27th Mar 2008 07:02
Cashbox PLC27 March 2008 Press Release 27 March 2008 Cashbox Public Limited Company ("Cashbox" or "the Company") Interim Results for the six months ended 31st December 2007 Cashbox (AIM:CBOX), the independent Automated Teller Machine ("ATM") installerand operator, announces its interim results for the six months ended 31 December2007 (H1 07/08). ------------------------ ----------- ----------- ----------- H1 07/08 H2 06/07 H1 06/07 6m ended 6m ended 6m ended 31 Dec 07 30 Jun 07 31 Dec 06 unaudited unaudited unauditedMachines installed at period end 1,820 1,442 1,245Turnover £ 000 2,271 2,137 2,243Gross Margin % 36% 27% 26%EBITDA * + £ 000 (1,119) (2,199) (1,311)Loss before exceptionals* £ 000 (1,609) (2,431) (1,625)Loss after exceptionals £ 000 (1,609) (5,116) (1,625)Loss per share before exceptionals (p)* (1.9)p (3.7)p (2.6)pLoss per share after exceptionals (p) (1.9)p (7.9)p (2.6)pNet debt + (£000) 5,022 1,340 2,204------------------------ ----------- ----------- ----------- * before exceptional items in H2 06/07 of £2,000,000 relating to settlement oflitigation and £685,000 lease termination penalties. + A non GAAP measure, these are defined in note 14. Highlights • Installed machines reach 1,820• Transaction revenues increased by 5% over H2 and 15% over H1 06/07• Gross profits increased and gross margin improved to 36%• Losses measured by EBITDA, operating loss, loss for the period, and loss per share all improved• Hanco litigation settled in October 2007 at a cost of £1.8m bringing the total settlement to £2.0m.• New funding of £1.0m in December 2007 CHAIRMAN'S STATEMENT I am pleased to present my first interim report to shareholders as the Chairmanof Cashbox PLC. For the six months to December 2007 your Company incurred a lossof £1.6m on turnover of £2.3m. The loss was incurred principally due to theslower than expected roll out of ATM's due to delays from suppliers in the firstquarter and the delayed refinancing at the end of last year. However, Cashboxhas seen a reduction in losses before exceptional items and an encouragingincrease in gross margins. Although this has been a difficult period in your Company's history there ismuch to give encouragement. The new executive management team has worked hard torid Cashbox of distractions to its core business; including the necessarysettlement of the Hanco litigation. Installations in Q1 2007 were 104 rising substantially to 274 for Q2, bringingthe total to 378 ATM's for the period. The total number of ATM's in Cashbox'sestate was 1,820 at the end of December 2007. Cashbox now has the 5th largestATM estate in the UK. Moving forward we are focusing all our efforts on increasing the number of newinstallations initially to 100 per month with the intention of exceeding thisnumber from the summer onwards. This is made possible by the new bankingfacilities secured from Bank of Scotland and the additional £1.0m of convertibledebt and unsecured debt funding raised in December 2007. As with all businesses at the same stage of Cashbox's evolution there needs tobe an ever vigilant approach to cost controls and I am pleased to report thatafter a review of operations carried out during the period annual overheads havebeen reduced. The increased focus on installations with the 'Placement Model', in whichCashbox receives a larger proportion of the transaction revenues has resulted innearly half the estate being in that category. This has brought about increasedmargins and bodes well for future profitability. Increasing the number of ATM's in our estate is a primary focus, however theperformance of existing machines is constantly assessed and wherever possiblethose ATM's that appear to have a low number of transactions are removed andplaced on sites where utilisation levels will be materially higher. Your Board and management are confident that opportunities are available tocontinue to increase market share. The excellent systems that have beendeveloped coupled with the customer service that this affords give distinctcompetitive advantage. This is clearly evidencing itself as we increase ourpenetration of major organisations who value this level of professionalism. Hanco Litigation UpdateIn October 2007 we agreed a full and final settlement with Hanco in respect ofthe litigation between the two companies. In the settlement, Cashbox ATM SystemsLimited will pay an additional £1.8m, on top of the £200,000 already paid.Cashbox ATM Systems Limited has the benefit of a joint and several indemnityfrom Carl Thomas and Anthony Sharp in connection with this litigation, which thedirectors intend to enforce to recover the £2m. The Board did not believe thatcontinuing with the litigation was in the best interests of shareholders. FinancingIn December 2007 we raised additional operating capital through the issue of aconvertible loan at the same time as restructuring our arrangements with Bank ofScotland. This increased the headroom on the financial covenants while thefacility was reduced from £8m previously agreed to £6m but extended through toDecember 2009 when repayment is due to commence. This has the effect of givingadditional flexibility for the financing of machines. In March 2008 we arefinalising arrangements to raise further operating capital as set out in theAnnual Report and at the AGM. The holders of the convertible loan have givennotice that they intend to convert on 1 April 2008 thereby further reducing theCompany's gearing. Board UpdateAs advised in the Annual Report, a number of Board changes took place followingthe AGM on 22 January 2008. Matthew Thomas, CTO, and Andrew Wilmot, TechnicalDirector, stepped down from the PLC Board to concentrate upon the organic growthof the business, and sit on the Board of Cashbox ATM Systems Limited.Stephen Brown, Non-Executive Director, and John Maples, Chairman, stepped downfrom the Board after successfully assisting with the stabilisation of thebusiness. The Board of Cashbox PLC now comprises Robin Saunders as Non Executive Chairman,Ciaran Morton (Chief Executive), David Auger (Chief Financial Officer) andWilliam Hughes as a non executive director. OutlookShareholders have reason to feel optimistic about Cashbox's prospects as we moveinto 2008. A number of significant hurdles, not least the Hanco litigation andthe re-financing of the business, have been successfully completed. This nowenables the management to concentrate upon two key areas: the organic growth ofthe core business, and deriving value from a consolidating market. The Board andthe Executive Management teams remain wholly focussed upon these primary goals,and are confident that the business will demonstrate accelerated growth ininstallations and revenues in the second half of the year. Robin SaundersNon Executive Chairman 27 March 2008 For further information:Cashbox plcDavid Auger, Chief Financial Officer Tel: +44 (0) 1256 441 [email protected] www.cashboxplc.co.uk ---------------------- Seymour Pierce LimitedJonathan Wright Tel: +44 (0) 20 7107 8000 www.seymourpierce.com ------------------------ Fairfax I.S. PLCEwan Leggat Tel: +44 (0) 20 7598 5368 www.fairfaxplc.com Media enquiries:Threadneedle CommunicationsJosh Royston / Graham Herring Tel: +44 (0) 20 7936 9606 www.threadneedlepr.co.uk INTERNATIONAL FINANCIAL REPORTING STANDARDS This is the first interim report of the Group produced in accordance withInternational Financial Reporting Standards ("IFRS"). The transition date forthe adoption of IFRS is 1 July 2006. All comparative data in this report hasbeen restated accordingly and a reconciliation is included in note 15. OPERATING AND FINANCIAL REVIEW Performance for the current period, the six months ended 31 December 2007 (H1 07/08) is measured against both the comparable period being the first half of theprior year being the six months ended 31 December 2006 (H1 06/07) and the periodimmediately preceding the period under review being the six months ended 30 June2007 (H2 06/07). The comparison to the second half of the prior year isconsidered to be meaningful as the Company is growing with the installation ofnew ATMs increasing the size of the installed base. The installed base of ATMs increased to 1,820 machines by 31 December 2007compared to 1,442 machines at 30 June 2007 and 1,245 machines at 31 December2006. The average number of machines in the first half of the year was 21%higher than the preceding six months and 42% higher than the comparable periodfollowing the acceleration of installations, particularly in the second quarter. Surcharging transactions for the six months were 1.3 million, up on both the sixmonths ended June 2007 H2 06/07, 1.2 million, and December 2006 H1 06/07, 1.2million, following the increase in the size of the ATM estate which offset aslight decline in transactions per machine. Turnover for the first half of the year was £2.3m, up 6% on the preceding sixmonths H2 06/07 and 1% on the comparable period H1 06/07. Transaction income wasup 5% and 15% respectively as the increased installed base of machinescontributed, offsetting the decline in transaction volumes per machine seenduring the period. Gross margins improved to 36% as a result of the higher margins on transactionfee revenues compared to ATM sale revenues as well as the increase in theproportion of "Placement model" ATMs where ownership of the ATM is retained bythe Cashbox Group in return for a higher share of the transaction revenues. At31 December 2007, Placement machines represented just under half of the totalestate. This resulted in the gross profit for the period being £0.8m, up on the£0.6m for both the six months ended December 2006 and June 2007. Administration costs were slightly lower then the preceding period but up on thesame period last year. Excluding depreciation, which increased following thegreater number of owned machines, the administration costs were £2.0m, areduction on prior periods with the benefits of the cost saving measures beingfelt. Salary costs, including related items such as recruitment costs, wereinline with prior periods despite the increase in headcount from 39 in H1 06/07to 50 in H2 06/07 (giving average of 44 for the year ended June 2007) to 52 forthe current six months. Professional fees remain higher than would be liked as aconsequence of the costs associated with reaching settlement with Hanco ATMSystems Limited, the financing undertaken towards the end of the half year andthe pursuit of Anthony Sharp and Carl Thomas under the indemnity given by themat the time of the flotation of the Company on AIM. Earnings before interest, tax, depreciation and amortisation, share basedpayments and exceptionals, EBITDA, for the period was a loss of £1.1m, asignificant improvement from the £2.1m loss in H2 06/07 and £1.3m loss in H1 06/07. Total operating loss was £1.4m for the period, an improvement on prior periodsof £1.6m in H1 06/07 and £4.4m in H2 06/07 with the higher gross profits andlower administration costs. Interest costs were up with the increased debt financing from Bank of Scotland,and included interest on the Hanco settlement monies, resulting in a loss beforetax for the period of £1.6m. Net cash from operating activities was an outflow of £1.9m with adversemovements in working capital principally being the payment of creditors.Purchase of fixed assets was £0.9m as placement machines were installed duringthe period. The outflows were financed by draw downs on the Bank of Scotlandfacility and the issue of the convertible loan in December 2007. Overall therewas a decrease in cash of £0.9m during the period. CONSOLIDATED INCOME STATEMENTFor the six months ended 31 December 2007 unaudited unaudited unaudited 6m ended 6m ended Year ended 31-12-07 31-12-06 30-6-07 Notes £ 000 £ 000 £ 000 Revenue 2 2,271 2,243 4,380 Cost of sales (1,455) (1,655) (3,219) --------- --------- ---------Gross Profit 816 588 1,161 Administration expenses 4 (2,217) (2,146) (5,093) Exceptional items:Litigation settlement costs 3 - - (2,000) --------- --------- ---------Total administration expenses (2,217) (2,146) (7,093) --------- --------- ---------Operating loss (1,401) (1,558) (5,932) --------- --------- --------- Finance income 27 11 37Finance costs 5 (235) (78) (161)Exceptional finance charges 3 - (685) --------- --------- --------- (208) (67) (809) --------- --------- ---------Loss for the period attributable tothe equity holders of the parent (1,609) (1,625) (6,741) ========= ========= =========Loss per ordinary share (pence) 6Basic (1.9)p (2.6)p (10.5)Diluted (1.9)p (2.6)p (10.5) Loss for the period excludingexceptional costs attributable tothe equity holders of the parent (1,609) (1,625) (4,056) ========= ========= ========= CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the six months ended 31 December 2007 unaudited unaudited unaudited 6m ended 6m ended Year ended 31-12-07 31-12-06 30-6-07 £ 000 £ 000 £ 000 Opening shareholders' deficit (3,520) (180) (180) Loss for the financial period beingtotal income and expenditure recognisedin the period (1,609) (1,625) (6,741)Share based payments 73 117 138 --------- --------- --------- (1,536) (1,508) (6,603) --------- --------- ---------Issue of shares including premium - - 3,263Equity component of convertible loan 38 - - --------- --------- ---------Movement in shareholders' funds (1,498) (1,508) (3,340) --------- --------- ---------Closing shareholders' deficit (5,018) (1,688) (3,520) ========= ========= ========= CONSOLIDATED BALANCE SHEETAs at 31 December 2007 unaudited unaudited unaudited 31-12-07 31-12-06 30-6-07 Notes £ 000 £ 000 £ 000ASSETSNon current assetsIntangible assets 55 10 13Property, plant and equipment 1,796 1,157 1,077 --------- --------- --------- 1,851 1,167 1,090 --------- --------- ---------Current AssetsInventories 56 27 110Trade and other receivables 7 861 822 850Cash and cash equivalents 1,160 1,161 1,452 --------- --------- --------- 2,077 2,010 2,412 --------- --------- --------- TOTAL ASSETS 3,928 3,177 3,502 ========= ========= ========= LIABILITIES AND EQUITY Current liabilitiesTrade and other payables 8 3,922 3,392 4,715Borrowings 9 620 1,473 2 --------- --------- --------- 4,542 4,865 4,717 --------- --------- ---------Non current liabilitiesBorrowings 9 4,404 - 2,305 --------- --------- --------- TOTAL LIABILITIES 8,946 4,865 7,022 --------- --------- --------- Capital and reserves attributable toequity holders of the parentShare capital 10 832 614 832Share premium account 10 6,925 3,880 6,925Merger reserve 10 2,180 2,180 2,180Equity component of Convertible debt 10 38 - -Warrants reserve 10 - 37 -Accumulated losses 10 (14,993) (8,399) (13,457) --------- --------- --------- (5,018) (1,688) (3,520) --------- --------- --------- TOTAL EQUITY AND LIABILITIES 3,928 3,177 3,502 ========= ========= ========= CONSOLIDATED CASH FLOW STATEMENTFor the six months ended 31 December 2007 unaudited Unaudited unaudited 6m ended 6m ended Year ended 31-12-07 31-12-06 30-6-07 £ 000 £ 000 £ 000CASH FLOWS FROM OPERATING ACTIVITIESCash used in operations 11 (1,927) 863 (2,440)Interest paid (158) (41) (150) --------- --------- ---------Net cash used in operating activities (2,085) 822 (2,590) --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property plant and equipment (857) (623) (687)Purchase of intangible fixed assets (52) - (6) --------- --------- ---------Net cash used in investing activities (909) (623) (693) --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIESIssue of ordinary shares for cash - - 584Proceeds from convertible loans 584 - -Proceeds from borrowings 1,500 500 5,600Repayments of borrowings - - (130)Capital repayments on finance leases (1) (74) (1,388)Lease termination costs paid 3 - - (467) --------- --------- ---------Net cash generated from financingactivities 2,083 426 4,199 --------- --------- ---------Net (decrease) / increase in cash (911) 625 916 ========= ========= ========= Cash and cash equivalents at thebeginning of the period 1,452 536 536 --------- --------- ---------Cash and cash equivalents at the end ofthe period 541 1,161 1,452 ========= ========= ========= NOTES TO THE FINANCIAL STATEMENTS 1. Accounting convention, policies and basis of preparation These half year 2008 interim consolidated financial statements of Cashbox PLCare for the six months ended 31 December 2007. The information included withinthis document has been prepared on the basis of the recognition and measurementrequirements of applicable IFRS and IFRIC interpretations in issue that eitherare endorsed by the European Commission and effective (or available for earlyadoption) at 30 June 2008 or are expected to be endorsed and effective (oravailable for early adoption) at 30 June 2008, the Group's first annualreporting date in accordance with IFRS. In preparing these consolidated interim financial statements, management hasamended certain accounting and valuation methods applied in the 2007 AnnualReport and Accounts to comply with IFRS. The Group accounting policies as setout in the 2007 Annual Report and Accounts have been revised where applicable toconform to IFRS. The restated accounting policies as set out on pages 10 to 13 of thesestatements, comprise the Group's complete accounting policies under IFRS. Thesepolicies have been consistently applied to all the years presented. The adoptedIFRS that will be effective (or available for early adoption) in the annualfinancial statements for the year ending 30 June 2008 are still subject to thepossibility of change as a result of decisions taken by the European Commissionon endorsement. As a result of such changes the accounting policies cannot bedetermined with certainty and therefore may require updating when the annualfinancial statements are prepared for the year ending 30 June 2008. The comparative figures in respect of the year ended 30 June 2007 have beenrestated to reflect these adjustments. Reconciliations and descriptions of theeffect of the transition from UK GAAP to IFRS are provided in note 15. Basis of Consolidation The consolidated financial statements comprise Cashbox Public Limited Companytogether with Cashbox ATM Systems Limited ("principal operating company")together with Cashbox No 1 Limited, Cashbox No 2 Limited and Cashbox FinanceLimited, all wholly owned either directly or indirectly by Cashbox PLC, for thesix month period ended 31 December 2007 with comparative information for the sixmonth period ended 31 December 2006 and for the year to 30 June 2007. All inter-company balances and transactions have been eliminated upon consolidation. Themerger reserve arose on the combination of Cashbox ATM Systems Limited withCashbox PLC on 23 March 2006 as the combining entities within the Group werecontrolled by the same parties both before and after the combination. Principal Accounting Policies The following paragraphs describe the main accounting policies that have beenrevised on transition to IFRS and hence supersede the previous accounting policydetailed in the 2007 Annual Report and Accounts. Revenue Revenue represents the value of goods sold and services provided during theyear, stated exclusive of Value Added Tax. Income from the sale of AutomatedTeller Machines (ATMs) is recognised when each ATM is installed in its locationand transaction income is recognised in the period in which the transaction tookplace. Foreign currency translation The consolidated financial statements are presented in pounds sterling ('£'),which is the company's functional and presentation currency. Transactions inforeign currencies are translated at the exchange rate ruling at the date oftransaction. Foreign currency transactions are translated into the functionalcurrency using the exchange rates prevailing at the dates of the transactions.Foreign exchange gains and losses resulting from the settlement of suchtransactions and from the translation at year-end exchange rates of monetaryassets and liabilities denominated in foreign currencies are recognised in theincome statement. Exceptional items Exceptional items are those significant items which are separately disclosed byvirtue of their size or incidence to enable a full understanding of the Group'sfinancial performance. Website development costs Expenditure incurred on maintaining websites and expenditure incurred ondeveloping websites used only for advertising and promotional purposes arewritten off as incurred. Leased assets Assets that are financed by leasing agreements that give rights approximating toownership (finance leases) are treated as if they had been purchased outright.The amount capitalised is the lower of the fair value of the leased assets andthe present value of the minimum lease payments payable over the term of thelease. The corresponding leasing commitments are shown as amounts payable to thelessor. Depreciation on the relevant assets is charged to the income statementover the shorter of estimated useful economic life and the period of the lease.Lease payments are analysed between capital and interest components so that theinterest element of the payment is charged to the income statement over theperiod of the lease and is calculated so that it represents a constantproportion of the balance of capital repayments outstanding. The capital elementof the payment reduces the amount payable to the lessor. All other leases are treated as operating leases. Their annual rentals arecharged or credited to the income statement on a straight line basis over theterm of the lease. Sale and leaseback Sale and leaseback arrangements, by means of a finance lease, are accounted forin the same manner as a standard finance lease agreement. It is not appropriateto regard an excess of sale proceeds over the carrying amount as income. Suchexcess is deferred and amortised over the lease term. Onerous Leases Where the unavoidable costs of a lease exceed the economic benefit expected tobe received from it, a provision is made for the present value of theobligations under the lease. Finance costs Finance costs are charged to the income statement over the term of the debt sothat the amount charged is at a constant rate on the carrying amount. Financecosts include issue costs, which are initially recognised as a reduction in theproceeds of the associated capital instrument. Intangible fixed assets Intangible fixed assets comprise computer software licences acquired and arecapitalised on the basis of separately identifiable costs incurred to acquireand bring into use specific software less accumulated amortisation and anyimpairment in value. Amortisation on intangible fixed assets Amortisation is provided on intangible fixed assets which have a finite usefuleconomic life to write off the cost, less estimated residual values, evenly overtheir expected useful lives on a straight line basis. Lives used for thispurpose are: Computer software 3 years Property, plant and equipment Property, plant and equipment are held at cost being the purchase price andother costs directly attributable to bringing the asset into use lessaccumulated depreciation and any impairment in value. Depreciation on tangible fixed assets Depreciation is provided on property, plant and equipment to write off the cost,less estimated residual values, evenly over their expected useful lives on astraight line basis. Lives used for this purpose are: Automated teller machines 5 yearsFurniture and fittings 3 yearsOffice equipment 3 years Impairment of non-financial assets Assets that are subject to amortisation or depreciation are reviewed forimpairment whenever events or changes in circumstances indicate that thecarrying amount may not be recoverable. An impairment loss is recognised for theamount by which the asset's carrying amount exceeds its recoverable amount. Therecoverable amount is the higher of an asset's fair value less costs to sell andvalue in use. Inventories Inventories are valued at the lower of cost and net realisable value. Cost isbased on the cost of purchase on a first in, first out basis. Net realisablevalue is based on the estimated selling price less additional costs tocompletion and disposal. Financial assets The group classifies all its financial assets as loans and receivables. Theseare non-derivative financial assets with fixed or determinable payments that arenot quoted in an active market. They are included in current assets. The Group'sloans and receivables comprise 'trade and other receivables' and cash and cashequivalents in the balance sheet. Trade receivables Trade receivables are recognised initially at fair value and subsequentlymeasured at amortised cost using the effective interest method, less provisionfor impairment. A provision for impairment of trade receivables is establishedwhen there is objective evidence that the Group will not be able to collect allamounts due according to the original terms of the receivables. The amount ofthe provision is the difference between the asset's carrying amount and thepresent value of estimated future cash flows, discounted at the originaleffective interest rate. Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held at call withbanks, and bank overdrafts. Bank overdrafts are shown within borrowings incurrent liabilities on the balance sheet. Trade payables Trade payables are recognised initially at fair value and subsequently measuredat amortised cost using the effective interest method. Borrowings Borrowings are recognised initially at fair value, net of transaction costsincurred. Borrowings are subsequently stated at amortised cost; any differencebetween the proceeds (net of transaction costs) and the redemption value isrecognised in the income statement over the period of the borrowings using theeffective interest method. Borrowings are classified as current liabilitiesunless the group has an unconditional right to defer settlement of the liabilityfor at least 12 months after the balance sheet date. Borrowings which carry a right or option to acquire shares in the company areaccounted for as separate components with the borrowing element being calculatedwith an interest rate equivalent to a debt only borrowing with similar securityand the equity component calculated as the balance in a separate reserve inShareholders funds. Current and deferred taxation The current income tax charge is calculated on the basis of the tax laws enactedor substantively enacted at the balance sheet date. Management periodicallyevaluates positions taken in tax returns with respect to situations in whichapplicable tax regulation is subject to interpretation and establishesprovisions where appropriate on the basis of amounts expected to be paid to thetax authorities. Deferred income tax is provided in full, using the liability method, ontemporary differences arising between the tax bases of assets and liabilitiesand their carrying amounts in the consolidated financial statements. However,the deferred income tax is not accounted for if it arises from initialrecognition of an asset or liability in a transaction other than a businesscombination that at the time of the transaction affects neither accounting nortaxable profit or loss. Deferred income tax is determined using tax rates (andlaws) that have been enacted or substantially enacted by the balance sheet dateand are expected to apply when the related deferred income tax asset is realisedor the deferred income tax liability is settled. Deferred income tax assets arerecognised to the extent that it is probable that future taxable profit will beavailable against which the temporary differences can be utilised. Pension costs Contributions to the Group's defined contribution pension scheme are charged tothe income statement in the year in which they become payable. Reimbursements under Indemnity agreements Amounts recoverable under indemnity agreements are treated as reimbursementsand, unless virtually certain, are only recognised on receipt. Share-based employee remuneration The Group has adopted IFRS 2 'Share based payment'. The Group issues equitysettled share based payments including share options and warrants to certainDirectors and employees and to Bank of Scotland. The fair value of the employeeservices received in exchange for the grant of the options is recognised as anexpense. Equity-settled share based payments are measured at fair value at thedate of grant using an appropriate option pricing model. The fair valuedetermined at the date of grant is expensed to the income statement on astraight line basis over the vesting period. At the balance sheet date thecumulative change in respect of each award is adjusted to reflect the actuallevels of options vesting or expected to vest. Relationship to statutory accounts and audit status The financial information included in this document is unaudited and does notcomprise statutory accounts within the meaning of section 240 of the CompaniesAct 1985. The comparative figures for the financial year ended 30 June 2007 arenot the Group's statutory accounts for that financial year. Those accounts,which were prepared under UK Generally Accepted Accounting Practices, have beenreported on by the Group's auditors and delivered to the Registrar of Companies.The report of the auditors was unqualified, did not include references to anymatters to which the auditors drew attention by way of emphasis withoutqualifying their report and did not contain statements under section 237(2) or(3) of the Companies Act 1985. 2. Turnover and Segmental Analysis Turnover (all arising in the UK) is attributed to the Group's principal activityof 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 turnover is provided: unaudited unaudited unaudited 6m ended 6m ended Year ended 31-12-07 31-12-06 30-6-07 £ 000 £ 000 £ 000 ATM sales 41 318 373Gross transaction revenue 2,199 1,915 4,003Other 31 - 4 --------- ---------- --------- 2,271 2,243 4,380 ========= ========== ========= 3. Exceptional Items unaudited unaudited unaudited 6m ended 6m ended Year ended 31-12-07 31-12-06 30-6-07 £ 000 £ 000 £ 000Charged in arriving at operating losses:Litigation settlement costs - - 2,000 ========= ========== ========= Charged within interest costs:Lease termination payments - - 685 ========= ========== ========= The litigation settlement costs relate to the full and final settlement costs of£1,800,000 associated with the agreement reached with Hanco on 23 October 2007together with the costs order of £199,760 paid on 24 July 2007. This has beenaccounted for in the year ended 30 June 2007. The Company's subsidiary, CashboxATM Systems Limited, has a joint and several indemnity in connection with thislitigation. In accordance with IAS 37, the amounts due under the indemnity havebeen treated as a reimbursement as described in Note 13. The £685,000 exceptional costs associated with terminating the leasearrangements with General Capital Venture Finance included the effective cashpayment of the interest element of future lease rentals, £467,000, plus the non-cash costs related to the write off of arrangement fees, £189,000, together withwrite back of future warrant accretion costs, £29,000. The agreement terminatingthe lease arrangements provided for full and final settlement of all outstandingobligations if the Group purchased the assets legally owned by GCVF and GCVFagreed to release the debenture held over the Group's assets. 4. Expenses by nature unaudited unaudited unaudited 6m ended 6m ended Year ended 31-12-07 31-12-06 30-6-07 £ 000 £ 000 £ 000 Employee and associatedstaff costs 1,209 1,286 2,691Depreciation of tangiblefixed assets 203 126 277Amortisation of intangiblefixed assets 9 4 7Occupancycosts 149 160 319Vehicle costs 145 114 292Professionalfees 259 219 874Other costs 243 237 633 --------- ---------- --------- 2,217 2,146 5,093 ========= ========== ========= 5. Finance costs unaudited unaudited unaudited 6m ended 6m ended Year ended 31-12-07 31-12-06 30-6-07 £ 000 £ 000 £ 000 Loan interest 211 - 11Interest onfinance leases 1 73 138Other 23 5 12 --------- ---------- --------- 235 78 161 ========= ========== ========= 6. Loss per ordinary share The calculation of the basic earnings per share is based on the earningsattributable to ordinary shareholders divided by the weighted average number ofshares in issue during the financial year. The Group also presents an adjustedearnings per share based on earnings excluding exceptional items which theDirectors believe aid the understanding of the Group's trading performance. Fordiluted earnings per share, the weighted average number of ordinary shares inissue is adjusted to reflect the impact of conversion of dilutive potentialordinary shares. The potential dilutive ordinary shares consist of the shareoptions and warrants. However as the Group is currently loss making none of thepotentially dilutive shares are currently dilutive. Adjusted earnings per shareare calculated on the same basis excluding the impact of exceptional items. 7. Trade and other receivables unaudited unaudited unaudited 31-12-07 31-12-06 30-6-07 £ 000 £ 000 £ 000 Tradereceivables 30 238 11Corporationtax - 21 21Value addedtax 476 54 479Otherreceivables 102 152 85Prepayments and accruedincome 139 357 122Impairment ofreceivables (6) - (6) --------- --------- --------- 741 822 712 --------- --------- --------- Prepaymentsgreater thanone year 119 - 138 --------- --------- ---------Trade andotherreceivables 861 822 850 ========= ========= ========= Not included in receivables is a principal amount of £1,999,760 plus interest,due joint and severally from Carl Thomas and Anthony Sharp under the terms of anindemnity in relation to the settlement of litigation with Hanco ATM SystemsLimited as described in note 3. Under IFRS this has been treated as areimbursement and will not be recognised until its receipt is virtually certain. 8. Trade and other payables unaudited unaudited unaudited 31-12-07 31-12-06 30-6-07 £ 000 £ 000 £ 000 Trade payables 641 924 731Taxation and socialsecurity 65 307 262Other payables 1,869 473 2,111Accruals and deferredincome 1,347 1,688 1,611 --------- --------- --------- 3,922 3,392 4,715 ========= ========= ========= Included in other payables is an amount of £1,820,000 (30 June 2007: £1,999,760;31 December 2006 nil) due to Hanco ATM Systems Limited as a result of thesettlement of litigation as described in note 3. 9. Borrowings unaudited unaudited unaudited 31-12-07 31-12-06 30-6-07 £ 000 £ 000 £ 000CurrentBankoverdrafts 618 - -Amounts due under financeleases 2 1,473 2 --------- --------- --------- 620 1,473 2 --------- --------- ---------Non CurrentBank loans 3,854 - 2,300Amounts due under financeleases 4 - 5Convertibleloan note 546 - - --------- --------- --------- 4,404 - 2,305 --------- --------- --------- 5,024 1,473 2,307 ========= ========= ========= The Bank overdraft and loans are secured by fixed and floating charges over theGroup's assets. The Convertible loan note is unsecured. 10. Reconciliation of closing equity The Group has capital and reserves as follows: unaudited unaudited unaudited unaudited unaudited unaudited Share capital Share premium Merger reserve Equity Retained Total reserves earnings £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 At 1 July 2006 614 3,880 2,180 37 (6,891) (180) Loss for theperiod (1,625) (1,625)Share basedpayments(IFRS 2) 117 117 ------- ------- ------- ------- ------- ------- At 31December 2006 614 3,880 2,180 37 (8,399) (1,688) Issue ofshares May2007 (net ofcosts) 218 3,045 3,263Cancellationof GCVFWarrants (37) 37 -Loss for theyear (5,116) (5,116)Share based payments(IFRS 2) 21 21 ------- ------- ------- ------- ------- -------At 30 June2007 832 6,925 2,180 - (13,457) (3,520) Loss for theyear (1,609) (1,609)Convertible loan - equity element 38 38Share basedpayments(IFRS 2) 73 73 ------- ------- ------- ------- ------- -------At 31December 2007 832 6,925 2,180 38 (14,993) (5,018) ======= ======= ======= ======= ======= ======= 11. Cash used in operations Unaudited unaudited unaudited 6m ended 6m ended Year ended 31-12-07 31-12-06 30-6-07 £ 000 £ 000 £ 000Loss beforetaxation (1,609) (1,625) (6,741)Adjustments:Net financecosts 208 67 809Interestreceived 27 11 37Depreciation of tangiblefixed assets 203 126 277Amortisation of intangiblefixed assets 9 4 7Accretion forwarrants - - 27Share based remunerationcharge 70 117 138Changes in working capital:Decrease / (increase) ininventories 54 (5) (88)(Increase) / decrease inreceivables (11) 834 433(Decrease) / increase intrade & otherpayables (878) 1,334 2,661 --------- --------- ---------Cash used inoperations (1,927) 863 (2,440) ========= ========= ========= 12. Post balance sheet events On 14 March 2007 the Company received notice from MBC Investments that theintention was to convert the convertible loan note issued into shares under theterms of the loan on 1 April 2008. 13. Contingencies On 17 July 2007 the Company's subsidiary wrote to Anthony CJ Sharp and Carl JThomas (the indemnifiers) under the terms of the deed of indemnity signed on 23March 2006. The Company's subsidiary has received a reply from Anthony Sharpinforming the Company that he does not consider the indemnity to be binding onhim. The Directors do not accept Mr Sharp's position and having taken legaladvice, believe the indemnity is enforceable. Discussions have been taking placewith the indemnifiers to resolve matters, however, if agreement with theindemnifiers cannot be reached in the near future then proceedings to recovermonies due under the indemnities will commence. As a result of Mr Sharp's position disputing the indemnity and concerns relatingto Mr Thomas' ability to pay, the Directors, while believing the indemnity isenforceable, have treated the receivable as a reimbursement in accordance withIAS 37, and since receipt is not virtually certain, have not recorded the amountdue of £1,999,760 in the accounts. Following the initial public offering of the Company it was expected that theabove indemnity would be replaced by a further indemnity from KKR Investmentmanagement SA , ("KKR", a company in which A CJ Sharp was expected to be aminority shareholder), Annenberg Investment Management SA (a company controlledby ACJ Sharp) and CJ Thomas severally (the "Further Indemnity") with solerecourse (in the case of Annenberg and CJ Thomas) to their respective holdingsof ordinary shares in the Company. The Further Indemnity was intended to comeinto effect only once KKR had unconditional finance in place, to thesatisfaction of the Directors and Seymour Pierce Limited (the Company'sNominated Advisor and Broker) to cover its liabilities under the FurtherIndemnity. As part of this agreement, the Company agreed to pay a cash fee inthe amount of £112,500 to KKR in respect of the provision of the FurtherIndemnity together with the issue of 187,500 new ordinary shares to KKR. Theseshares would only be issued once the Further Indemnity was unconditional.Pursuant to the deed, unconditional finance has not been put in place. 14. Non GAAP terms EBITDA is earnings before interest, tax, depreciation, amortisation, exceptionalitems, share based payments and minority interests and equals operating income /loss before exceptional items plus depreciation and amortisation. EBITDA, whichwe consider to be a meaningful measure of operating performance, particularlythe ability to generate cash, does not have a standard meaning under IFRS andmay not be comparable with similar measures used by others. unaudited unaudited unaudited 6m ended 6m ended Year ended 31-12-07 31-12-06 30-6-07 £ 000 £ 000 £ 000 Operating loss (1,401) (1,558) (5,932)Add backDepreciation andamortisation 212 130 284Exceptionalitems (seenote 3) - - 2,000Share basedpayments 70 117 138 --------- --------- --------- (1,119) (1,311) (3,510) ========= ========= ========= Net debt includes the borrowings of the Group (including bank loans, otherloans, finance leases and overdrafts) less cash and cash equivalents excludingbalances held with the Bank of England for cash withdrawal settlement purposes. unaudited unaudited unaudited 31-12-07 31-12-06 30-6-07 £ 000 £ 000 £ 000 Cash and cashequivalents 1,160 1,161 1,452Less BOE cashbalance (1,158) (1,028) (1,349) --------- --------- ---------Cash excludingBOE balances 2 133 103 --------- --------- --------- Currentborrowings 779 1,473 2Non currentborrowings 4,245 - 2,305 --------- --------- --------- 5,024 1,473 2,307 --------- --------- ---------Net debt 5,022 1,340 2,204 ========= ========= ========= 15. Adoption of IFRS In implementing the transition to IFRS, the Group has followed the requirementsof IFRS 1 "First Time Adoption of International Financial Reporting Standards",which in general requires IFRS accounting policies to be applied fullyretrospectively in deriving the opening balance sheet at the date of transition.In the Group's case this is 1 July 2006 being the start of the previous periodthat has been presented as comparative information. IFRS 1 contains certainmandatory exceptions and some optional exemptions to this principle ofretrospective application. The adoption of IFRS represents an accounting changeonly and does not affect the operations or cash flows of the Group. Theprincipal area of impact is that purchased computer software costs werepreviously recorded as property, plant and equipment as permitted by UK GAAP. Inaccordance with IAS 38, all purchased computer software is recorded as anintangible asset. The impact of this adjustment was to reduce the net book valueof property, plant and equipment by £14,000 as at 30 June 2006, £10,000 as at 31December 2006 and £13,000 as at 30 June 2007 with a corresponding increase inintangible assets. UNAUDITED COMPARATIVE DATA RESTATED IN ACCORDANCE WITH TRANSITION TO IFRS CONSOLIDATED INCOME STATEMENT FOR YEAR ENDED 30 JUNE 2007 UK GAAP Adjustments IFRS £ 000 £ 000 £ 000 Revenue 4,380 - 4,380Cost of sales (3,219) - (3,219) --------- --------- ---------Gross Profit 1,161 1,161 Administrationexpenses (5,093) - (5,093)ExceptionalLitigation settlementcosts (2,000) - (2,000) --------- --------- ---------Total administrationexpenses (7,093) - (7,093) --------- --------- ---------Operating loss (5,932) - (5,932) --------- --------- --------- Finance income 37 - 37Finance costs (161) - (161)Exceptional financecharges (685) - (685) --------- --------- --------- (809) - (809) --------- --------- ---------Loss for the periodattributable to the equityholders of theparent (6,741) - (6,741) ========= ========= ========= UNAUDITED CONSOLIDATED INCOME STATEMENT FOR SIX MONTHS ENDED 31 DECEMBER 2006 UK GAAP Adjustments IFRS £ 000 £ 000 £ 000 Revenue 2,243 - 2,243Cost of sales (1,655) - (1,655) --------- --------- ---------Gross Profit 588 - 588 Administrationexpenses (2,146) - (2,146) --------- --------- ---------Operating loss (1,558) - (1,558) --------- --------- --------- Finance income 11 - 11Finance costs (78) - (78) --------- --------- --------- (67) - (67) --------- --------- ---------Loss for the periodattributable to the equityholders of theparent (1,625) - (1,625) ========= ========= ========= UNAUDITED COMPARATIVE DATA RESTATED IN ACCORDANCE WITH TRANSITION TO IFRS CONSOLIDATED BALANCE SHEET AT 30 JUNE 2006 UK GAAP Adjustments IFRS £ 000 £ 000 £ 000ASSETSNon current assetsIntangibleassets - 14 14Property, plant andequipment 674 (14) 660 --------- --------- --------- 674 - 674 --------- --------- ---------Current AssetsInventories 22 - 22Trade and otherreceivables 1,492 - 1,492Cash and cashequivalents 536 - 536 --------- --------- --------- 2,050 - 2,050 --------- --------- --------- TOTAL ASSETS 2,724 - 2,724 ========= ========= ========= LIABILITIES AND EQUITY Current liabilitiesTrade andother payables 2,053 - 2,053Borrowings 172 - 172 --------- --------- --------- 2,225 - 2,225 --------- --------- ---------Non current liabilitiesBorrowings 679 - 679 --------- --------- --------- TOTALLIABILITIES 2,904 - 2,904 --------- --------- --------- Capital and reservesattributable to equityholders of the parentShare capital 614 - 614Share premiumaccount 3,880 - 3,880Merger reserve 2,180 - 2,180Warrantsreserve 37 - 37Accumulatedlosses (6,891) - (6,891) --------- --------- --------- (180) - (180) --------- --------- --------- TOTAL EQUITY ANDLIABILITIES 2,724 - 2,724 ========= ========= ========= Adjustments relate to the separate disclosure of software from other tangiblefixed assets of £14,000. UNAUDITED COMPARATIVE DATA RESTATED IN ACCORDANCE WITH TRANSITION TO IFRS CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2006 UK GAAP Adjustments IFRS £ 000 £ 000 £ 000ASSETSNon current assetsIntangibleassets - 10 10Property, plant andequipment 1,167 (10) 1,157 --------- --------- --------- 1,167 - 1,167 --------- --------- ---------Current AssetsInventories 27 - 27Trade and otherreceivables 822 - 822Cash and cashequivalents 1,161 - 1,161 --------- --------- --------- 2,010 - 2,010 --------- --------- --------- TOTAL ASSETS 3,177 - 3,177 ========= ========= ========= LIABILITIES AND EQUITY Current liabilitiesTrade andother payables 3,392 - 3,392Borrowings 1,473 - 1,473 --------- --------- --------- 4,865 - 4,865 --------- --------- ---------Non current liabilitiesBorrowings - - - --------- --------- --------- TOTALLIABILITIES 4,865 - 4,865 --------- --------- --------- Capital and reservesattributable to equityholders of the parentShare capital 614 - 614Share premiumaccount 3,880 - 3,880Merger reserve 2,180 - 2,180Warrantsreserve 37 - 37Accumulatedlosses (8,399) - (8,399) --------- --------- --------- (1,688) - (1,688) --------- --------- --------- TOTAL EQUITY ANDLIABILITIES 3,177 - 3,177 ========= ========= ========= Adjustments relate to the separate disclosure of software from other tangiblefixed assets of £10,000. UNAUDITED COMPARATIVE DATA RESTATED IN ACCORDANCE WITH TRANSITION TO IFRS CONSOLIDATED BALANCE SHEET AT 30 JUNE 2007 UK GAAP Adjustments IFRS £ 000 £ 000 £ 000ASSETSNon current assetsIntangibleassets - 13 13Property, plant andequipment 1,090 (13) 1,077 --------- --------- --------- 1,090 - 1,090 --------- --------- ---------Current AssetsInventories 110 - 110Trade and otherreceivables 850 - 850Cash and cashequivalents 1,452 - 1,452 --------- --------- --------- 2,412 - 2,412 --------- --------- --------- TOTAL ASSETS 3,502 - 3,502 ========= ========= ========= LIABILITIES AND EQUITY Current liabilitiesTrade andother payables 4,715 - 4,715Borrowings 2 - 2 --------- --------- --------- 4,717 - 4,717 --------- --------- ---------Non current liabilitiesBorrowings 2,305 - 2,305 --------- --------- --------- TOTALLIABILITIES 7,022 - 7,022 --------- --------- --------- Capital and reservesattributable to equityholders of the parentShare capital 832 - 832Share premiumaccount 6,925 - 6,925Merger reserve 2,180 - 2,180Accumulatedlosses (13,457) - (13,457) --------- --------- --------- (3,520) - (3,520) --------- --------- --------- TOTAL EQUITY ANDLIABILITIES 3,502 - 3,502 ========= ========= ========= Adjustments relate to the separate disclosure of software from other tangiblefixed assets of £13,000. UNAUDITED COMPARATIVE DATA RESTATED IN ACCORDANCE WITH TRANSITION TO IFRS CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2007 UK GAAP Adjustments IFRS £ 000 £ 000 £ 000CASH FLOWS FROM OPERATING ACTIVITIESCash used inoperations (2,440) - (2,440)Interest paid (149) - (149) --------- --------- ---------Net cash used in operatingactivities (2,589) - (2,589) --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property plantand equipment (687) - (687)Purchase of intangiblefixed assets (6) - (6) --------- --------- ---------Net cash used in investingactivities (693) - (693) --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIESProceeds of issue ofordinary shares for cash 584 - 584Proceeds fromborrowings 5,600 - 5,600Repayments ofborrowings (130) - (130)Capital repayments onfinance leases (1,389) - (1,389)Lease terminationcosts paid (467) - (467) --------- --------- ---------Net cash generated fromfinancing activities 4,198 - 4,198 --------- --------- ---------Net increasein cash 916 - 916 ========= ========= ========= UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2006 UK GAAP Adjustments IFRS £ 000 £ 000 £ 000CASH FLOWS FROM OPERATING ACTIVITIESCash used inoperations 863 - 863Interest paid (41) - (41) --------- --------- ---------Net cash usedin operatingactivities 822 - 822 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property plantand equipment (623) - (623) --------- --------- ---------Net cash used in investingactivities (623) - (623) --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIESProceeds fromborrowings 500 - 500Capital repayments onfinance leases (74) - (74) --------- --------- ---------Net cash generated fromfinancing activities 426 - 426 --------- --------- ---------Net increasein cash 625 - 625 ========= ========= ========= FORWARD LOOKING STATEMENTS This document contains statements concerning the Group's business, financialcondition, results of operations and certain of the Group's plans, objectives,assumptions, projections, expectations or beliefs with respect to these items. The Company cautions that any forward-looking statements in this document mayand often do vary from actual results and the differences between thesestatements and actual results can be material. Accordingly, readers arecautioned not to place undue reliance on forward-looking statements, which speakonly at their respective dates. The Company undertakes no obligation to releasepublicly the result of any revisions to these forward-looking statements thatmay be made to reflect events or circumstances after the date of this document,including, without limitation, changes in the Group's business or acquisition ordivestment strategy or planned capital expenditures, or to reflect theoccurrence of unanticipated events. By their nature, forward-looking statements involve risk and uncertainty becausethey relate to events and depend on circumstances that will occur in the future.There are a number of factors that could cause actual results and developmentsto differ materially from those expressed or implied by these forward-lookingstatements. These factors include, among other things: the impact of competitivepricing; changes in the price of ATMS and other key items; the occurrence ofmajor operational problems; the loss of major customers; limitations imposed bythe Group's indebtedness and leverage; contingent liabilities, risks associatedwith changes in technology requirements from LINK; risks of litigation; andother factors described in the Company's filings with the London Stock Exchange. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Cake Box Holdi.