Cake Box Holdi. Regulatory News (CBOX)

30 Mar 2007 08:26

Cashbox PLC30 March 2007 Cashbox Public Limited Company ("Cashbox" or "the Company") Interim Results for the six months ended 31st December 2006 Cashbox (AIM:CBOX), the independent Automated Teller Machine ("ATM") deployerand operator, announces its interim results for the six months ended 31 December2006 (H1 06/07). Anthony Sharp, Executive Chairman said: "Our sales force has continued its momentum but lack of timely funds from ourlease provider delayed our ability to roll out ATMs as quickly as we would haveliked, however the foundations remain in place to drive this business forward". -------------------------------------------------------------------------------- as restated H1 06/07 H2 05/06 H1 05/06 ended Dec 06 ended Jun 06 ended Dec 05 unaudited unaudited unaudited £ 000 £ 000 £ 000Machines installed at period end 1,245 1,058 848Turnover 2,243 1,730 1,429Gross Margin % 26% 25% 34%EBITDA* (1,311) (1,313) (735)Loss on ordinary activities* (1,625) (1,531) (927)Earnings per share* (2.6)p (3.0)p (2.7)pNet debt 312 315 8-------------------------------------------------------------------------------- * before exceptional items of £1,175,000 in H2 05/06 relating to listing andshare option costs. Highlights • Merchant contract wins increases potential ATM sites to over 80,000• Installed estate increased to 1,245 despite difficulties with lease provider• Turnover up 30% from preceding six months and 57% from the same period last year• Gross margin up slightly from H2 05/06 but lower than the comparable period H1 05/06 which benefited from higher service income• Net debt at period end £0.3m, unchanged from H2 05/06• New £2.8m loan facilities signed in 2007 CHAIRMAN'S STATEMENT While the steps that the Board had put in place, as reported in the AnnualReport, put us in an excellent position to grow the business, the period to 31December 2006 and the last couple of months have proved frustrating as our leaseprovider, General Capital Venture Finance Ltd ("GCVF"), did not provide funds ona timely basis. As a consequence our ability to roll out our ATMs acrossMerchant Sites at the rate we would have liked was fundamentally prejudiced, andour ability to reach a critical mass impeded. This has delayed our statedambition of achieving profitability. Clearly this is disappointing, howeverarrangements for alternative ATM financing are being made and the foundationsremain in place to drive this business forward once we have access to necessarycapital. In February 2007 we arranged a series of short term loans totaling £0.8m fromdirectors and some existing shareholders as the arrangements with GCVFdeteriorated. This is testament to the continuing support of a number of keyindividuals. The Board also resolved to seek alternative asset financing tofacilitate the growth of the business and is in the final stages of negotiatingan £8.0m asset financing arrangement together with a £0.75m overdraft facility.While this progresses, the Company has arranged a £2.0m loan facility in Marchto enable the rollout of ATMs to continue. At an operational level the existing estate of ATMs has performed well. Duringthis difficult time we have been able, through careful cash management, toinstall a further 187 machines and the sales force have worked hard andcontinued to sign a number of key agreements with major customers. The number ofsites owned or managed by Cashbox's customers (including those with anassociated membership network) has increased to in excess of 80,000.Operationally we therefore believe the business is well placed to execute thebusiness plan once the asset financing arrangements are finalised. Financial Review Turnover for the first half of the year was £2.2m, up 30% from the second halfof last year and 57% over the first half of last year, the comparable period,with growth due to higher transaction income as more ATMs are installed. Gross margin for the period was 26%, up slightly from the second half of 05/06,but down from the first half 05/06 which benefited from service income derivedfrom relocating a number of a customer's ATMs. Administration costs were up significantly from the comparable period last year,mainly salary costs including share-based payments, as the business continues toput in place the infrastructure to grow, but only 15% up on the preceding sixmonths as the growth has been slowed while the financing of new ATMinstallations is resolved. Interest costs are lower following the restructuring of the debt prior to theflotation of the Company in March 2006 and the interest for the six months ended31 December 2006 relates principally to the lease facility. Consequently the loss on ordinary activities for the period was £1.6m comparedto £0.9m for the comparable period with higher gross profit being more thanoffset by the higher administration costs. Careful cash management and negotiation of payment terms resulted in a net cashinflow from operating activities of £0.9m, with cash collection from debtors andincreased creditors. This was utilised servicing the lease facilities andpurchasing fixed assets with an overall increase in cash for the period of£0.6m. Net debt was unchanged at £0.3m at the period end with the net cash inflow fromoperating activities covering the continued investment in ATMs. Board update As we announced on 21 March 2007, Carl Thomas, previously CEO, was dismissedwithout notice after a disciplinary process. Carl Thomas has notified theCompany he is appealing this decision. I have assumed executive responsibilitieswhile the company is without a Chief Executive and while holding an executiveposition I have stepped down from the Audit Committee. David Auger has also joined the Board to take over as Chief Financial Officer,effective 2nd April 2007, from Darren Woolsgrove who will be working in a moreoperational role assisting me. We are delighted to have been able to appointsomeone of David's calibre as CFO. The expertise he brings with him from highprofile organisations such as PricewaterhouseCoopers and ICI will be of greatbenefit to Cashbox as we continue to grow. Darren has indicated a desire toultimately seek a new challenge after the Company's successful IPO and is seeingthrough his commitments made at that time last year. He will be stepping down asa Director once a CEO is in place. Hanco Litigation update The litigation between inter alia, Cashbox ATM Systems Limited (the Company'sSubsidiary), Carl Thomas (previously Cashbox CEO), and other former employees ofthe Company and Hanco ATM Systems Limited ("Hanco") is continuing. At a hearingon 21st February 2007, and as announced on 23rd February 2007, the court made anorder for the Company's Subsidiary and Carl Thomas to pay 60% of Hanco's costsof the summary judgment application together with an interim payment on accountof those costs of £150,000. The Company's Subsidiary and Carl Thomas haveapplied for permission to appeal the summary judgment decision and a stay of theinterim payment on account of costs has been granted pending determination ofthe application for permission to appeal. The Company and the Company's Subsidiary have obtained a joint and severalindemnity from both Carl Thomas and Anthony Sharp against any liability of theCompany or the Company's Subsidiary arising from or in connection with thislitigation to pay any sum for damages awarded in respect thereof by a court ofcompetent jurisdiction (including all sums payable to the legal advisers ofHanco) or for any agreed settlement in respect thereof. Hanco's application for an interim payment in relation to quantum was adjournedto a further hearing. The position of the Company's Subsidiary remains that Hanco would not beentitled to anything other than nominal recovery because Hanco would not havesecured Phase II of the Threshers contract in any event; and Phase II of theThreshers contract was not profitable for the Company's subsidiary. Financing As a direct result of the difficulties experienced with the current leaseprovider GCVF, the Board decided to seek alternative financing for the business. The Company has secured a £2.0m loan through the clients of UK investment bank,Fairfax I.S. plc, while discussions are taking place with a major, reputableprime lender to provide asset financing. These discussions are at an advancedstage, credit approval has been received, and we are working towards completionin the near future. The Board is considering seeking additional equity financing to maintain anappropriate level of financial gearing and, if necessary, will hold anExtraordinary General Meeting to seek shareholder approval for this. Discussions are taking place with GCVF for the termination of their leasefacility and release of their debenture security. It is the Company's view thatGCVF are in breach of the terms of the facility and that the significantcontractual penalties GCVF is currently relying on are not payable. The ongoingwithout prejudice negotiations have been protracted and the outcome isuncertain. The Board is of the view that the termination of this facility is inthe long term interests of the business and expects matters to be resolved inthe near future. Outlook Whilst the last few months have been a difficult and frustrating period for theCompany and our staff, we are confident that good progress will be made ingrowing the business over the next few months and that we will be reportingsignificant progress with our full year results to be announced in the autumn. Anthony SharpExecutive Chairman30 March 2007 For further information: Cashbox plcAnthony Sharp, Executive Chairman Tel: +44 (0) 870 126 2274asharp@cashboxplc.co.uk www.cashboxplc.co.uk Seymour Pierce LimitedJeremy Porter, Corporate Finance Tel: +44 (0) 20 7107 8000 www.seymourpierce.comMedia enquiries:Threadneedle CommunicationsJosh Royston / Graham Herring Tel: +44 (0) 20 7936 9606 www.threadneedlepr.co.uk CASHBOX PLCCONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE SIX MONTHS ENDED 31 DECEMBER 2006 as unaudited unaudited restated Notes 6m ended 6m ended Year ended 31-12-06 31-12-05 30-6-06 £'000 £'000 £'000 Turnover 2,243 1,429 3,159 Cost of sales (1,655) (947) (2,245) --------- --------- ---------Gross profit 588 482 914 --------- --------- --------- Administrativeexpenses (2,146) (1,265) (3,131) Exceptional items: Share based remuneration (options) - - (574) charge Listing costs - - (605) --------- --------- --------- Total exceptional costs - - (1,179) --------- --------- --------- Totaladministrativeexpenses (2,146) (1,265) (4,310) --------- --------- --------- Operating loss (1,558) (783) (3,396) Interest receivable andsimilar income 11 6 13Interest payable andsimilar charges 2 (78) (150) (254) --------- --------- --------- Loss on ordinaryactivities before andafter taxation (1,625) (927) (3,637) --------- --------- --------- Loss per ordinary share (pence) 3 Basic (2.6)p (2.7)p (8.4)p Diluted (2.6)p (2.7)p (8.4)p Loss on ordinaryactivities excludingexceptional costs andbefore and after taxation (1,625) (927) (2,458) All amounts relate to continuing activities CASHBOX PLCCONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFOR THE SIX MONTHS ENDED 31 DECEMBER 2006 unaudited unaudited as restated Notes 6m ended 6m ended Year ended 31-12-06 31-12-05 30-6-06 £'000 £'000 £'000 Loss for the period (1,625) (927) (3,637) --------- --------- Prior period adjustments 1 (75)- share based payments ---------Total gains and losses recognisedsince last financial statements (1,700) --------- CASHBOX PLCCONSOLIDATED BALANCE SHEETAS AT 31 DECEMBER 2006 unaudited unaudited Notes 31-12-06 31-12-05 30-6-06 £'000 £'000 £'000Fixed assets Tangible assets 1,167 234 674 Current assets Stocks 27 48 22 Debtors 822 634 1,492 Cash at bank and in hand 1,161 625 536 --------- --------- --------- 2,010 1,307 2,050 Creditors: amountsfalling due withinone year 4 (4,865) (3,807) (2,225) --------- --------- --------- Net currentliabilities (1,688) (2,500) (175) --------- --------- ---------Total assets lesscurrent liabilities (521) (2,266) 499 Creditors: amountsfalling due aftermore than one year 4 - - (679) --------- --------- --------- Net liabilities (1,688) (2,266) (180) --------- --------- --------- Capital and reserves Called up share capital 614 380 614 Share premium account 3,880 - 3,880 Merger reserve 2,180 2,180 2,180 Warrants reserve 37 - 37 Profit and loss account (8,399) (4,826) (6,891) --------- --------- --------- Shareholders' deficit 5 (1,688) (2,266) (180) --------- --------- --------- CASHBOX PLCCONSOLIDATED CASH FLOW STATEMENTFOR THE SIX MONTHS ENDED 31 DECEMBER 2006 unaudited unaudited Notes 6m ended 6m ended Year ended 31-12-06 31-12-05 30-6-06 £'000 £'000 £'000 Net cash inflow /(outflow) fromoperating activities 6 852 (742) (4,327) ---------- ---------- ---------- Returns on investments andservicing of finance Interest received 11 6 13 Interest paid (41) (117) (254) ---------- ---------- ---------- Net cash outflow fromreturns on investment andservicing of finance (30) (111) (241) ---------- ---------- ---------- Capital expenditure and financialinvestment Purchase of tangible fixed assets (623) (154) (44) ---------- ---------- ---------- Net cash outflow fromcapital expenditureand financial investment (623) (154) (44) ---------- ---------- ----------Cash inflow / (outflow)before use of liquidresources and financing 3 (1,007) (4,612) ---------- ---------- ---------- Financing Issue of ordinary shares for cash - 1,596 5,339 (net of issue costs) Loans taken and repaid - (15) (457) Cash advances from Lease 500 - - Provider Capital element of finance leases (74) - - repaid Sale and leaseback of tangible - - 215 fixed assets ---------- ---------- ---------- Net cash inflow from financing 426 1,581 5,097 ---------- ---------- ---------- Increase / (decrease) in cash 625 574 485 ---------- ---------- ---------- CASHBOX PLCNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 31 DECEMBER 2006 1. Accounting policies and basis of presentation of financial informationThese financial statements have been prepared under the historical costconvention and in accordance with applicable United Kingdom Accounting Standardson a going concern basis and should be read in conjunction with the Group'sAnnual Accounts for the year ended 30 June 2006. The results for the six monthsended 31 December 2006 and the comparative figures for the six months ended 31December 2005 are unaudited. The interim report for the six months ended 31 December 2006 was approved by theBoard on 29 March 2007. This interim financial information does not constitute the Company's statutoryaccounts within the meaning of section 240 of the Companies Act 1985. Thefinancial information for the year ended 30 June 2006 has been extracted fromthe statutory accounts which have been filed with the Registrar of Companies.The auditors' report in those accounts was unqualified but included an emphasisof matter regarding Going Concern. The auditors' report did not contain astatement under s237 (2) or (3) Companies Act 1985. Change of accounting policyThe Company has applied the requirements of Financial Reporting Standard No 20Share-based payment, which it has adopted for the first time with effect from 1July 2006 as its application is obligatory for accounting periods commencing onor after 1 January 2006. The Group issues equity-settled share-based payments including share options andwarrants to certain Directors and employees. Equity-settled share-based paymentsare measured at fair value at the date of grant using an appropriate optionpricing model. The fair value determined at the date of grant is expensed to theprofit and loss account on a straight line basis over the vesting period. At thebalance sheet date the cumulative change in respect of each award is adjusted toreflect the actual levels of options vesting or expected to vest. The effect ofthis is to increase costs for the six months ended 31 December 2006 by £117,000.The prior period comparatives have been restated resulting in an increase incosts for both the six months and year ended 30 June 2006 of £75,000 being£71,000 of ordinary and £4,000 exceptional costs. There was no impact on openingreserves at 1 July 2005 as no equity-settled share-based payments were madeprior to March 2006. 2. Interest payable and similar charges unaudited unaudited 6m ended 6m ended Year ended 31-12-06 31-12-05 30-6-06 £'000 £'000 £'000 Bank loans andoverdrafts - 126 203Supplier interest - 23 46Other loans 5 1 5Finance leaseinterest andother charges 73 - - --------- --------- --------- 78 150 254 --------- --------- --------- 3. Loss per Share Basic and diluted loss per share has been calculated on the basis of lossesafter taxation of £1,625,000 (2005: £927,000) and 61,409,143 1p ordinary shares(2005: 34,068,000 equivalent 1p ordinary shares) being the weighted averagenumber of shares in issue during the six month period. The exercise of shareoptions would have the effect of reducing the loss per ordinary share and istherefore not dilutive under the terms of Financial Reporting Standard 22. 4. Creditors falling due within and after one year unaudited unaudited 31-12-06 31-12-05 30-6-06 £'000 £'000 £'000Within one year Director loans - 600 -Trade creditors 924 1,435 592Taxation and social security 307 97 45Amounts due under finance leases 973 - 172Advances from lease provider 500 - -Other creditors 473 462 469Accruals and deferred income 1,688 1,213 947 --------- --------- --------- 4,865 3,807 2,225 --------- --------- ---------After one year Amounts due under finance leases - - 679 --------- --------- --------- - - 679 --------- --------- --------- The finance lease is provided by GCVF and is for a period of five years from thedate of execution, 30 June 2006, and as per a facility letter dated 23 March2006 for a total facility of £6.1m. On 13 November and 18 December 2006, twocash advances were received but no accompanying documentation has been providedor executed and accordingly these balances are treated as Cash Advances ratherthan finance leases. Following GCVF's failure to provide funds on a timely basis, and in accordancewith the facility letter of 23 March 2006, it is expected that the financeleases and cash advances will be repaid within the next 12 months andaccordingly balances previously due after one year have been reclassified. 5. Reconciliation of movements in shareholders' funds unaudited unaudited as restated 6m ended 6m ended Year ended 31-12-06 31-12-05 30-06-06 £'000 £'000 £'000 Loss for the period (1,625) (927) (3,637)Share based payments - credit toreserves 117 - 645 ---------- ---------- ---------- Profit and loss account (1,508) (927) (2,992) Issue of shares - - 234Premium on shares issued - - 3,880Capital (merger) reserve - 1,706 1,706Warrants reserve - - 37 ---------- ---------- ---------- Net (decrease) / increase inshareholders' funds (1,508) 779 2,865 ---------- ---------- ---------- Shareholders' deficit at beginningof the period as previously stated (180) (3,045) (3,045) Prior period adjustments:Share based remuneration charge 75 - -Share based payments - credit toreserves (75) - - ---------- ---------- ---------Shareholders' deficit at beginningof the period as restated (180) (3,045) (3,045) ---------- ---------- --------- Shareholders' (deficit)/funds atend of period (1,688) (2,266) (180) --------- --------- --------- 6. Reconciliation of operating loss to net cash outflow from operating activities unaudited unaudited as restated 6m ended 6m ended Year ended 31-12-06 31-12-05 30-6-06 £'000 £'000 £'000 Operating loss (1,558) (783) (3,396) Share based remunerationcharge 117 - 645Depreciation 130 48 98(Increase) /Decrease / in stock (5) 163 189Decrease /(Increase) in debtors 834 (325) (1,294)Increase /(Decrease) in creditors 1,334 155 (569) ---------- ---------- ----------Net cash outflowfrom operatingactivities 852 (742) (4,327) ---------- ---------- ---------- 7. Analysis of changes in net debt unaudited unaudited unaudited unaudited unaudited unaudited Cash in Bank Total cash Debt due Debt due Total net hand and overdraft and within one after one debt at bank overdraft year year £'000 £'000 £'000 £'000 £'000 £'000 At 30 June2006 536 - 536 (172) (679) (315) Cash flows 625 - 625 625 Cash advancesfrom leaseprovider (500) - (500) Funds due fromlease provider (192) (192) Finance leaserepayments 74 - 74 Non cash items (4) (4) Reclassifications - - - (679) 679 - -------- -------- -------- -------- -------- --------At 31 December2006 1,161 - 1,161 (1,473) - (312) -------- -------- -------- -------- -------- -------- The funds due from lease provider relate to amounts invoiced to the leaseprovider as part of the sale and leaseback of ATMs. A corresponding amount isincluded in Debtors. 8. Dividend The Directors are not able to declare a dividend. 9. Subsequent events On 8 February 2007 the Company arranged a series of short term loans fromdirectors and a number of existing shareholders totalling £0.8m repayable on 28days notice with interest payable at base rate plus 0.5%. On 26 March 2007 the company signed a £2.0m 15% loan note repayable in threeyears time with interest payable quarterly in arrears with Finsbury NomineesLimited, a client of Fairfax I.S. plc, a UK investment bank. 10. Contingencies The Company's Subsidiary has entered into a finance leasing agreement with GCVF.The liabilities of the Company's Subsidiary pursuant to such agreement aresecured by fixed and floating charges and guarantees given by the Company andCompany's Subsidiary. Under the terms of the agreement, penalty clauses up to amaximum of the outstanding charges discounted at 3% are payable on earlytermination. 10. Contingencies (continued) In December 2003 Hanco ATM Systems Limited ("Hanco") made significant claimsagainst Carl Thomas and Cashbox ATM Systems Limited ("Subsidiary") including anallegation that Carl Thomas diverted a business opportunity from Hanco toCashbox, namely a contract for the installation of ATMs with the Thresher Group.Both the Company's Subsidiary and Carl Thomas vigorously denied these claims. The Company and the Company's Subsidiary have obtained a joint and severalindemnity from both Carl Thomas and Anthony Sharp against any liability of theCompany or the Company's Subsidiary arising from or in connection with thislitigation to pay any sum for damages awarded in respect thereof by a court ofcompetent jurisdiction (including all sums payable to the legal advisers ofHanco) or for any agreed settlement in respect thereof. 11. Non-GAAP terms EBITDA is earnings before interest, tax, depreciation, amortization, exceptionalitems and minority interests and equals operating income before exceptionalitems plus depreciation and amortization. EBITDA, which we consider to be ameaningful measure of operating performance, particularly the ability togenerate cash, does not have a standard meaning under UK GAAP and may not becomparable with similar measures used by others. unaudited unaudited as restated 6m ended 6m ended Year ended 31-12-06 31-12-05 30-6-06 £'000 £'000 £'000 Operating loss (1,558) (783) (3,396) Add back: Exceptional items - - 1,179 Share based payments charge 117 - 71 Depreciation 130 48 98 --------- --------- --------- EBITDA (1,311) (735) (2,048) --------- --------- --------- This information is provided by RNS The company news service from the London Stock Exchange