Interim Results
Cashbox PLC
30 March 2007
Cashbox Public Limited Company
('Cashbox' or 'the Company')
Interim Results for the six months ended 31st December 2006
Cashbox (AIM:CBOX), the independent Automated Teller Machine ('ATM') deployer
and operator, announces its interim results for the six months ended 31 December
2006 (H1 06/07).
Anthony Sharp, Executive Chairman said:
'Our sales force has continued its momentum but lack of timely funds from our
lease provider delayed our ability to roll out ATMs as quickly as we would have
liked, however the foundations remain in place to drive this business forward'.
--------------------------------------------------------------------------------
as restated
H1 06/07 H2 05/06 H1 05/06
ended Dec 06 ended Jun 06 ended Dec 05
unaudited unaudited unaudited
£ 000 £ 000 £ 000
Machines installed at period end 1,245 1,058 848
Turnover 2,243 1,730 1,429
Gross Margin % 26% 25% 34%
EBITDA* (1,311) (1,313) (735)
Loss on ordinary activities* (1,625) (1,531) (927)
Earnings per share* (2.6)p (3.0)p (2.7)p
Net debt 312 315 8
--------------------------------------------------------------------------------
* before exceptional items of £1,175,000 in H2 05/06 relating to listing and
share option costs.
Highlights
• Merchant contract wins increases potential ATM sites to over 80,000
• Installed estate increased to 1,245 despite difficulties with lease
provider
• Turnover up 30% from preceding six months and 57% from the same period last
year
• Gross margin up slightly from H2 05/06 but lower than the comparable period
H1 05/06 which benefited from higher service income
• Net debt at period end £0.3m, unchanged from H2 05/06
• New £2.8m loan facilities signed in 2007
CHAIRMAN'S STATEMENT
While the steps that the Board had put in place, as reported in the Annual
Report, put us in an excellent position to grow the business, the period to 31
December 2006 and the last couple of months have proved frustrating as our lease
provider, General Capital Venture Finance Ltd ('GCVF'), did not provide funds on
a timely basis. As a consequence our ability to roll out our ATMs across
Merchant Sites at the rate we would have liked was fundamentally prejudiced, and
our ability to reach a critical mass impeded. This has delayed our stated
ambition of achieving profitability. Clearly this is disappointing, however
arrangements for alternative ATM financing are being made and the foundations
remain in place to drive this business forward once we have access to necessary
capital.
In February 2007 we arranged a series of short term loans totaling £0.8m from
directors and some existing shareholders as the arrangements with GCVF
deteriorated. This is testament to the continuing support of a number of key
individuals. The Board also resolved to seek alternative asset financing to
facilitate the growth of the business and is in the final stages of negotiating
an £8.0m asset financing arrangement together with a £0.75m overdraft facility.
While this progresses, the Company has arranged a £2.0m loan facility in March
to enable the rollout of ATMs to continue.
At an operational level the existing estate of ATMs has performed well. During
this difficult time we have been able, through careful cash management, to
install a further 187 machines and the sales force have worked hard and
continued to sign a number of key agreements with major customers. The number of
sites owned or managed by Cashbox's customers (including those with an
associated membership network) has increased to in excess of 80,000.
Operationally we therefore believe the business is well placed to execute the
business plan once the asset financing arrangements are finalised.
Financial Review
Turnover for the first half of the year was £2.2m, up 30% from the second half
of last year and 57% over the first half of last year, the comparable period,
with growth due to higher transaction income as more ATMs are installed.
Gross margin for the period was 26%, up slightly from the second half of 05/06,
but down from the first half 05/06 which benefited from service income derived
from relocating a number of a customer's ATMs.
Administration costs were up significantly from the comparable period last year,
mainly salary costs including share-based payments, as the business continues to
put in place the infrastructure to grow, but only 15% up on the preceding six
months as the growth has been slowed while the financing of new ATM
installations is resolved.
Interest costs are lower following the restructuring of the debt prior to the
flotation of the Company in March 2006 and the interest for the six months ended
31 December 2006 relates principally to the lease facility.
Consequently the loss on ordinary activities for the period was £1.6m compared
to £0.9m for the comparable period with higher gross profit being more than
offset by the higher administration costs.
Careful cash management and negotiation of payment terms resulted in a net cash
inflow from operating activities of £0.9m, with cash collection from debtors and
increased creditors. This was utilised servicing the lease facilities and
purchasing fixed assets with an overall increase in cash for the period of
£0.6m.
Net debt was unchanged at £0.3m at the period end with the net cash inflow from
operating activities covering the continued investment in ATMs.
Board update
As we announced on 21 March 2007, Carl Thomas, previously CEO, was dismissed
without notice after a disciplinary process. Carl Thomas has notified the
Company he is appealing this decision. I have assumed executive responsibilities
while the company is without a Chief Executive and while holding an executive
position I have stepped down from the Audit Committee.
David Auger has also joined the Board to take over as Chief Financial Officer,
effective 2nd April 2007, from Darren Woolsgrove who will be working in a more
operational role assisting me. We are delighted to have been able to appoint
someone of David's calibre as CFO. The expertise he brings with him from high
profile organisations such as PricewaterhouseCoopers and ICI will be of great
benefit to Cashbox as we continue to grow. Darren has indicated a desire to
ultimately seek a new challenge after the Company's successful IPO and is seeing
through his commitments made at that time last year. He will be stepping down as
a Director once a CEO is in place.
Hanco Litigation update
The litigation between inter alia, Cashbox ATM Systems Limited (the Company's
Subsidiary), Carl Thomas (previously Cashbox CEO), and other former employees of
the Company and Hanco ATM Systems Limited ('Hanco') is continuing. At a hearing
on 21st February 2007, and as announced on 23rd February 2007, the court made an
order for the Company's Subsidiary and Carl Thomas to pay 60% of Hanco's costs
of the summary judgment application together with an interim payment on account
of those costs of £150,000. The Company's Subsidiary and Carl Thomas have
applied for permission to appeal the summary judgment decision and a stay of the
interim payment on account of costs has been granted pending determination of
the application for permission to appeal.
The Company and the Company's Subsidiary have obtained a joint and several
indemnity from both Carl Thomas and Anthony Sharp against any liability of the
Company or the Company's Subsidiary arising from or in connection with this
litigation to pay any sum for damages awarded in respect thereof by a court of
competent jurisdiction (including all sums payable to the legal advisers of
Hanco) or for any agreed settlement in respect thereof.
Hanco's application for an interim payment in relation to quantum was adjourned
to a further hearing.
The position of the Company's Subsidiary remains that Hanco would not be
entitled to anything other than nominal recovery because Hanco would not have
secured Phase II of the Threshers contract in any event; and Phase II of the
Threshers contract was not profitable for the Company's subsidiary.
Financing
As a direct result of the difficulties experienced with the current lease
provider GCVF, the Board decided to seek alternative financing for the business.
The Company has secured a £2.0m loan through the clients of UK investment bank,
Fairfax I.S. plc, while discussions are taking place with a major, reputable
prime lender to provide asset financing. These discussions are at an advanced
stage, credit approval has been received, and we are working towards completion
in the near future.
The Board is considering seeking additional equity financing to maintain an
appropriate level of financial gearing and, if necessary, will hold an
Extraordinary General Meeting to seek shareholder approval for this.
Discussions are taking place with GCVF for the termination of their lease
facility and release of their debenture security. It is the Company's view that
GCVF are in breach of the terms of the facility and that the significant
contractual penalties GCVF is currently relying on are not payable. The ongoing
without prejudice negotiations have been protracted and the outcome is
uncertain. The Board is of the view that the termination of this facility is in
the long term interests of the business and expects matters to be resolved in
the near future.
Outlook
Whilst the last few months have been a difficult and frustrating period for the
Company and our staff, we are confident that good progress will be made in
growing the business over the next few months and that we will be reporting
significant progress with our full year results to be announced in the autumn.
Anthony Sharp
Executive Chairman
30 March 2007
For further information:
Cashbox plc
Anthony Sharp, Executive Chairman Tel: +44 (0) 870 126 2274
asharp@cashboxplc.co.uk www.cashboxplc.co.uk
Seymour Pierce Limited
Jeremy Porter, Corporate Finance Tel: +44 (0) 20 7107 8000
www.seymourpierce.com
Media enquiries:
Threadneedle Communications
Josh Royston / Graham Herring Tel: +44 (0) 20 7936 9606
www.threadneedlepr.co.uk
CASHBOX PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 31 DECEMBER 2006
as
unaudited unaudited restated
Notes 6m ended 6m ended Year ended
31-12-06 31-12-05 30-6-06
£'000 £'000 £'000
Turnover 2,243 1,429 3,159
Cost of sales (1,655) (947) (2,245)
--------- --------- ---------
Gross profit 588 482 914
--------- --------- ---------
Administrative
expenses (2,146) (1,265) (3,131)
Exceptional items:
Share based remuneration (options) - - (574)
charge
Listing costs - - (605)
--------- --------- ---------
Total exceptional costs - - (1,179)
--------- --------- ---------
Total
administrative
expenses (2,146) (1,265) (4,310)
--------- --------- ---------
Operating loss (1,558) (783) (3,396)
Interest receivable and
similar income 11 6 13
Interest payable and
similar charges 2 (78) (150) (254)
--------- --------- ---------
Loss on ordinary
activities before and
after taxation (1,625) (927) (3,637)
--------- --------- ---------
Loss per ordinary share (pence) 3
Basic (2.6)p (2.7)p (8.4)p
Diluted (2.6)p (2.7)p (8.4)p
Loss on ordinary
activities excluding
exceptional costs and
before and after taxation (1,625) (927) (2,458)
All amounts relate to continuing activities
CASHBOX PLC
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE SIX MONTHS ENDED 31 DECEMBER 2006
unaudited unaudited as restated
Notes 6m ended 6m ended Year ended
31-12-06 31-12-05 30-6-06
£'000 £'000 £'000
Loss for the period (1,625) (927) (3,637)
--------- ---------
Prior period adjustments 1 (75)
- share based payments
---------
Total gains and losses recognised
since last financial statements (1,700)
---------
CASHBOX PLC
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2006
unaudited unaudited
Notes 31-12-06 31-12-05 30-6-06
£'000 £'000 £'000
Fixed assets
Tangible assets 1,167 234 674
Current assets
Stocks 27 48 22
Debtors 822 634 1,492
Cash at bank and in hand 1,161 625 536
--------- --------- ---------
2,010 1,307 2,050
Creditors: amounts
falling due within
one year 4 (4,865) (3,807) (2,225)
--------- --------- ---------
Net current
liabilities (1,688) (2,500) (175)
--------- --------- ---------
Total assets less
current liabilities (521) (2,266) 499
Creditors: amounts
falling due after
more than one year 4 - - (679)
--------- --------- ---------
Net liabilities (1,688) (2,266) (180)
--------- --------- ---------
Capital and reserves
Called up share capital 614 380 614
Share premium account 3,880 - 3,880
Merger reserve 2,180 2,180 2,180
Warrants reserve 37 - 37
Profit and loss account (8,399) (4,826) (6,891)
--------- --------- ---------
Shareholders' deficit 5 (1,688) (2,266) (180)
--------- --------- ---------
CASHBOX PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 31 DECEMBER 2006
unaudited unaudited
Notes 6m ended 6m ended Year ended
31-12-06 31-12-05 30-6-06
£'000 £'000 £'000
Net cash inflow /(outflow) from
operating activities 6 852 (742) (4,327)
---------- ---------- ----------
Returns on investments and
servicing of finance
Interest received 11 6 13
Interest paid (41) (117) (254)
---------- ---------- ----------
Net cash outflow from
returns on investment and
servicing of finance (30) (111) (241)
---------- ---------- ----------
Capital expenditure and financial
investment
Purchase of tangible fixed assets (623) (154) (44)
---------- ---------- ----------
Net cash outflow from
capital expenditure
and financial investment (623) (154) (44)
---------- ---------- ----------
Cash inflow / (outflow)
before use of liquid
resources and financing 3 (1,007) (4,612)
---------- ---------- ----------
Financing
Issue of ordinary shares for cash - 1,596 5,339
(net of issue costs)
Loans taken and repaid - (15) (457)
Cash advances from Lease 500 - -
Provider
Capital element of finance leases (74) - -
repaid
Sale and leaseback of tangible - - 215
fixed assets ---------- ---------- ----------
Net cash inflow from financing 426 1,581 5,097
---------- ---------- ----------
Increase / (decrease) in cash 625 574 485
---------- ---------- ----------
CASHBOX PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2006
1. Accounting policies and basis of presentation of financial information
These financial statements have been prepared under the historical cost
convention and in accordance with applicable United Kingdom Accounting Standards
on a going concern basis and should be read in conjunction with the Group's
Annual Accounts for the year ended 30 June 2006. The results for the six months
ended 31 December 2006 and the comparative figures for the six months ended 31
December 2005 are unaudited.
The interim report for the six months ended 31 December 2006 was approved by the
Board on 29 March 2007.
This interim financial information does not constitute the Company's statutory
accounts within the meaning of section 240 of the Companies Act 1985. The
financial information for the year ended 30 June 2006 has been extracted from
the statutory accounts which have been filed with the Registrar of Companies.
The auditors' report in those accounts was unqualified but included an emphasis
of matter regarding Going Concern. The auditors' report did not contain a
statement under s237 (2) or (3) Companies Act 1985.
Change of accounting policy
The Company has applied the requirements of Financial Reporting Standard No 20
Share-based payment, which it has adopted for the first time with effect from 1
July 2006 as its application is obligatory for accounting periods commencing on
or after 1 January 2006.
The Group issues equity-settled share-based payments including share options and
warrants to certain Directors and employees. 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
profit and loss account 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. The effect of
this is to increase costs for the six months ended 31 December 2006 by £117,000.
The prior period comparatives have been restated resulting in an increase in
costs for both the six months and year ended 30 June 2006 of £75,000 being
£71,000 of ordinary and £4,000 exceptional costs. There was no impact on opening
reserves at 1 July 2005 as no equity-settled share-based payments were made
prior to March 2006.
2. Interest payable and similar charges
unaudited unaudited
6m ended 6m ended Year ended
31-12-06 31-12-05 30-6-06
£'000 £'000 £'000
Bank loans and
overdrafts - 126 203
Supplier interest - 23 46
Other loans 5 1 5
Finance lease
interest and
other charges 73 - -
--------- --------- ---------
78 150 254
--------- --------- ---------
3. Loss per Share
Basic and diluted loss per share has been calculated on the basis of losses
after taxation of £1,625,000 (2005: £927,000) and 61,409,143 1p ordinary shares
(2005: 34,068,000 equivalent 1p ordinary shares) being the weighted average
number of shares in issue during the six month period. The exercise of share
options would have the effect of reducing the loss per ordinary share and is
therefore not dilutive under the terms of Financial Reporting Standard 22.
4. Creditors falling due within and after one year
unaudited unaudited
31-12-06 31-12-05 30-6-06
£'000 £'000 £'000
Within one year
Director loans - 600 -
Trade creditors 924 1,435 592
Taxation and social security 307 97 45
Amounts due under finance leases 973 - 172
Advances from lease provider 500 - -
Other creditors 473 462 469
Accruals and deferred income 1,688 1,213 947
--------- --------- ---------
4,865 3,807 2,225
--------- --------- ---------
After one year
Amounts due under finance leases - - 679
--------- --------- ---------
- - 679
--------- --------- ---------
The finance lease is provided by GCVF and is for a period of five years from the
date of execution, 30 June 2006, and as per a facility letter dated 23 March
2006 for a total facility of £6.1m. On 13 November and 18 December 2006, two
cash advances were received but no accompanying documentation has been provided
or executed and accordingly these balances are treated as Cash Advances rather
than finance leases.
Following GCVF's failure to provide funds on a timely basis, and in accordance
with the facility letter of 23 March 2006, it is expected that the finance
leases and cash advances will be repaid within the next 12 months and
accordingly balances previously due after one year have been reclassified.
5. Reconciliation of movements in shareholders' funds
unaudited unaudited as restated
6m ended 6m ended Year ended
31-12-06 31-12-05 30-06-06
£'000 £'000 £'000
Loss for the period (1,625) (927) (3,637)
Share based payments - credit to
reserves 117 - 645
---------- ---------- ----------
Profit and loss account (1,508) (927) (2,992)
Issue of shares - - 234
Premium on shares issued - - 3,880
Capital (merger) reserve - 1,706 1,706
Warrants reserve - - 37
---------- ---------- ----------
Net (decrease) / increase in
shareholders' funds (1,508) 779 2,865
---------- ---------- ----------
Shareholders' deficit at beginning
of the period as previously stated (180) (3,045) (3,045)
Prior period adjustments:
Share based remuneration charge 75 - -
Share based payments - credit to
reserves (75) - -
---------- ---------- ---------
Shareholders' deficit at beginning
of the period as restated (180) (3,045) (3,045)
---------- ---------- ---------
Shareholders' (deficit)/funds at
end of period (1,688) (2,266) (180)
--------- --------- ---------
6. Reconciliation of operating loss to net cash outflow from operating
activities
unaudited unaudited as restated
6m ended 6m ended Year ended
31-12-06 31-12-05 30-6-06
£'000 £'000 £'000
Operating loss (1,558) (783) (3,396)
Share based remuneration
charge 117 - 645
Depreciation 130 48 98
(Increase) /Decrease /
in stock (5) 163 189
Decrease /
(Increase) in debtors 834 (325) (1,294)
Increase /
(Decrease) in creditors 1,334 155 (569)
---------- ---------- ----------
Net cash outflow
from operating
activities 852 (742) (4,327)
---------- ---------- ----------
7. Analysis of changes in net debt
unaudited unaudited unaudited unaudited unaudited unaudited
Cash in Bank Total cash Debt due Debt due Total net
hand and overdraft and within one after one debt
at bank overdraft year year
£'000 £'000 £'000 £'000 £'000 £'000
At 30 June
2006 536 - 536 (172) (679) (315)
Cash flows 625 - 625 625
Cash advances
from lease
provider (500) - (500)
Funds due from
lease provider (192) (192)
Finance lease
repayments 74 - 74
Non cash items (4) (4)
Reclassificati
ons - - - (679) 679 -
-------- -------- -------- -------- -------- --------
At 31 December
2006 1,161 - 1,161 (1,473) - (312)
-------- -------- -------- -------- -------- --------
The funds due from lease provider relate to amounts invoiced to the lease
provider as part of the sale and leaseback of ATMs. A corresponding amount is
included in Debtors.
8. Dividend
The Directors are not able to declare a dividend.
9. Subsequent events
On 8 February 2007 the Company arranged a series of short term loans from
directors and a number of existing shareholders totalling £0.8m repayable on 28
days notice with interest payable at base rate plus 0.5%.
On 26 March 2007 the company signed a £2.0m 15% loan note repayable in three
years time with interest payable quarterly in arrears with Finsbury Nominees
Limited, a client of Fairfax I.S. plc, a UK investment bank.
10. Contingencies
The Company's Subsidiary has entered into a finance leasing agreement with GCVF.
The liabilities of the Company's Subsidiary pursuant to such agreement are
secured by fixed and floating charges and guarantees given by the Company and
Company's Subsidiary. Under the terms of the agreement, penalty clauses up to a
maximum of the outstanding charges discounted at 3% are payable on early
termination.
10. Contingencies (continued)
In December 2003 Hanco ATM Systems Limited ('Hanco') made significant claims
against Carl Thomas and Cashbox ATM Systems Limited ('Subsidiary') including an
allegation that Carl Thomas diverted a business opportunity from Hanco to
Cashbox, namely a contract for the installation of ATMs with the Thresher Group.
Both the Company's Subsidiary and Carl Thomas vigorously denied these claims.
The Company and the Company's Subsidiary have obtained a joint and several
indemnity from both Carl Thomas and Anthony Sharp against any liability of the
Company or the Company's Subsidiary arising from or in connection with this
litigation to pay any sum for damages awarded in respect thereof by a court of
competent jurisdiction (including all sums payable to the legal advisers of
Hanco) or for any agreed settlement in respect thereof.
11. Non-GAAP terms
EBITDA is earnings before interest, tax, depreciation, amortization, exceptional
items and minority interests and equals operating income before exceptional
items plus depreciation and amortization. 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 UK GAAP and may not be
comparable with similar measures used by others.
unaudited unaudited as restated
6m ended 6m ended Year ended
31-12-06 31-12-05 30-6-06
£'000 £'000 £'000
Operating loss (1,558) (783) (3,396)
Add back:
Exceptional items - - 1,179
Share based payments charge 117 - 71
Depreciation 130 48 98
--------- --------- ---------
EBITDA (1,311) (735) (2,048)
--------- --------- ---------
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