5th Apr 2005 07:01
Datacash Group PLC05 April 2005 DataCash Group Plc: DATA / Index: AIM / Sector: Support Services 5 April 2005 DATACASH GROUP PLC ('DataCash' or 'the Company') FINAL RESULTS DataCash Group Plc, the AIM listed payments service provider, announces itsresults for the 12 months to 31 December 2004. • Turnover up 30% to £4.64m (2003: £3.58m) • Adjusted pre-tax profit * up 102% to £1.52m (2003: £752,000) - equivalent to an underlying EPS of 3.40p (2003:1.71p) • Strong cash balance of £3.21m (2003: £1.55m) • Continued strong growth of the core Card Holder Not Present transaction processing business - transaction volumes increased by more than 50% year-on-year • Ongoing investment in technology infrastructure and new product offerings • Gaming sector continues to play an important role but strong growth also from retail customers - other sectors such as travel and ticketing should provide additional growth • Good start to 2005 with further increases in transaction activity and a healthy pipeline of target customers • Maiden dividend payment of 0.5p per share proposed * before goodwill amortisation, National Insurance provision on share optiongain and exceptional items. CHAIRMAN'S STATEMENT 2004 was another encouraging year for DataCash and, as well as increasingpre-tax profits, before goodwill amortisation, National Insurance provision onshare option gain and exceptionals ("Adjusted pre-tax profits") by over 100% andmore than doubling our net cash balances, I am pleased to announce that we areable to propose the first ever dividend of 0.5p per share, from the Group. Turnover grew from £3.58m to £4.64m in 2004, reflecting the continued growth ofthe core business of Card Holder Not Present transaction processing. Costs alsoincreased as we recruited a Chief Executive and additional sales staff to enablestrong future revenue growth as well as investing in our technologyinfrastructure to provide enhanced service and support to our existingcustomers. Adjusted pre-tax profits grew by 102% to £1.52m (2003: £752,000) andunderlying earnings per share were 3.40p (2003: 1.71p). We continue to benefitfrom accumulated tax losses. Cash balances grew by £1.66m and at 31st December2004 were £3.21m (2003: £1.55m). Despite the historic tax losses, the Group has some modest distributablereserves, and the Board recommends a maiden dividend be paid out of 2004earnings of 0.5p per share. The core Card Holder Not Present (CNP) payment processing business of DataCashgrew strongly in 2004, and transaction volumes increased by more than 50%year-on-year from 27 million to 41 million. That growth rate has continued sofar in 2005. Our clients, especially in the gaming arena, are requiring increasinglysophisticated and varied solutions to their global business needs. We haverecently announced new product offerings, through our partners, in the areas ofIdentity Verification and Chargeback Management. These together with otherinitiatives in, for example, international payments and dynamic currencyconversion, are expected to provide new revenue opportunities from both ourexisting and prospective customers. In 2004 we continued to invest in our production systems in order to provide theworld-class reliability, functionality and overall service that our customersrequire. Our strategy in the Card Holder Present (CHP) market has been to sell viapartners and here our relationship with IBM and its partners is showing goodpromise. We remain committed to offering a complete solution to the paymentprocessing needs of customers who have both an online and high street presence.We believe that our CHP solution offers significant benefits to particularsegments of the market and are confident that our investment will reap rewards. None of the achievements of 2004 could have been achieved without the commitmentand talent of our employees (36 people as at 31st December 2004). The Board andI would like to thank them for their contribution. Jane Reedy, who was a founder of Corporate Executive Search International, theAIM-listed company into which DataCash merged in March 2000, has indicated herdesire to step down from the Board at the AGM in May, although she will remainan employee with the Group, performing her vital role of new businessintroduction. She has been on the Board since 1997, and I would like to takethis opportunity to thank her for the contributions she has made in that period. 2005 has begun strongly and the Board of DataCash Group believe that this willbe another successful year of progress for your Company. David BaileyChairman CHIEF EXECUTIVE'S REPORT When I joined DataCash in July 2004 I was encouraged to find a Card Holder NotPresent business that had a strong market position in the UK, reliabletechnology, growing revenues and plenty of opportunity for growth. Like allservice businesses our reputation with customers is key, and I found DataCashhad, given the fragmented marketplace, a good reputation. Our gaming customers,in particular, demand very high reliability, service availability andincreasingly broad functionality. DataCash has built its reputation on providinga rapid and reliable response to these demands. My task is to build on the achievements so far and develop a platform forincreasing our revenue growth, our range of services and enhancing ourreputation with both existing and prospective customers. The number of transactions processed in 2004 grew by more than 50% from 27m to41m. Interestingly, when DataCash first came to the market in March 2000, itprocessed about 8,000 transactions per day. We now process about 140,000 on anormal day, with exceptional days exceeding 250,000 transactions. DataCash's Card Holder Not Present (CNP) business continued to perform well in2004 with adjusted pre-tax profits up over 100% to £1.52m (before goodwillamortisation, National Insurance provision on share option gain andexceptionals) and revenues up by £1.07m to £4.64m. The National Insuranceprovision relates to employer's NI on share option gains. This liability willnot occur on any new share options issued in future. The majority of the revenue growth was from transactions and we expect furthergood growth in transaction volumes in 2005. Although the vast majority of thesetransactions related to standard credit and debit card processing, we wereencouraged by the growth of transactions from our other products includingdirect debits and direct credits which in total grew by 300% to 840,000. Theseproducts act as revenue streams and also as differentiators from ourcompetitors. While the majority of our transactions continue to come from the gaming sectorand growth from our gaming customers has been strong, the relative importance ofother vertical market sectors grew. In particular we saw strong growth from ourretail customers. Other sectors such as travel and ticketing should providefurther non-gaming related growth in 2005. The different requirements of sectors such as travel and ticketing has resultedin DataCash further developing its 'partner' model to enable us to moreeffectively target sectors where either the end-users are individually too smallfor DataCash to deal with directly or where there is a requirement to integratewith an industry standard 'platform' where payments are an embedded part of thatsolution. Consequently DataCash has been recruiting personnel with experience ofselling via the partner model to further exploit the exciting opportunities inthese sectors. During the year DataCash continued to add to its product set by developing bothnew products and services and continuing to integrate with 'best of breed' thirdparty services that are accessible by customers through a single integrationwith the DataCash Payment Gateway. These enhancements and extensions helpdifferentiate DataCash from its direct competitors and provide evidence of theadvantages of the outsourced ASP model. We currently offer fraud screening, 3DSecure services, chargeback management, gift vouchers and age/identityverification. Further products such as Dynamic Currency Conversion and links toa variety of payment 'wallets' are expected to be added shortly. Some of our customers are increasingly requiring an international dimension tothe payment service, in particular the gaming, e-tail and travel sectors. Thisfunctionality is being added by developing commercial relationships withpartners where transactional volumes are not significant enough to warrantdirect development of these services. Integration with payment wallets is partof this strategy, solving the problem of taking payments in the more remote partof the world where direct integration with the banking networks is notjustifiable for cost or practical reasons. In our statements in 2004 we talked about our efforts to make inroads into theCard Holder Present (CHP) market. We have completed the initial phase of ourstrategy, which is to build, deliver and maintain an outsourced, hosted paymentplatform. We are now signing up a number of channel partners which will extendthe IBM and Triangle relationships announced last year. These partners will usethe DataCash processing platform as a key component in a fully integrated pointof sale solution to address the CHP market. We are confident this strategy willdeliver good revenue opportunities though we cannot announce any contracts atthis stage. A large part of our mid-tier retail target market is still reviewingthe various options, and there are very specific market opportunities where ourproposition is particularly suitable. Operationally DataCash had another good year with minimal system downtime. Thisremains one of the differentiators to our service. The most significant infrastructure investment DataCash made in the last yearwas in the deployment of a second independent payment gateway designed tofurther enhance our system availability and reliability and to eliminatemaintenance and upgrade downtime. During 2004 we also implemented DDoS attackprevention measures, built an MPLS backbone between the two data centres,developed a CHP solution so that we are now Chip and PIN enabled and invested inadditional operations staff to further reinforce our operational excellence. This investment, along with the expansion of our salesforce and management,increased costs from 2003 by approximately 13% to £3.2m. A similar increase inour cost base is expected in 2005. 2005 has started well, with further increases in transaction activity and a goodpipeline of target customers. DataCash is in a strong position, with rising cashbalances and good profitable revenue growth. It is also pleasing that we havebeen able to announce our first dividend payment out of our 2004 earnings. TheGroup is looking to the future with confidence. Terry CaveChief Executive DataCash Group plc Consolidated Profit and Loss AccountFor the year ended 31 December 2004 Year ended Year ended 31 December 31 December 2004 2003 £000 £000 Turnover 4,643 3,575 Administrative expenses Amortisation of Goodwill (1,975) (1,975) National insurance on share option charge (125) (17) Release of provisions - exceptional - 729 Other operating expenses (3,210) (2,846) _______ _______Total administrative expenses (5,310) (4,109) Operating loss (667) (534) Interest receivable and similar income 87 23 Amounts written off investments - exceptional - (160) _______ _______Loss on ordinary activities before taxation (580) (671) Taxation 228 930 _______ _______(Loss)/profit on ordinary activities after taxation (352) 259 Dividend (224) - _______ _______Retained (loss)/profit for the year (576) 259 ======= =======Basic (loss)/earnings per share (0.79)p 0.59 pDiluted (loss)/earnings per share (0.79)p 0.58 p Diluted adjusted earnings per share 3.91 p 3.75 p Consolidated Balance SheetAs at 31 December 2004 31 December 31 December 2004 2003 £000 £000 Fixed assetsIntangible assets 10,312 12,287Tangible assets 190 126Investments - - _______ _______ 10,502 12,413 _______ _______ Current assetsDebtors 741 653Debtors - deferred tax asset 1,175 930Cash at bank and in hand 3,206 1,548 _______ _______ 5,122 3,131 _______ _______ CreditorsAmounts falling due within one year (1,411) (908) _______ _______ Net current assets 3,711 2,223 _______ _______ Total assets less current liabilities 14,213 14,636 Provisions for liabilities and charges (125) (22) _______ _______ 14,088 14,614 ======= =======Capital and reservesCalled up share capital 448 447Share premium account 9,750 9,701Merger reserve (124) (124)Other reserve 18,889 18,889Profit and loss account (14,875) (14,299) _______ _______ Equity shareholders' funds 14,088 14,614 ======= ======= Company Balance SheetAs at 31 December 2004 31 December 31 December 2004 2003 £000 £000 Fixed assetsInvestments 472 472 _______ _______ 472 472 _______ _______ Current assets Debtors 7,613 8,812Debtors - deferred tax asset 40 -Cash at bank and in hand 2,785 1,383 _______ _______ 10,438 10,195 _______ _______ Creditors Amounts falling due within one year (346) (95) _______ _______ Net current assets 10,092 10,100 _______ _______ Total assets less current liabilities 10,564 10,572 Provisions for liabilities and charges - - _______ _______ 10,564 10,572 ======= ======= Capital and Reserves Called up share capital 448 447Share premium account 9,750 9,701Profit and loss account 366 424 _______ _______ Equity shareholders' funds 10,564 10,572 ======= ======= Consolidated Cash Flow StatementFor the year ended 31 December 2004 Year ended Year ended 31 December 31 December 2004 2003 £000 £000 Net cash inflow from operating activities 1,678 736 Returns on investments and servicing of financeInterest received 87 23 _______ _______ Net cash inflow from returns on investmentsand servicing of finance 87 23 _______ _______ Capital expenditure and financial investmentPurchase of tangible fixed assets (158) (79)Sale of tangible fixed assets 1 - _______ _______ Net cash outflow from capital expenditure and financial investments (157) (79) _______ _______ Net cash inflow before management of liquid resources and financing 1,608 680 Management of liquid resourcesDecrease/(increase) in short term bank deposits 112 (453) _______ _______ Net cash inflow/(outflow) from management of liquid resources 112 (453) _______ _______ FinancingExercise of share options 50 201 _______ _______ Net cash inflow from financing 50 201 _______ _______ Increase in cash in the year 1,770 428 ======= ======= Reconciliation of Net Cash Flow to Movement in Net FundsFor the year ended 31 December 2004 Year ended Year ended 31 December 31 December 2004 2003 £000 £000 Increase in cash in the year 1,770 428 Cash inflow/(outflow) from management of liquid resources (112) 453 _______ _______ Movement in net funds 1,658 881 Opening net funds 1,548 667 _______ _______ Closing net funds 3,206 1,548 ======= ======= DataCash Group plc Notes To the Financial StatementsFor the year ended 31 December 2004 1. Basis of Preparation The results for the year ended 31 December 2004 have been prepared on accountingbases and policies which are consistent with those used in the preparation ofthe financial statements of the Group for the year ended 31 December 2003 The above financial information does not constitute statutory accounts asdefined by section 240 of the Companies Act 1985. It is an extract from the 2004financial statements, which have not yet been filed with the Registrar ofCompanies. The Auditors' Report, dated 05 April 2005, on the financialstatements for the year ended 31 December 2004, which received an unqualifiedopinion, does not contain a statement under section 237(2) or (3) of theCompanies Act 1985. The comparative information is an extract from the statutoryaccounts for the financial year ended 31 December 2003. Those accounts, on whichthe Auditors issued an unqualified opinion, in accordance with section 235 ofthe Companies Act 1985, have been filed with the Registrar of Companies. 2. Loss per Share The Basic and Diluted Loss Per Share is based on the loss on ordinary activitiesafter tax of £352,000 (December 2003: profit £259,000). The weighted averagenumber of ordinary shares outstanding during the period used in the calculationof Basic Loss Per Share was 44,737,684 (December 2003: 43,981,347). A fully diluted earnings per share, which assumes the full exercise of shareoptions, has been calculated on 44,737,684 (2003:44,883,672) Ordinary shares.Due to the loss incurred in 2004, there is no dilutive effect from the issue ofshare options. An adjusted earnings per share figure is presented below. The directors believethat the adjusted Earnings Per Share figure assists in the presentation of thegroup's underlying performance. Year ended Year ended 31 December 31 December 2004 2003 £000 £000 Profit/(Loss) on ordinary activities after taxation (352) 259 Amortisation of Goodwill 1,975 1,975Provision for national insurance on share option gains 125 17Release of provisions - exceptional - (729)Provision for investment - exceptional - 160 _______ _______ Profit/(loss) on ordinary activities before administration items 1,748 1,682 ======= ======= No. of shares No. of shares Weighted average number of shares 44,737,684 43,981,347Dilutive effect of options - 902,325 __________ __________ 44,737,684 44,883,672 ========== ========== 3. Reconciliation of operating loss to operating cash flows Year ended Year ended 31 December 31 December 2004 2003 £000 £000 Operating loss (667) (534) Amortisation 1,975 1,975Depreciation 94 123(Profit) / loss on disposal of fixed assets (1) -Increase in debtors (88) (12)Increase/(decrease) in creditors 262 (51)Increase/(decrease) in provisions 103 (765) _______ _______ Net cash inflow from operating activities 1,678 736 ======= ======= NOTE A copy of the full accounts will be sent to shareholders on the Register OfMembers as at 05 April 2005 or can be obtained from the Secretary, DataCashGroup plc, Descartes House, 8 Gate Street, London WC2A 3HP. ANNUAL GENERAL MEETING The Company's AGM will be held on Tuesday, 24 May 2005 at 12.00 noon atDescartes House, 8 Gate Street, London WC2A 3HP Contacts: Keith Butcher FD, DataCash Group Plc 0870 7274 760Isabel Crossley St Brides Media & Finance Ltd 020 7242 4477 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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