilities
Borrowings 679 - 679
--------- --------- ---------
TOTAL
LIABILITIES 2,904 - 2,904
--------- --------- ---------
Capital and reserves
attributable to equity
holders of the parent
Share capital 614 - 614
Share premium
account 3,880 - 3,880
Merger reserve 2,180 - 2,180
Warrants
reserve 37 - 37
Accumulated
losses (6,891) - (6,891)
--------- --------- ---------
(180) - (180)
--------- --------- ---------
TOTAL EQUITY AND
LIABILITIES 2,724 - 2,724
========= ========= =========
Adjustments relate to the separate disclosure of software from other tangible
fixed assets of £14,000.
UNAUDITED COMPARATIVE DATA RESTATED IN ACCORDANCE WITH TRANSITION TO IFRS
CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2006
UK GAAP Adjustments IFRS
£ 000 £ 000 £ 000
ASSETS
Non current assets
Intangible
assets - 10 10
Property, plant and
equipment 1,167 (10) 1,157
--------- --------- ---------
1,167 - 1,167
--------- --------- ---------
Current Assets
Inventories 27 - 27
Trade and other
receivables 822 - 822
Cash and cash
equivalents 1,161 - 1,161
--------- --------- ---------
2,010 - 2,010
--------- --------- ---------
TOTAL ASSETS 3,177 - 3,177
========= ========= =========
LIABILITIES AND EQUITY
Current liabilities
Trade and
other payables 3,392 - 3,392
Borrowings 1,473 - 1,473
--------- --------- ---------
4,865 - 4,865
--------- --------- ---------
Non current liabilities
Borrowings - - -
--------- --------- ---------
TOTAL
LIABILITIES 4,865 - 4,865
--------- --------- ---------
Capital and reserves
attributable to equity
holders of the parent
Share capital 614 - 614
Share premium
account 3,880 - 3,880
Merger reserve 2,180 - 2,180
Warrants
reserve 37 - 37
Accumulated
losses (8,399) - (8,399)
--------- --------- ---------
(1,688) - (1,688)
--------- --------- ---------
TOTAL EQUITY AND
LIABILITIES 3,177 - 3,177
========= ========= =========
Adjustments relate to the separate disclosure of software from other tangible
fixed assets of £10,000.
UNAUDITED COMPARATIVE DATA RESTATED IN ACCORDANCE WITH TRANSITION TO IFRS
CONSOLIDATED BALANCE SHEET AT 30 JUNE 2007
UK GAAP Adjustments IFRS
£ 000 £ 000 £ 000
ASSETS
Non current assets
Intangible
assets - 13 13
Property, plant and
equipment 1,090 (13) 1,077
--------- --------- ---------
1,090 - 1,090
--------- --------- ---------
Current Assets
Inventories 110 - 110
Trade and other
receivables 850 - 850
Cash and cash
equivalents 1,452 - 1,452
--------- --------- ---------
2,412 - 2,412
--------- --------- ---------
TOTAL ASSETS 3,502 - 3,502
========= ========= =========
LIABILITIES AND EQUITY
Current liabilities
Trade and
other payables 4,715 - 4,715
Borrowings 2 - 2
--------- --------- ---------
4,717 - 4,717
--------- --------- ---------
Non current liabilities
Borrowings 2,305 - 2,305
--------- --------- ---------
TOTAL
LIABILITIES 7,022 - 7,022
--------- --------- ---------
Capital and reserves
attributable to equity
holders of the parent
Share capital 832 - 832
Share premium
account 6,925 - 6,925
Merger reserve 2,180 - 2,180
Accumulated
losses (13,457) - (13,457)
--------- --------- ---------
(3,520) - (3,520)
--------- --------- ---------
TOTAL EQUITY AND
LIABILITIES 3,502 - 3,502
========= ========= =========
Adjustments relate to the separate disclosure of software from other tangible
fixed assets of £13,000.
UNAUDITED COMPARATIVE DATA RESTATED IN ACCORDANCE WITH TRANSITION TO IFRS
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2007
UK GAAP Adjustments IFRS
£ 000 £ 000 £ 000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash used in
operations (2,440) - (2,440)
Interest paid (149) - (149)
--------- --------- ---------
Net cash used in operating
activities (2,589) - (2,589)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property plant
and equipment (687) - (687)
Purchase of intangible
fixed assets (6) - (6)
--------- --------- ---------
Net cash used in investing
activities (693) - (693)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of issue of
ordinary shares for cash 584 - 584
Proceeds from
borrowings 5,600 - 5,600
Repayments of
borrowings (130) - (130)
Capital repayments on
finance leases (1,389) - (1,389)
Lease termination
costs paid (467) - (467)
--------- --------- ---------
Net cash generated from
financing activities 4,198 - 4,198
--------- --------- ---------
Net increase
in cash 916 - 916
========= ========= =========
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2006
UK GAAP Adjustments IFRS
£ 000 £ 000 £ 000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash used in
operations 863 - 863
Interest paid (41) - (41)
--------- --------- ---------
Net cash used
in operating
activities 822 - 822
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property plant
and equipment (623) - (623)
--------- --------- ---------
Net cash used in investing
activities (623) - (623)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from
borrowings 500 - 500
Capital repayments on
finance leases (74) - (74)
--------- --------- ---------
Net cash generated from
financing activities 426 - 426
--------- --------- ---------
Net increase
in cash 625 - 625
========= ========= =========
FORWARD LOOKING STATEMENTS
This document contains statements concerning the Group's business, financial
condition, results of operations and certain of the Group's plans, objectives,
assumptions, projections, expectations or beliefs with respect to these items.
The Company cautions that any forward-looking statements in this document may
and often do vary from actual results and the differences between these
statements and actual results can be material. Accordingly, readers are
cautioned not to place undue reliance on forward-looking statements, which speak
only at their respective dates. The Company undertakes no obligation to release
publicly the result of any revisions to these forward-looking statements that
may be made to reflect events or circumstances after the date of this document,
including, without limitation, changes in the Group's business or acquisition or
divestment strategy or planned capital expenditures, or to reflect the
occurrence of unanticipated events.
By their nature, forward-looking statements involve risk and uncertainty because
they relate to events and depend on circumstances that will occur in the future.
There are a number of factors that could cause actual results and developments
to differ materially from those expressed or implied by these forward-looking
statements. These factors include, among other things: the impact of competitive
pricing; changes in the price of ATMS and other key items; the occurrence of
major operational problems; the loss of major customers; limitations imposed by
the Group's indebtedness and leverage; contingent liabilities, risks associated
with changes in technology requirements from LINK; risks of litigation; and
other factors described in the Company's filings with the London Stock Exchange.
This information is provided by RNS
The company news service from the London Stock Exchange