Final Results

RNS Number : 1033E

Cashbox PLC

15 December 2009

 



CASHBOX PUBLIC LIMITED COMPANY

("CASHBOX" OR "THE COMPANY")

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2009

BUSINESS HIGHLIGHTS

Cashbox (AIM:CBOX), the independent Automated Teller Machine ("ATM") deployer and operator, announces its annual results for the year ended 30 June 2009.
			Year ended	Year ended
			30 June 2009	30 June 2008	% Movement
Machines installed at period end			2,438	2,045	19.2%
Number of transactions			4,920,705	4,228,122	16.4%
Revenue (£ 000)			6,419	4,675	37.3%
Gross Profit (£ 000)			2,312	1,768	30.8%
Gross Margin %			36.0%	37.8%
Adjusted EBITDA (£ 000) *			(1,522)	(1,848)	17.6%
Loss attributable to equity holders (£ 000)			(2,481)	(3,003)	17.4%
Loss per share (p)			(1.8)	(3.4)
Net debt (£ 000) *			9,268	5,016

* Adjusted EBITDA (earnings before interest, tax, depreciation, amortisation, exceptional items, share-based payments, fair value movements on valuations for acquisitions and derivatives) and net debt are defined in note 8.

Highlights

•	Installed estate increased from 2,045 to 2,438 as at 30 June 2009
•	Transaction revenues 34% higher
•	Gross profit up 31% from last year at £2.3m
•	Successfully completed two acquisitions
•	The final £1m of £5.7m Bank of Scotland facility was utilised to purchase ATMs
•	Raised £1.5m of new equity and £1.5m in a convertible loan to provide further working capital, as well as funding for acquisition and integration purposes

CHAIRMAN'S STATEMENT 

Despite a troubled economic climate, I am pleased to report that your Company has enjoyed considerable revenue growth, both organic, as well as through pursuing an acquisition strategy, as outlined in last year's statement.

After significant churn and uplift of machines, we have increased our estate size by 19% to 2,438 installed sites, whilst still retaining sufficient stock to deliver the same growth in 2009/2010.

In respect of organic growth, the Company has focused sales resource signing contracts with multi site corporates for two key reasons: these sites offer a better return on investment by generating higher average transaction volumes, and their corporate parent ensures a supply of cash for the self-fill ATM providing a more dependable partnership as compared to an independent stand-alone site. All installations are self-fill, whereby the merchant supplies the cash, and the majority of these sites will charge a convenience fee. However, this year has seen increased interest in Free-to-Use" ("FTU") ATMs and we have run a number of trials to test this concept. Indications are that we can make this a workable financial model, via the bank interchange fees, and we predict considerable growth in this area over the coming year.

A number of acquisition targets were identified during the course of the year, leading to the successful acquisitions of MyATM and Cash4All. Both of these businesses, now fully integrated within Cashbox, have significantly contributed to the growth in revenues experienced this year.

2008/2009 results
Sales for the year ended 30 June 2009 were £6,418,628 (2008: £4,675,000), resulting in an adjusted EBITDA loss (as defined in note 8) of £1,522,052 (2008: £1,848,221). Operating loss was £1,612,294 (2008: £2,484,221). It should be noted that the operating loss benefits from a one-off £1.2m credit resulting from the accounting treatment of the acquisitions.
The management team has also worked hard to control costs, resulting in significantly reduced salary costs. Although revenue has increased by 37%, adjusted administration costs (as defined in note 8) were down by 4%, on prior year, despite a significant increase in professional fees due to the acquisition activity.

 Funding and Board appointments

The Company raised £1.5m in equity during the course of the year to provide ongoing working capital. In December 2008, the Company secured a further £1.5m in funding from Synergy Capital LLP. This was in the form of an unsecured convertible loan, due to mature in 2013. As a condition of this investment, we welcomed Andrew Fearon to the Board as a non-Executive Director. Having successfully completed the restructuring of the operations divisions, including field engineering, help desk and sales support, Chief Technical Officer, Matthew Thomas, was able to rejoin the Board in April 2009, and I welcome his return.

The debt market for small and medium sized enterprises is extremely challenging; it is against this backdrop that the Directors have successfully extended the repayment schedule of the Bank of Scotland loan. It is pleasing to report a satisfactory outcome which will enable the Company to commence a reduced level of capital repayment.  

Post Balance Sheet Events

The first quarter of the 2009/2010 financial year has produced the strongest sales performance in the Company's history. The contract with Mitchells and Butlers PLC has been extended by a further 380 sites, bring the total numbers of their sites supported by Cashbox to over 500. We have also been successful in securing more than six new corporate contracts in the first quarter, including The Tattershall Castle Group Ltd, Orchid Group Ltd and Reel Cinemas Ltd. This has provided a steady stream of new sites in which to deploy churned ATMs.

Unfortunately, the economic climate has proved difficult for some of our partners, and we have been impacted by the owners of the off licence chain Thresher, First Quench Retailing, going into administration. Cashbox processed and supported over 300 ATMs for Threshers and these ceased to transact in November 2009. The impact of this loss will have the effect of slowing, but not reversing, our growth in quarters two and three of the 2009/2010 year. The Board remains confident that the existing pipeline of contracts will be sufficient to replace the Thresher sites with new sites within the year, although the loss of contribution to revenue cannot be avoided. An offset to this disappointment is that we have been able to acquire from the Administrator the ATMs previously owned by Thresher, by taking responsibility for the decommissioning and uplift costs.

2009/2010

Our priority remains clear: the creation of value for shareholders through long term sustainable revenue growth. Considerable progress has been made during the course of this year with significant increases in scale and revenue and the cost base being very tightly controlled. This has enabled break even adjusted EBITDA (as defined in note 8) to be achieved for the first quarter of the 2009/2010 year. I believe that trading conditions will continue to be challenging for the remainder of this year. However, continued growth and appropriate cost management should make an operating profit achievable towards the end of the year.

Having stepped up from a Non-Executive Director to Non-Executive Chairman two years ago, I believe that this is an appropriate juncture to hand over the reins of Chairman. Trading conditions for SMEs like Cashbox PLC have not been tougher in living memory and I have enjoyed my tenure working with such a dedicated team. Overseeing a turnaround during these economic conditions has, at times, been extremely testing for everyone working for and with Cashbox. However, I believe that the business now has the base to grow shareholder value as opposed to preserving shareholder value, the latter a recurring theme throughout the sector over the last eighteen months.

I wish my successor, Ciaran Morton, the best of luck for the future and attribute the Company's changing fortunes, in no small part, to his continued tenacity and ability. My thanks also go to all staff and my fellow directors who have contributed to the business during my time as Chairman.  

BUSINESS REVIEW

Summary of the Business Review

• 34% growth in transaction revenues

• Adjusted administration costs (as defined in note 8) down 4%

• 18% improvement in adjusted EBITDA (as defined in note 8)

• 17% improvement in losses attributable to equity holders

• Two acquisitions successfully integrated

• Increased corporate sales activity

Summary

The last year has seen Cashbox complete two acquisitions, win new multiߛsite contracts, develop new revenue streams via Free to Use [FTU], WiFi and advertising and secure new investors to provide working capital while the Company moves towards achieving an operating profit.

This was a strong revenue performance during a period of economic challenges, and clearly demonstrated the group's increasing maturity, and its ability to remain focused upon organic growth whilst maintaining service and support levels with a reduced headcount, and executing against the original acquisition strategy.

From 1 July 2008 to 30 June 2009, the installed base expanded from 2,045 to 2,438 sites. This number does not reflect that in excess of 400 ATMs were also uplifted between 1 January 2009 and 30 June 2009, some of which came from within ATM estates acquired during the year. This was a planned exercise to ensure that sufficient ATMs would be held in anticipation of fulfilling large contracts (including Mitchells and Butlers PLC, Orchid Group Ltd, and Tattershall Castle Group Ltd amongst many others, which were agreed post year end), and in the knowledge that the last available drawdown of the Bank of Scotland capital funding to purchase new ATMs would be utilised within the financial year. 

Acquisitions

A clearly stated strategy for the year was to increase scale through acquisition. A number of possibilities were explored and investigated throughout the year resulting in two successful acquisitions.

The acquisitions of MyATM and Cash4All, carried out in four transactions, were concluded in November 2008. The majority of the sites were fully integrated and migrated across to the Cashbox platform by April 2009. Although, these sites immediately increased revenue, the margin benefits were not fully realised until the integrations were completed. As such, the full effect of these acquisitions will be felt in the coming year.

This expansion of the estate, together with the increased security requirements for independent ATM deployers ["IADs"] generally, increased the workload in ensuring that all ATMs are kept compliant with LINK regulations and secure from interference or fraud. The head office team has been strengthened by the successful recruitment of a Compliance and Security Manager, reporting directly into Matthew Thomas, Cashbox Chief Technical Officer. This role will liaise with the LINK scheme, whilst ensuring that Cashbox field engineers are up to date and conversant with all aspects of LINK regulations concerning the installation and operation of ATMs in the UK.

Growth and future opportunities

Cashbox has also continued to grow organically over the period, with increased transactions at existing sites as well as new sites being won. The ATM requirement for these new sites has been fulfilled through uplifting placement ATMs from underߛperforming sites. It should also be noted that whilst the credit crunch may have impacted the ability of the Group to raise finance for further acquisitions, it would appear to have had a positive effect upon transaction volumes. As the public moves away from credit to cash, it is apparent that ATM usage increases, especially as currently 71% of all cash in circulation in the UK is sourced from ATMs. This amount is predicted by APACS to rise above 75% by 2011.

This churning of sites has also had the effect of increasing average transactions per site across the whole estate, and reduced the reactive workload of the inߛhouse support services team and field engineers. This has enabled them to continue to provide outstanding service to the Group's partners, and has led to the expansion of existing corporate relationships, such as Mitchells and Butlers PLC.

The challenging economic conditions have increased the demand from partners to roll out FTU ATMs, as part of their own value offering to their customers. Many of our uplifted ATMs were used in a series of FTU trials across the country. Every FTU trial to date has successfully evolved into a full rollout of the FTU offering. Over 7% of the Company's installed ATM base is now operating on a free to use basis.

Many of the contracts announced by Cashbox in the first quarter of the 2009/2010 year stipulate the partial deployment of FTU ATMs and the Board expects this trend to continue.

The quality of Cashbox service and support is demonstrated by the ability to win processing contracts (the provision of the LINK connection and ATM service and support to companies who own their own ATMs). In the first half of 2009/2010 Cashbox signed a contract with the Orchid Group to support nearly 200 of their ATMs sited in pubs across the UK. Cashbox now has the engineering, Help Desk, reporting and billing infrastructure to pitch for these competitor-held processing contracts as they come up for renewal.

The partnership with BT Openzone is a unique ATM initiative enabling Cashbox to offer its partners the chance to provide Broadband access at their sites, increasing the pull of the site as a destination, as well as potentially increasing customer time spent onsite. This is a new revenue stream for the Company which is part of a strategic drive to leverage the geographic presence of the ATMs.

As estate size increases so does the potential to sell advertising on the screen, as well as on the ATM itself. 

Staffing and economic environment

The increased stability of the business and the completion of the internal restructuring of the Company reduced the need for departmental managers. A proportion of this layer of management had been utilised to enact strategic and operational changes which, as new practices became institutionalized, were redundant to the future needs of the business. Headcount reduced from 50 (June 2008) to 43 (June 2009) during the course of the year with many of the savings only being recognized in the fourth quarter of the year. As such, the full benefit will be felt in the coming year. 

The staff changes also included the departure of CFO David Auger in April 2009. After two years assisting with the turnaround of the Group, David wanted to return to the opportunities and experience offered by the larger Company environment where he has spent the majority of his professional life. We thank him for his contribution and wish him well for the future.

Funding

The Board are mindful that the business has not yet attained profitability and successfully raised over £3m in working capital through a mixture of convertible debt and equity investment, from leading funds such as Axa Framlington Investment Management Ltd and Action Group Holding Company KSCC. Despite the recent rapid growth in revenue, further investment will be required to carry the Company through to profitability. It should be noted that the impact of this revenue growth enabled the Company to report adjusted EBITDA breakeven performance for the first quarter of the 2009/2010 year.  

2009/2010

I remain encouraged by the ability of the staff and the technical infrastructure to rapidly integrate acquisitions, whilst still delivering consistent organic growth in our core business. New revenue streams, such as WiFi and advertising will play an increasingly important role in the future of the Company as the estate continues to mature and grow. The key goal is to move into profitability, but we are realistic about the challenges facing our business. Despite the increase in estate size, we are realistic about our reliance upon the need to grow through ATM churn, which requires our customers to operate in a stable economic environment. However, I strongly believe that the Group is in a stronger and more stable state than ever before.

Financial Review

Revenue, margins, administration costs and Adjusted EBITDA
Revenue for the year was £6.4m, 37% higher than last year, with pure transaction revenues 34% higher with numbers of transactions up by 16% in 2009. This was due both to the increase in core estate business (revenues of the estate without the Cash4All but including the MyATM acquisitions) and most significantly, the acquisition of the Cash4All estate, which brought an additional £1.3m of commission earnings to the Group. Gross profits were up significantly again on the previous year, at £2.3m compared to £1.8m, an improvement of 31%. We believe that the Gross Profit Margin of 36% in 2008/2009 to be sustainable in the future.
Management focused on retaining its tight cost control and made further cuts in general administration expense. Administration expenses increased from £4.3m to £5.1m, although adjusted administration expenses (as defined in note 8), fell a further 4% from last year to £3.5m. This was almost entirely due to employee costs, which decreased by 6% with total numbers of staff down to 43 from 50. Vehicle and fuel costs reflected the fall in staff numbers and were down 10% on last year.
Adjusted EBITDA (as defined in note 8) was a loss of £1.5m, an improvement of 18% on previous year, whereas operating loss was lower by 35% at £1.6m.

The financial impact of the acquisitions
IFRS dictates that the Group must recognise the assets of the businesses acquired during the year at fair value. Fair values were calculated for the acquisitions of Cash4All and MyATM at £3.1m and £0.5m respectively, resulting in an excess of fair value over consideration of £1.2m in total, which is credited to the income statement under IFRS as 'gains on bargain purchases'. Details of the acquisitions have been disclosed in note 25 of the financial statements.
Finance income and finance costs
Finance income, sourced from the Group's Bank of England account, reflected lower rates of interest and showed a drop over previous years. Finance costs rose from £0.6m to £0.9m, mainly due to the increase in borrowings of £2.5m during the year.

Cashflows
Compared with last year, the Group experienced a decrease of 15% in operational cash used. Cash used for investing activities rose significantly to £2.0m for the year both as a result of the acquisition of the Cash4All and MyATM estates and continuing organic growth of the core estate.
This was financed both from raising new equity and from funding through loans, at £1.5m and £2.5m respectively for the year, totalling £4.0m of funding compared with £3.9m in 2008.
Despite continued improvements in profitability and revenue, the Group is still loss making and therefore may require further working capital funding. The Group has already prearranged an extension of £0.8m on the loan of £1.5m from Synergy. In respect to general cashflow considerations, the Group has renegotiated the terms of repayment with the Bank of Scotland for the loan of £5.7m and extended the loan to be repayable by 31 December 2015.

The Group was in breach of the bank's financial covenants at the balance sheet date, and irrespective of the bank's willingness to take no action as a result, we have applied the requirements of IFRS and disclosed the bank debt as payable within one year rather than spread over the term of the loan. However, all terms were renegotiatiated with the Bank of Scotland and are detailed in note 6.

Post balance sheet events

In parallel with the significant contract wins with Mitchells and Butlers PLC, The Orchid Group Ltd and Tattershall Castle group Ltd amongst others, the Company has also successfully extended the period of capital repayments to Bank of Scotland for the June 2007 loan. The original repayment schedule period of 2009 to 2012, has been extended to run from 2009 to 2015 (see note 6 for details).

2009/2010

Future organic transaction growth will be delivered in part through the continual redeployment of ATMs within the estate to higher performing sites. These new sites will be secured by ongoing corporate sales activity. For the fulfilment of large multi-site contracts the Company intends to lease ATMs, rather than immediately purchase, as this enables the Group to better manage its cash position.  

Additional revenues will be generated through the sale of advertising and the provision of WiFi. However, these products are in their infancy and not expected to significantly contribute in the 2009/2010 financial year. The group remains acquisitive, and following the successful integrations of Cash4All and MyATM, is monitoring the market for potential targets. 

Ciaran Morton

Chief Executive Officer

CONSOLIDATED INCOME STATEMENT
For the year ended 30 June 2009
				2009	2008
			Notes	£ 000	£ 000
Revenue			1	6,419	4,675
Cost of sales				(4,107)	(2,907)
Gross profit				2,312	1,768
Administration expenses			2	(5,123)	(4,252)
Gain on bargain purchases				1,199	-
Total administration expenses				(3,924)	(4,252)
Operating loss				(1,612)	(2,484)
Finance income				16	46
Finance costs				(885)	(565)
				(869)	(519)
Loss for the year attributable to the equity holders of the parent company				(2,481)	(3,003)
Loss per ordinary share (in pence)
	Basic		4	(1.8)	(3.4)
	Diluted		4	(1.8)	(3.4)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2009
					2009	2008
					£ 000	£ 000
Opening shareholders' deficit					(5,348)	(3,520)
Loss for financial period being the total recognised loss for the year					(2,481)	(3,003)
Share based remuneration					101	133
Issue of shares for cash including premium net of costs					1,485	459
Issue of shares for acquisition					573	-
Issue of shares including premium on conversion of loan stock					655	583
Closing shareholders' deficit					(5,015)	(5,348)

CONSOLIDATED BALANCE SHEET
As at 30 June 2009
					2009	2008
				Notes	£ 000	£ 000
ASSETS
Non current assets
Intangible assets					1,701	53
Property, plant and equipment					3,239	2,081
					4,940	2,134
Current assets
Inventories					257	165
Trade and other receivables					495	657
Cash and cash equivalents					594	1,112
					1,346	1,934
TOTAL ASSETS					6,286	4,068
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables					1,958	4,159
Borrowings					6,583	5,254
					8,541	9,413
Non current liabilities
Borrowings					2,760	3
					2,760	3
TOTAL LIABILITIES					11,301	9,416
Capital and reserves attributable to equity holders
Share capital					1,445	1,044
Share premium account					8,823	7,755
Merger reserve					2,661	2,180
Equity reserve					655	-
Warrant reserve					108	-
Retained earnings					(18,707)	(16,327)
					(5,015)	(5,348)
TOTAL EQUITY AND LIABILITIES					6,286	4,068

CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 June 2009
					2009	2008
				Notes	£ 000	£ 000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash used in operations				7	(1,986)	(2,348)
Finance income					16	46
Finance costs					(582)	(350)
Net cash used in operating activities					(2,552)	(2,652)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment					(426)	(1,495)
Purchase of intangible fixed assets					(11)	(60)
Acquisition of MyATM					(319)	-
Acquisition of Cash4All					(1,238)	-
Net cash used in investing activities					(1,994)	(1,555)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of issue of ordinary shares for cash (net of issue costs)					1,485	476
Proceeds from borrowings					2,546	3,393
Capital repayments on finance leases					(3)	(2)
Net cash generated from financing activities					4,028	3,867
Net decrease in cash					(518)	(340)
Cash and cash equivalents at the beginning of the year					1,112	1,452
Cash and cash equivalents at the end of the year					594	1,112

NOTES TO THE PRELIMINARY RESULTS STATEMENT

1. REVENUE AND SEGMENTAL ANALYSIS
Revenue (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 therefrom. Although the directors consider that there is only one business segment, the following analysis of revenue is provided:
															2009			2008
															£ 000			£ 000
Gross transaction revenue															6,028			4,486
ATM and consumable sales															182			93
Other revenues															209			96
															6,419			4,675
2. EXPENSES BY NATURE
														2009			2008
														£ 000			£ 000
Employee costs														2,181			2,331
Depreciation of tangible fixed assets														920			491
Amortisation of intangible fixed assets														316			20
Occupancy costs														218			291
Vehicle costs														272			301
Professional fees (including auditor's remuneration)														642			361
Costs of acquisitions written-off														329			-
Other administration costs														240			457
Exchange differences														5			-
Total administration costs														5,123			4,252
The Directors are not able to declare a dividend.
3. TAXATION
													2009			2008
													£ 000			£ 000
Loss on ordinary activities before tax													(2,481)			(3,003)
add: Gain on bargain purchases													(1,199)			-
													(3,680)			(3,003)
Expected tax credit based on loss at the standard rate of UK corporation tax of 28% (2008: 29.5%)
													(1,030)			(886)
Effect of:
Expenses not deductible for tax purposes													169			14
Depreciation in excess of capital allowances													201			90
Other short term timing differences													64			-
Losses carried forward													596			782
Total tax charge													-			-

4. LOSS PER SHARE

The calculation of the basic loss per share is based on the losses attributable to ordinary shareholders divided by the weighted average number of shares in issue during the financial year. 

For dilutive loss per share, the weighted average number of shares in issue is adjusted to better reflect the impact of conversion of dilutive potential ordinary shares. These potential dilutive 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.

During the year the weighted average number of potentially dilutive outstanding options and warrants where the exercise price is below the average share price was 3,660,822 (2008: 2,153,846).
					2009	2008
					£ 000	£ 000
Losses
Loss for the year for basic loss per share					(2,481)	(3,003)
Number of ordinary shares
Weighted average number of shares					134,232,274	88,312,035
Basic loss per share (in pence)					(1.8)	(3.4)
Diluted loss per share (in pence)					(1.8)	(3.4)

Not included in the above is the share issue occurring after the year end, for 5,714,286 shares, which would increase the total number of issued shares to 150,198,478 shares. The weighted average number of shares, if the share issue were to have taken place on 1 July 2008 would have been 139,930,904. The directors do not consider the effect on the EPS to be material.

5. GOING CONCERN

The Directors have prepared projected cashflow information for the period to 30 June 2012. Key assumptions used in the projected cashflow model are:

    a) The existing estate being fully deployed by 31 December 2009

b) The average number of transactions per machine rising through the continuing policy of identifying, then redeploying, low transaction sites

    c) Applying prudent cost controls throughout the period

    d) Securing new contract wins

    e) An injection of a further £0.8m of funding by 31 December 2009

The projections include cashflows to Bank of Scotland (as renegotiated - see note 6) being quarterly interest payments together with the repayment of principal commencing 31 December 2009.

Although the Directors feel that all of the key assumptions are reasonable and that revenue projections are achievable, they accept that uncertainty over these assumptions constitutes a material uncertainity that may cast significant doubt over the ability of the Group to continue as a going concern. 

The terms of the £0.8m extension to the existing £1.5m Synergy loan have been agreed. Release of funds is subject to completion of legal paperwork, which the Directors are confident will be concluded before 31 December 2009. In the event that the funds are not released before that date, alternative funding would need to be raised before 31 December 2009. 

Furthermore, should the key assumptions around the increase in the number of machines deployed and new contract wins prove to be inaccurate, then this may adversely impact upon our ability to generate sufficient cash to meet working capital and interest repayment requirements. The directors are confident that they would be able to raise further funding should this be required.

As a result of the above, the Directors consider it appropriate to prepare the financial statements on a going concern basis. Accordingly, the financial statements do not reflect any adjustments that would be required in the event that the group were unable to achieve its forecast cashflows.

6. POST BALANCE SHEET EVENTS

On 4 July 2009, the Company signed a five-year deal with BT Openzone, offering high speed wireless broadband service at sites in London, Manchester, Glasgow and Cardiff, and Digress, The Wall, Agenda, Abacus, Livery and Alibi bar restaurants in the City of London.
On 21 July 2009, the Company was awarded contracts to manage 125 and 260 ATMs respectively at sites within the Mitchells & Butlers PLC ("M&B") estate of managed pubs, bringing the total number of ATM's operated by Cashbox within M&B to over 500.
On 4 August 2009, the Company was awarded the contract for managing 120 machines in the ATM estate of the Tattershall Castle Group.
On 10 September 2009, 5,714,286 new ordinary shares in the capital of the Company was issued to QST Nominees Limited, a wholly owned subsidiary of Fairfax I.S PLC, in lieu of professional fees of £200,000, ranking pari passu in all respects with the existing ordinary shares of the Company. The Company has also successfully extended the period of capital repayments to the Bank of Scotland for the June 2007 loan. The original repayment schedule period of 2009 to 2012, has been extended to run from 2009 to 2105. Repayments are calculated as percentages of the amounts drawn prior to 31 December 2008 being 4.8% during year ended June 2010; 11.4% during year ended June 2011; 15.7% during the year ended 30 June 2012, and the remaining 68.1% by 31 December 2015. The newly negotiated arrangement will incur an additional £100,000 of fees, and interest rate applicable to the loan is set at 4% above LIBOR for the term of the loan.

7. NOTES SUPPORTING THE CONSOLIDATED CASH FLOW STATEMENT
					2009	2008
					£ 000	£ 000
Loss before taxation					(2,481)	(3,003)
Adjustments:
Depreciation of property, plant and equipment					920	491
Amortisation of intangible fixed assets					316	20
Gain on bargain purchases					(1,199)	-
Net finance costs					869	519
Share based remuneration charges					101	126
Costs of acquisitions written-off					329	-
Changes in working capital
Increase in inventories					(91)	(56)
(Increase)/Decrease in receivables					161	176
Decrease in trade and other payables					(911)	(621)
Cash used in operations					(1,986)	(2,348)

8. NON-GAAP TERMS

Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation, exceptional items, share-based payments, fair value movements on valuations for acquisitions and derivatives and equals operating income/loss before exceptional items plus depreciation and amortisation. Adjusted 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.
					2009	2008
					£ 000	£ 000
Operating loss					(1,612)	(2,484)
add back:
Gain on bargain purchases					(1,199)	-
Gain on fair value of derivative					(48)	-
Depreciation and amortisation					1,236	511
Share based payments					101	125
Adjusted EBITDA					(1,522)	(1,848)

Adjusted administration expenses used for key performance measures only has been adjusted:
					2009	2008
					£ 000	£ 000
Administration costs, as per Income Statement					5,123	4,252
less:
Depreciation and amortisation					1,236	511
Share based remuneration charges					101	125
Costs of acquisitions written-off					329	-
Adjusted administration costs					3,457	3,616

Net debt is a measure used by the Directors to consider the level of indebtedness of the Group and is defined as 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. The Directors exclude the balances held with the Bank of England as, while there is no legal obligation to separately identify those funds, the balance principally represents merchants' funds withdrawn from ATMs.
					2009	2008
					£ 000	£ 000
Cash and cash equivalents					594	1,112
less Bank of England cash balance					(519)	(871)
Cash excluding Bank of England balances					75	241
Current borrowings					(6,583)	(5,254)
Non current borrowings					(2,760)	(3)
					(9,343)	(5,257)
Net debt					(9,268)	(5,016)

9. BASIS OF PREPARATION AND CONSOLIDATION

The financial information in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRSs"), this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to send full financial statements that comply with IFRSs to shareholders in December 2009.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the Group's accounting policies which affect the reported amount of assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reported period. Although the estimates are based on management's best knowledge of the amount, event or actions, actual results may ultimately differ from those estimates. There have been no significant changes to the Group's accounting policies during the year.

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006 for the years ended 30 June 2009 and 30 June 2008, but is derived from those accounts. The statutory accounts for the year ended 30 June 2008 have been delivered to the Registrar of Companies and those for the year ended 30 June 2009 will be delivered following the company's annual general meeting. The auditors have reported on those accounts: their report was unqualified, but the auditors drew attention to a material uncertainty in respect of going concern by way of emphasis without qualifying their report for both years ended 30 June 2008 and 2009 and it did not contain a statement under Section 237 of the Companies Act 1985 for the year ended 30 June 2008 or under section 498 of the Companies Act 2006 for the year ended 30 June 2009.

10. REPORT AND ACCOUNTS

The report and accounts for the year ended 30 June 2009 are being despatched to shareholders shortly and will be available to be viewed on the Company 's website www.cashboxatm.co.uk    

 

END

 

 

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