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XN Checkout Holdings (XNC)

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Tuesday 08 March, 2005

XN Checkout Holdings

Final Results

XN Checkout Holdings PLC
08 March 2005

Press Release                                                       8 March 2005

                            XN Checkout Holdings Plc

                         ('XN Checkout' or 'the Group')

            Preliminary Results for the year ended 31 December 2004

XN Checkout Holdings Plc (AIM: XNC), a market leader of Electronic Point of Sale
('EPOS') solutions to the leisure, retail and hospitality markets, today
announces its Preliminary Results for the year ended 31 December 2004.


  •    £3.9 million profit before tax swing from (£2.2 million) to £1.73 million

  •    Turnover up 28% to £18.5 million (2003: £14.3 million)

  •    Record growth in Hospitality division

  •    Gaming division poised for significant growth

  •    New acquisitions deliver new contract wins

  •    High visibility of 2005 revenues in all divisions

Commenting on the Preliminary Results, Ed Dayan, Chief Executive of XN Checkout
Holdings plc, said: 'We are extremely pleased with the results for the year
ended 31 December 2004.  They indicate that the Group has returned to growth and
profitable trading and we look forward to continuing improvements in financial
performance through 2005 and beyond. '

'The acquisitions of ACE, DRS and XN Africa undertaken post year-end will
augment the improved trading currently being experienced within the hospitality
sector and provide the Group with continuing profitable opportunities in a
number of related market areas.'

'Our visibility of future business is at an all time high and we look forward to
delivering continuing profitable growth to our Shareholder base. '

For further information:
XN Checkout Holdings Plc
Ed Dayan, Chief Executive                                   +44 (0) 1582 869 610                               

Daniel Stewart & Co.
Ruari McGirr                                           Tel: +44 (0) 20 7374 6789               

Media enquiries:
Henry Harrison-Topham / Chris Lane                     Tel: +44 (0) 20 7398 7700                     

Chairman's Statement

Trading Results

I am delighted to report our first set of Preliminary Results since our
Admission to AIM on 29 June 2004.

The Group's success during 2004 is due to a combination of continued investment
in intellectual property over the last three years together with a renewed
confidence in the Company's products and financial viability from both existing
and new customers.  Additionally, the benefits of a number of cost saving
initiatives undertaken during 2002 and 2003 are now being fully recognised.

Through its innovative solutions and strengthened finances, the Group has
secured a number of long term contract wins from a wide range of customers
within the Hospitality arena.  Additionally, it has invested in a number of
related areas, leveraging on both its hardware and software development
expertise, in order to further its reach into such areas as the hotel and gaming
environments.  Specifically, during the year, the Group set up a separate Gaming
Company (XN Entertainment Limited).  This company has taken the Group's touch
screen expertise and applied it to solutions within the casino industry.  In its
first year of operations it has been successful in obtaining installations with
Gala Casinos, Stanley Leisure and Sun International in South Africa.

The Group's Preliminary Results can be summarised as follows:

For the year ended 31 December                                         2004                        2003
                                                                         £m                          £m
                                                                (Unaudited)                 (Unaudited)
Turnover                                                               18.3                        14.3
Gross Margin                                                            9.8                         6.4
Profit on ordinary activities before tax                                1.7                       (2.2)
Earnings per share                                                     9.7p                     (14.7)p

It is pleasing to report that the Group's improved performance in the year has
arisen from a combination of increased revenues, improved gross margins and
tight control of overheads.  Hospitality revenues, which comprised 74 per cent
of the Group's revenues, increased by 43 per cent following a doubling in new
project activity and small increase in recurring revenues.  Gross margins have
benefited from the sale of a greater proportion of internally developed
solutions.  The Group currently has three core hospitality software solutions,
giving it the ability to address areas as diverse as managed and leasehold
sites, nightclubs, ferries, contract catering, restaurants, coffee shops and
retail outlets.

Management and Staff

The Group is served by a small but extremely focussed Board.  At the time of  my
appointment as Chairman prior to the listing, Ed Dayan has resumed in the role
of CEO and has continued to further the Group's reach into both its existing and
new markets.  He has been ably assisted by the two other Board members, Maarten
Hemsley and Chris Ford.  The senior management currently in place are extremely
talented and looking to continue to build on the Group's current successes and


The Company has made an excellent start in enacting its strategy of extending
its core managed pub systems business into other related areas of the
hospitality industry, winning a number of new contracts in such sectors as
hotels, restaurants, night clubs, ferry services and retail chains.

We have made a promising debut in the casino gaming systems field, delivering
innovative touch screen roulette systems to some of the biggest names in this
industry, including Gala, Stanley Leisure and Sun International in South Africa.

Our Company has a proven history of turning technical innovation into a
profitable business stream, and I am confident that the numerous activities in
which we are currently involved will continue to add to this reputation.

In widening its product and market focus, the Group has identified the Hotel,
Gaming and Retail sectors as providing the most scope for expansion.  Building
on the back of wins with the Paramount Hotel Group and Medina Hotels in
Australia, investment continues in the Hotel sector with a view to promoting an
integrated PMS and POS solution into both medium and larger chains.

Through its investment in XN Entertainment, the Group has successfully entered
the Gaming environment with its Touch Control Roulette, Winning Number Displays
and Cashless solutions.  The recent acquisitions of African Casino Equipment
(ACE) and XN Africa have secured the technology, expanded the product portfolio
and strengthened a number of key customer relationships in this area.  The
Gaming division is set to make a strong impact on Group profitability in 2005.

Current Trading and Outlook

As a Board, we are extremely pleased with the results for the year ended 31
December 2004.  They indicate that the Group has returned to profitable trading
and we look forward to continuing improvements in financial performance through
2005 and beyond.  The Board is committed to a continuing investment in Research
and Development activity and extending its reach into sectors related to its
core hospitality base.

The acquisitions of ACE, DRS and XN Africa undertaken post year-end will augment
the improved trading currently being experienced within the hospitality sector
and provide the Group with continuing profitable opportunities in a number of
related market areas.

Our visibility of future business is at an all time high and we look forward to
delivering continuing profitable growth to our Shareholder base.

Christopher Moore


8 March 2005

CEO Report

Our results for 2004 emphatically point to XNC's return to strong profitable

We adopted a strategy of diversification in 2002 by building on our two key
strengths at that time - our market leader position arising from a highly
successful 10 year track record within the UK managed pub till systems sector -
and our strength and depth of proven technical expertise and capability for
designing and manufacturing innovative, integrated hardware and software
technology solutions.

This strategy of diversification led us into related hospitality areas (such as
hotels, nightclubs and restaurants), casino gaming and retail, providing the
Group with multiple springboards for strong profitable growth in both local and
international markets, as evidenced by the increasing number of new contract
wins at home and overseas.

Our continued focus on numerous parallel, intensely targeted R&D investments in
each of the market segments in which we operate has given rise to a richness of
IPR which is being increasingly profitably exploited by each of the Group's
divisions.  In addition to the investment in R&D for the new market segments
being addressed by XNC, significant investment has been made into creating an
incremental upgrade path for our managed pub user base.  This incremental spend
approach has been very well received by our existing users at a time when large
capital spend budgets are scarce.

The ability of XNC to maintain and incrementally update and enhance its
solutions within the managed pub sector (some systems are over 15 years old) has
considerably strengthened XNC's credibility and is proving valuable in winning
new business.

We believe that by maintaining more emphasis on being 'technology creators'
rather than 'technology traders', we can deliver to our Shareholders consistent
opportunities for sustained and exciting profitable growth into the future.


New hospitality business revenues in 2004 nearly doubled 2003 levels.

In our December 2004 trading update, we detailed a number of hospitality
projects which were underway.  I am pleased to report that these projects have
continued to deliver to expectations and that consequently the current year has
started with a high level of revenue visibility.

Having selected XN Checkout's DRS (Dynamic Retail System) EPOS System for pilot
in October 2004, Caffe Nero have now installed the system and are operating
successfully in 13 pilot sites including flagship sites in London, Birmingham
and Manchester.

Caffe Nero is the leading operator of Italian-style coffee bars and one of the
fastest growing companies in Europe. The system provided by XNC has been
tailored to meet the specific needs of Caffe Nero and includes centralised (web)
stock and management reporting and Xn9000 touch screen based point of sale till

We announced last month that Pathfinder Pubs (the managed house division of
Wolverhampton & Dudley PLC) had chosen the XNC EPoS solution for their recently
acquired managed estate of Burtonwood Brewery, consisting of  40 managed houses
which are being integrated into the core Pathfinder estate.  The system chosen
is based on the Active Business Series software operating on Xn900 terminals
from XNC.  The rollout is at about the half way point and is progressing well.

Mitchells and Butlers (MAB) have successfully tested XNC products designed to
enhance the capability and prolong the life of their current XNC EPOS systems.
This technology refresh has been supplemented by a number of software
development projects which have been successfully delivered to MAB.

Our installations within the Punch Taverns estate continue to perform well and a
30 outlet initial rollout phase is currently underway into their GRS estate.

A number of other rollout projects are also underway, including Stena Line
Ferries (Europe's largest ferry operator) and the Night Club Company.

We recently announced we had won our first full-scale hotel contract in
Australia with the Sydney-based Toga hospitality group to provide XN Checkout's
own dotPOS Enterprise point-of-sale system in addition to supplying a full
roll-out of the Protel Multi-Property Edition (MPE). This was achieved through
our XN Australia Pty Limited subsidiary.

Following this success, we have strengthened our UK-based sales presence for the
hotel sector and look forward to announcing XNC's part in winning a prestigious
Protel Multi-Property Edition (MPE) cross-border deal in due course.


The Group's presence in gaming was initially established via XNE (XN
Entertainments) and has now been significantly strengthened following the
acquisitions of ACE and XN Africa.  These three operations represent a major
growth opportunity for XNC and the contribution from their combined results will
become increasingly significant moving forward.


In order to accommodate this fast growing part of the business, a new division
is being created, to be called XN Gaming (XNG).  We have recruited a first class
team with proven successful track records gained in the gaming industry in the
three areas of leadership, business and technical development.  This new team at
XNG will assume responsibility for ensuring the Group's resources are fully
leveraged in assisting each gaming entity achieve its performance goals.  In
addition, XNG will coordinate inter gaming company activities, provide business
direction and ensure that new gaming business streams are seamlessly integrated
into this fast growing business. A number of additional opportunities for XNC to
increase its presence in the gaming market are currently being actively studied.


XNC is pleased to announce that, following its acquisition of ACE (Pty) Ltd in
January 2005, an order has been secured by ACE for the purchase of a further
1,500 units of its proprietary SX6000 machine interface unit, for installation
in South America. These interface units replace the standard coin mechanisms in
slot machines with hardware and software which reads cards, thus instantly
converting these machines to coinless operation.  Coupled with the order of 500
units prior to the acquisition, a total of 2,000 units should come online in the
region in the next few months to supplement the 1,000 units already installed.
Once all 3,000 units are in use, recurring revenue in excess of US$1 million per
annum will be generated from system licence fees of ACE's Management Software.
It is anticipated that all the recently ordered units will be in use before the
end of 2005.


I am pleased to announce the acquisition of XN Corporation Africa Pty Ltd (XNA).

XNA is a successful developer and distributor of a range of gaming, hospitality
and retail products and locally represents the XNC and XNE product portfolio.
XNA has recently undergone significant expansion following a number of
successful installations of digital media products, XNE gaming products and
information kiosks into casino units operated by Sun International.

Following these successful implementations over the past year, I am pleased to
report that Sun International are placing further orders with XNA for a range of
XN gaming and digital media solutions to be installed into a number of their
units over the next twelve months. The value of these initial installations over
the next twelve months is expected to exceed US$2 million.

As a result of these successful implementations and the backing of XNC, XNA is
now very well placed to seize the considerable opportunity that exists in the
wider African gaming market.


Since the introduction of XNE to the Gaming market at the International Casino
Exhibition in January 2004 the division's Touch Control Roulette (TCR) software
has been successfully tested by Gala Casinos and Stanley Leisure.

Following a successful implementation of TCR into Gala's Birmingham casino in a
cashless environment, I am pleased to announce that XNE have been awarded
further orders for Gala lounges in other casinos, offering both cashless as well
as a Ticket In-Ticket out TCR solutions, incorporating the ability to load other
applications such as bar ordering and web access within the TCR environment.
These latest installations are scheduled to commence in April 2005.

Following the acceptance of TCR, XNE have developed single and dual screen free
standing cabinets which are capable of running in either Ticket in-Ticket out or
cashless mode.  This latest development places XNE firmly among the contenders
competing for the main gaming floors in the UK and abroad.

XNE also developed winning number displays with which XNA won a large
competitive tender in South Africa.

The first dual screen cabinets and winning number displays were successfully
tested by Stanley Casinos in December 2004 and further sites are now being
scheduled for installation.

XNE dual screen Cabinets and winning number displays are currently being
prepared for evaluation by Grosvenor Casinos at their Hard Rock Casino,
Leicester Square.

The widespread acceptance of XNE products by the Casino player community is
contributing to a high level of repeat orders for their products and is creating
high revenue visibility for 2005.


XNC Korea and XNC Asia (based in Singapore) have been actively selling XN
hospitality hardware and DRS retail software solutions for over three years.
Following our recent acquisition of Dynamic Retail Systems Pty Ltd (DRS), I am
pleased to announce that XNC Asia and DRS have completed a major DRS software
development project for Fujitsu Taiwan.  Fujitsu Taiwan have successfully
piloted the system and are now in the process of configuring DRS to fulfill some
important contract wins which they have recently secured in Taiwan and in China.

Some of the key features of DRS software in addition to its ease of use include
the ability to operate in multi-language, multi-currency environments, multi-tax
regimes, linking stores to their head office in real time mode using either of
the world's two leading data base engines, as required by the customer.  DRS is
also one of the very few products in the world which can be deployed seamlessly
into a diverse retail and hospitality environment. This feature was key in DRS
winning the Stena Line business which was recently announced.

XN Checkout Korea Limited has won a significant retail hardware and services
contract to supply the Korea National Tourism Organisation ('KNTO') with POS
terminals. KNTO, which was established in 1962 as a government-invested
corporation responsible for the Korean tourism industry, had been operating
industry standard POS terminals for a number of years, and following a rigorous
survey of all current POS technology, selected XN Checkout's XN500i dual touch
screen POS terminal.

The installation of 120 XN500i dual touch screen POS terminals, networks and
servers into KNTO's duty-free shops throughout the country, including the
largest unit located at Incheon International airport in Seoul, has been
completed successfully. It is particularly encouraging when our products win in
fiercely competitive markets which include the world's best known IT names and
strong local competition.

We recently announced the contract win to supply the entire Stena Line fleet.
This contract was won with DRS.  Following the success of our DRS retail
software in Asia and Stena Line, we are planning to officially launch DRS in the
UK this summer.


XNC staff  faced a significantly higher than usual workload during 2004 in
connection with our successful listing on AIM on 29 June 2004.  The Directors
would like to extend their congratulations and warm appreciation to all XNC
staff for achieving the double success of a major turnaround in the Company's
financial performance and a successful listing in the same year.  The Directors
would also like to pay tribute to all XNC staff partners and family members for
their unstinting support during 2004.

Ed Dayan

Chief Executive Officer

8 March 2005

Financial Review


The financial results reported for the year ending 31 December 2004 are the
first since the Company was admitted to AIM on 29 June 2004.  Immediately prior
to the listing, the Company changed its name from Checkout Holdings PLC.

Operating Results

The reported results for the year indicate revenues of £18.3 million (2003:
£14.3 million) and profit before tax of £1.7 million (2003: £2.2 million loss).
The retained profit for the year totalled £2.6 million following the recognition
of a deferred tax asset of £0.8 million.  The fund raising resulting from the
listing and subsequent placing, together with the improved profitability have
strengthened the balance sheet such that net assets at 31 December 2004 have
increased to £6.4 million from a net liability position of £3.9 million at the
end of 2003.

Profit and Loss Account
For the year ended 31 December                                           2004                        2003
                                                                           £m                          £m
Turnover                                                                 18.3                        14.3
Cost of Sales                                                           (8.5)                       (7.9)
Gross Margin                                                              9.8                         6.4
Overheads                                                               (7.9)                       (8.4)
Operating profit/(loss)                                                   1.9                       (2.0)
Interest Payable                                                        (0.2)                       (0.2)
Profit/(loss) on ordinary activities before tax                           1.7                       (2.2)
Tax on profit on ordinary activities                                      0.8                           0
Profit/(loss) on ordinary activities after tax                            2.5                       (2.2)
Minority Interests                                                        0.1                           0
Retained Profit/(Loss) for the year                                       2.6                       (2.2)
Earnings per share                                                       9.7p                     (14.7)p

Revenues in 2004 have been driven by a strong performance from the Hospitality
division.  New project revenue has more than doubled while there has been a
modest increase in the level of recurring revenues.  New product solutions have
been delivered to both new and existing customers and have received very
positive receptions.

Gross margins in the year have improved to 54 per cent (2003: 45%) mainly as a
result of the roll out of products incorporating the Group's new software and
hardware solutions.  Three new hardware products shipped for the first time in
2004, together with the first sales of the Group's new web based POS software,
which gave the Group the opportunity to benefit from its continuing investment
in intellectual property.  Additionally, gross margins benefited from the
strengthening of Sterling, which impacted on component pricing.

Overheads have remained under tight control, falling by 6 per cent from the
previous year.  A number of cost saving initiatives have been undertaken during
2002 and 2003 and the full benefit of these were finally recognised during 2004.
The full reduction in overheads in the year is masked to an extent by the
investment undertaken in building up the Group's gaming and hotel divisions.
Expenditure in these areas has increased by £0.6 million in 2004.  The Group
continues to invest £2 million a year in research and development activities,
all of which are written off as they are incurred.

Interest has been paid during the period on various long and short-term loans.
All but one of these have been paid off in the period and three sets of
convertible loan notes totalling £0.2 million were converted into equity shortly
before the year end.  Interest costs are therefore set to reduce substantially
during 2005.

The Group has tax losses carried forward of £9.3 million.  The return to
profitability has provided the opportunity to recognise a deferred tax asset,
which has strengthened the balance sheet by £0.8 million.

The Directors are not recommending the payment of a dividend in respect of the
year just ended.

Balance Sheet

The balance sheet at 31 December 2004 shows net assets of £6.4 million compared
to net liabilities at the previous year-end of £3.9 million.  The Group has
raised £7.6 million of finance (net of costs) during the year through the
listing on 29 June 2004 and a subsequent placing on 1 October 2004.  As a
result, net debt at the year-end had reduced to £0.4 million and the Group had
cash balances of £1.7 million.  Despite the Group's profitability, cash of £2.4m
has been consumed from operating activities during the period.  The Group has
recovered from a financially distressed position and, as such, has needed to re
balance its working capital position.

A further placing of £5 million has been carried out since the year-end.


Subsequent to the year-end, the Group has made three acquisitions.  Ace Casino
Equipment ('Ace'), a gaming company specialising in cashless solutions was
acquired in January 2005.  DRS, a retail software specialist based in Australia
was acquired in February 2005 and XN Corp Africa Pty Ltd, a distribution Company
specialising in Gaming and POS solutions and based in South Africa was acquired
in March 2005.

Group Profit and Loss Account
For the year ended 31 December                                               2004             2003
                                                                               £m               £m
Turnover                                                                     18.3             14.3
Cost of sales                                                               (8.5)            (7.9)
Gross profit                                                                  9.8              6.4
Distribution costs                                                          (0.7)            (0.6)
Administrative expenses                                                     (7.2)            (7.8)
Group operating profit/(loss)                                                 1.9            (2.0)

Interest payable and similar charges                                        (0.2)            (0.2)
Profit /(loss) on ordinary activities before taxation                         1.7            (2.2)
Tax on profit /(loss) on ordinary activities                                  0.8                -
Profit /(loss) on ordinary activities after taxation                          2.5            (2.2)
Minority interests                                                            0.1                -
Retained loss for the financial year                                          2.6            (2.2)
Retained profit brought forward                                            (12.0)            (9.7)
Retained profit carried forward                                             (9.4)           (11.9)

Consolidated balance sheet
As at 31 December                                                             2004              2003
                                                                                £m                £m
Fixed assets
Tangible assets                                                                0.9               0.7
Investment in associate                                                        0.2               0.2
                                                                               1.1               0.9
Current assets
Stocks                                                                         2.9               2.1
Debtors                                                                        7.0               3.0
Cash at bank and in hand                                                       1.7               0.6
                                                                              11.6               5.7
Creditors: Amounts falling due within one year                               (6.3)              (8.0
Net current assets                                                             5.3             (2.3)
Total assets less current liabilities                                          6.4             (1.4)
Creditors : Amounts falling due after one year                                   -             (2.5)
Provisions for liabilities and charges                                           -                 -
Net assets                                                                     6.4             (3.9)

Capital and reserves                                                             -                 -
Called up share capital                                                        2.4               -
Share premium account                                                         13.4               8.1
Profit and loss account                                                      (9.4)            (12.0)

Total shareholders' funds                                                      6.4             (3.9)

Group cash flow statement
For the year ended 31 December                                                  2004          2003
                                                                                  £m            £m

 Net cash outflow from operating activities                                    (2.4)         (1.1)

 Returns on investment and servicing of finance
 Interest paid                                                                 (0.3)         (0.2)

 Net cash (outflow)/from returns on investments and servicing                  (0.3)         (0.2)
 of finance

 UK corporation tax paid                                                           -           0.1
 Tax recovered                                                                     -           0.1

 Capital expenditure
 Purchases of tangible fixed assets                                            (0.3)         (0.2)

 Net cash outflow for capital expenditure                                      (0.3)         (0.2)

 Net cash outflow before use of liquid resources and financing                 (3.0)         (1.4)


 (Decrease)/increase in borrowings                                             (0.7)           1.4
 Equity shares issued                                                            6.3             -
 Expenses arising on issue of shares                                           (0.7)             -
 Net cash (outflow)/inflow from financing                                        4.9           1.4

 Increase in cash                                                                1.9             -

Net Cashflow from operating activities
                                                                                2004          2003
                                                                                  £m            £m
 Operating profit/(loss)                                                         1.9         (2.0)

 Depreciation charge                                                             0.2           0.4

 (Increase)/Decrease in stocks                                                 (0.8)           0.4
 (Increase) in debtors                                                         (3.1)             -
 (Decrease)/Increase in creditors                                              (0.6)           0.1
 Net cash inflow from operating activities                                     (2.4)           1.1

Notes to the preliminary announcement for the year ended 31 December 2004

Note 1:  Basis Of Preparation

The financial information for the year ended 31 December 2004 has not been
audited and does not constitute the Company's statutory financial statements
within the meaning of S240 of the Companies Act 1985.  The statutory accounts
for the year ended 31 December 2004 have not been filed with the Registrar of
Companies nor reported on by the Company's auditors.

Note 2:  Significant Accounting Policies

The significant accounting policies applied in the audited annual financial
statements of the Company as of 31 December 2003 are applied consistently in
these financial statements.

Note 3:  Movement in reserves
                                                                  Share premium       Profit and loss
                                                                      account             account
                                                                       Group                Group
                                                                         £m                   £m

 At 1 January 2004                                                       8.1                -12.0
 Retained profit for the year                                              -                  2.6
 Shares issued                                                           6.1                    -
 Share issue costs                                                     (0.7)                    -
 At 31 December 2004                                                    13.5                 -9.4

                                    - Ends -

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