RNS Number:8621J
Moneybox PLC
17 March 2005
Preliminary results for the year ended 31 December 2004
Results ahead of expectations despite challenging market conditions
Year ended 11 months ended Change
31 December 31 December 2003
2004 (i)
Turnover #42.9m #29.3m Up #13.6m or
+46%
EBITDA (ii) before exceptional items #5.1m #(0.1)m Up #5.2m
Profit / (loss) on ordinary activities before taxation,
exceptional items and goodwill amortisation
- UK ATMs
#3.5m #2.0m Up #1.5m
- Rest of Europe ATMs
#(0.8)m #(2.4)m Down #1.6m
- Cashless payments and access control
#0.5m - Up #0.5m
- Central costs including interest
#(1.1)m #(0.9)m Up #0.2m
Total profit / (loss) on ordinary activities before taxation, #2.1m #(1.3)m Up #3.4m
exceptional items and goodwill amortisation
Loss on ordinary activities before taxation #(3.4)m #(1.3)m Up #2.1m
(i) Includes the results of G2 from acquisition on 18 March 2004
(ii) A reconciliation of EBITDA to operating profit / (loss) is set out in
note 5 to the preliminary announcement
HIGHLIGHTS
* Profit before tax, exceptional items and goodwill amortisation ahead
of revised market expectations at #2.1m (2003: loss of #1.3m)
* H2 profit before tax, exceptional items and goodwill amortisation
#1.8m compared to #0.3m in H1
* Exceptional items of #4.3m (2003: nil) incurred in 2004 on AIM
flotation, aborted acquisition and bid defence costs, reorganisation
and restructuring costs and loss on fixed asset impairments
* Results delivered against a difficult H2 trading background in the
independent ATM sector
* New management structure in place dedicated to delivering sustainable
shareholder value
* UK ATM estate increased by 18% from 2,471 in December 2003 to 2,912 in
December 2004 and in Europe the estate increased by 67% from 343 in
December 2003 to 573 in December 2004
* Major ATM contract won with Compass Group
* Free-standing ATM kiosk programme underway
* Acquisition of G2 has delivered the expected ATM maintenance cost
savings
* Successful launch of G2's "Myriad" prepayment, ID and access control
platform in schools, universities and major financial institutions
highlights the excellent growth opportunities for the Group's cashless
payments and access control division
Peter McNamara, Executive Chairman of Moneybox plc, said:
"Our first year as a public company has been eventful. The profits warning in
September 2004 led to significant changes at Board level and a subsequent
restructuring of the business to cut costs, improve operating margins and
streamline operations. While the business remains focused on top line growth,
the new management team has been careful to ensure that capital is only
committed to opportunities that generate an attractive rate of return. Your
Board is confident that this approach, coupled with continuing tight cost
control, will allow the Group to deliver strong future profits growth."
For further information please contact
Moneybox plc
Peter McNamara, Executive Chairman 020 7452 5400
Reputation Inc
Tom Wyatt 020 7758 2800
Chairman's Statement
Our first year as a public company has been eventful. The profits warning in
September 2004 led to significant changes at Board level and a subsequent
restructuring of the business to cut costs, improve operating margins and
streamline operations. Since that time, excellent progress has been made in
laying the foundations to deliver strong further growth of the business.
As part of the Company's flotation in March 2004, Moneybox acquired G2, one of
the UK's leading providers of cashless payments and access control systems. We
have taken significant steps to bring the two businesses together and to obtain
cost saving benefits and synergies from shared investment in services and
facilities. We have also been able to build, from the existing G2 maintenance
field force, an in-house maintenance and deployment capability for our ATMs.
The second half of 2004 saw challenging trading conditions particularly
impacting on UK surcharging ATM transactions. These conditions have continued in
early 2005 reflecting the difficult external background of unprecedented press
criticism of charging ATMs and the consequence of engineering work required to
complete the upgrade of our ATM estate to meet 'Chip and Pin' and revised
encryption standards imposed by LINK. As these factors start to fall away we
are confident that transaction volumes will improve.
The planned rationalisation and streamlining of the business gathered pace in
the Autumn, after a thorough review of the business identified that we should
take a number of measures to improve the Group's profitability and return on
capital. As a result of this exercise, we downsized the management structure to
be leaner and more customer-responsive and have taken steps to restructure
certain ATM supplier contracts. These measures, together with exceptional items
previously announced, have given rise to #4.3m of exceptional items in 2004, and
we anticipate that up to a further #2m will arise in 2005 in order to complete
this cost reduction programme.
As a consequence results for the year were affected but we nevertheless believe
that the actions taken place Moneybox in a far stronger position to go forward
into the next phase of our growth. In addition, despite the challenging
conditions, we are extremely pleased to have exceeded the revised market
expectations in achieving a profit before tax, exceptional items and goodwill
amortisation for the year of #2.1m (2003: loss of #1.3m).
We have reorganised and streamlined our whole organisation with a view to
lowering operating costs at every level and we have examined opportunities to
develop new profitable business, both in the UK and in Europe. We have won a
number of important new contracts and have exciting prospects in our new
business pipeline.
Moneybox has a successful business that remains strongly positioned
strategically. We have a major share of the fast growing market for
independently deployed ATMs and are a leader in the development of complementary
access control and cashless payment systems. We are now also lean and hungry,
with the new management team focusing its full attention on the delivery of
shareholder value.
There has also been recent press speculation over the potential sale of
Independent ATM Deployer ('IAD') businesses and there are undoubtedly further
economies of scale to be achieved through the consolidation of the UK IAD market
as the sector matures.
I must thank, on behalf of the Board, all our staff for their work towards the
considerable achievements the business has made during 2004. They are an
enthusiastic and hard working team, with whom it is a pleasure to work.
Financial Overview
Turnover for the 2004 year rose by 46%, from #29.3m to #42.9m, partly reflecting
a 9 month first time contribution from our acquisition of G2. However, the
existing Moneybox ATM deployment business also showed strong organic growth,
with sales ahead by 26%, from #29.3m to #37.0m. On a like for like basis,
excluding G2 and annualising the prior period, group sales growth was 16%.
Profit before tax, exceptional items and goodwill amortisation was #2.1m,
compared with a loss of #1.3m for 2003. This principally reflected the
continuing growth of the profitability of our UK ATM business and reduced losses
in our other European ATM operations as we reached critical mass in Germany and
reduced costs further in the Netherlands. After exceptional items of #4.3m and
goodwill amortisation of #1.2m, there was a loss on ordinary activities before
taxation of #3.4m (2003: loss of #1.3m).
I have already outlined the strong action taken last September to restructure
the group's activities and re-balance the cost base to more appropriately match
the level of business. Whilst turnover in our main ATM business improved in
2004, we should be in no doubt that we are in a highly competitive service
industry where reducing costs and efficiency savings are likely to remain the
best driver of profitability. We are fully committed to this aspect of the
business model and believe that we are now gaining an operating cost advantage
to compliment our technical expertise.
The 2004 balance sheet shows shareholders' funds of #29.9m, equivalent to 15p
per share compared with less than #1m in the pre-float 2003 balance sheet.
Capital expenditure in the year totalled #18.6m, but this figure included the
#13m cost of acquiring our UK and European ATM estates, previously rented from
NCR under long term operating leases. The balance sheet at 31 December 2004
includes #14.9m of goodwill, arising from the G2 acquisition, which is being
amortised over a ten year period.
We will obtain significant cost savings in future years as a result of
refinancing these ATM assets, although the immediate benefits in 2004 and 2005
have been more than offset by the additional costs of upgrading our ATM estate
for EMV ('Chip and Pin') technology. During the year, Moneybox drew down a #10m
five-year term loan from The Royal Bank of Scotland plc to help finance the ATM
estate purchase. At 31 December 2004, the Group had a cash balance of #6.5m and
net debt was #4.1m.
Review of Operations
ATM Deployment and Management
UK ATMs
Turnover for the UK ATM business in 2004 was #32.8m (2003: #27.6m) generating a
profit before tax, exceptional items and goodwill amortisation of #3.5m (2003:
#2.0m). At 31 December 2004, the Group operated 2,912 ATMs in the UK (31
December 2003: 2,471 ATMs).
Moneybox has seen further rapid expansion of its UK ATM estate during 2004. This
includes the installation of over 130 freestanding kiosks. These are able to
offer 24-hour cash availability and their greater visibility has proved highly
effective in helping us win new contracts.
We are necessarily investing in the updating of our entire estate for 'Chip and
Pin' and improved encryption technology. This mandatory upgrade programme will
be substantially completed by May 2005.
We are also beginning to see the roll-out of mobile phone top-up functionality:
the market has developed rapidly in recent months and now more than 50% of bank
cards offer the facility of a mobile phone top-up at an ATM. We believe this
will radically change the nature of the top-up market and that ATMs will become
an increasingly convenient destination for mobile phone top-ups.
Our expansion in the UK to date has been almost entirely by organic development,
and we now have a strong pipeline of new ATM sites that will enable us to
redeploy unprofitable ATMs to further improve our overall estate quality. In
2005 we plan to accelerate this redeployment programme in order to maximise
medium term returns on capital.
Our long-term plans for developing this business include the strategic aim of
developing long-term contracts with major retailers, leisure groups and
financial institutions to establish a solid core of recurring revenue streams.
We already have some of the highest transaction levels in the industry for a fee
charging estate and we intend to continue driving up the quality of our ATM
portfolio, by replacing poorly performing sites and acquiring better and more
profitable sites, rather than playing a pure ATM numbers growth game. While the
business remains focussed on top-line growth, the new management team has been
careful to ensure that available capital is only committed to opportunities that
generate an attractive rate of return.
Recent major contract wins have included an agreement with the UK and Ireland
division of Compass Group, the world's biggest contract caterer, to install ATM
machines in suitable locations identified from their 9,000 locations across the
UK. This gives us a major reserve of potential new sites and we expect to deploy
machines in at least 100 new Compass locations in 2005. We have also signed an
agreement with X-Leisure Group, an operator of retail/leisure parks throughout
the UK, to install and operate ATM machines and freestanding ATM kiosks in
X-Leisure locations.
The roll-out of our own ATM maintenance operation is now complete and gives us
full coverage of the UK. We have also recently replaced third party providers
with our own installation teams delivering both logistical and cost benefits.
Both of these new capabilities will drive costs lower and our ability to deliver
an in-house service and maintenance function will allow us to achieve further
improvements in ATM availability and customer service.
Shareholders will be aware that the influential Treasury Select Committee ('
TSC') has recently undertaken a brief inquiry into ATM charging, in which it has
identified a particular interest in three aspects of the industry's operations:
the reasons for the recent rapid growth in the number of charging ATM machines,
the transparency of charges, and what impact the growth in the number of
charging machines might be having on individual low-income communities - in
short the issue of financial inclusion.
Along with other leading industry participants, we were invited to make a
submission to the TSC and, later, with other IAD representatives, were requested
to appear at one of the TSC's public hearings. We were pleased to have the
opportunity to address the TSC on the important issues they were examining, and
in particular to explain the basis of our belief that the current rules of the
LINK network are operated in such a way as to be detrimental to the interests of
consumers and to the disadvantage of the IADs.
The Board of Moneybox believes that the TSC's decision to examine ATM charges
provides an opportunity to encourage wider scrutiny of the current regulatory
regime governing ATMs. We believe strongly that changes in the structure of
charges made by LINK, the monopoly supplier of switching services between
card-issuers and ATM deployers, would potentially be of benefit to consumers and
would significantly improve the competitive position of IADs.
We wait with interest to hear the TSC's conclusions and recommendations. We are
confident that we can demonstrate that IADs provide choice and a service that is
valued by consumers. Charges could be lower if IADs were able to recover an
interchange fee for cash withdrawals through the existing LINK network system.
We have also pointed out that the transparency of our charges is in marked
contrast to other card-based transactions. Finally, we have already acted to
improve signage and consumer information on our ATMs. In view of our discussions
with the TSC, we would be surprised if they were to direct any actions that
could be materially damaging to the IAD market.
Rest of Europe ATMs
Turnover for the other European ATM businesses in 2004 was #4.7m (2003: #1.7m)
producing a loss before tax, exceptional items and goodwill amortisation of
#0.8m (2003: loss of #2.4m). At 31 December 2004, the Group operated 573 ATMs in
the rest of Europe (31 December 2003: 343 ATMs).
Overall, our overseas ATM deployment business remained loss making in 2004.
However, we made significant progress during the year, not just in increasing
the scale of our involvement towards the level of critical mass necessary to
move into profitability, but also in driving the same principles of
cost-reduction and efficiency improvement into the management of the business.
In Germany, which we entered for the first time in mid 2002 and where we see
particularly exciting prospects for expansion, we have increased the number of
machines deployed from 178 at 31 December 2003 to 400 at 31 December 2004. This
business became profitable in the second half of the year. In the Netherlands,
we have grown our estate to 173 ATMs and have significantly reduced our
operating costs. In addition, we are now exploring expansion into self-fill and
interchange ATMs in major retailers.
Our German ATM business has delivered consistent growth in terms of machine
installations and revenue throughout the second half of the year. Our business
model of installing ATMs in transport and other high frequency remote locations
has been extended to include the installation and management of ATMs within bank
branches.
Cashless Payments and Access Control
Since acquisition on 18 March 2004, and up to 31 December 2004, this division
generated turnover of #5.4m and profit before tax, exceptional items and
goodwill amortisation of #0.5m. However, its value to Moneybox far outweighs its
immediate contribution to the bottom line with a medium term growth rate that we
believe could exceed that of our core ATM activities.
Our acquisition of G2 at the time of our float in March 2004 brought into the
group one of the UK's leading developers and deployers of access control and
cashless payment systems. There are considerable synergistic overlaps between
this new area of activity and our core ATM business: both use similar card
technology and secure messaging software systems, both have a common need for
payment processing facilities and the operational support of dedicated
maintenance and installation teams, and there is significant overlap between the
customer bases of the two businesses.
Even more importantly, we see exciting prospects for developing new products and
new technologies on the back of our existing activities. Access control, stored
value cards and cashless payments are technologies for which demand is growing
at a rapid pace, for obvious reasons in a world which has an ever greater need
for better security and more efficient payments. Customers include organisations
that operate in a wide range of high-security environments, including
universities, corporate headquarters, large manufacturing plants and schools,
and an even wider range of users of cashless payment systems.
Access control and cashless payment system sales form the core area of G2's
activity and business has continued to show some major contract wins in the
current year, with recent orders from Johnson & Johnson, Unilever, Addenbrooke's
Hospital and the University of Durham.
Cashless payment technology can deliver an almost endless catalogue of benefits
to its users. Apart from increasing customers' propensity to spend, it can be
used to generate significantly quicker customer service, to allow variable
tariffs for different user groups, to simplify accounting and eliminate the
handling of cash, to provide a complete audit trail and detailed management
reports, to centrally manage pricing, promotional activity, incentives,
allowances and subsidies - in summary, it can provide a management tool across
an extraordinarily wide range of tasks.
G2 has an unrivalled expertise in the cashless payment business going back
nearly two decades. Its wide customer base gives it an outstanding range of
experience and capability. It has a multi-skilled in-house engineering resource
and a modular range of flexible products to match the customer's specific
requirements. And it has brought together its complete in-house operation -
covering design, development, manufacture, sales, installation and service
support - to launch a new range of products and services.
At the centre of this is G2's innovative cashless payment system, Myriad. Myriad
has the capability to deliver flexible solutions to the management of access
control and cashless payments to users who may require unusually complex
operations. For example, it can handle access control via ID production,
including visitor management, across multiple locations via the use of local or
wireless networks. It can manage cashless payment systems offering a range of
value loading options - note and coin loading, credit and debit card loading or
back-office cheque loading. It can handle complicated purse options which
recognise subsidies, special offers, reward points and meal tokens. And it can
provide full transaction histories by product, location or cardholder, available
via a local or web-based reporting tool.
During 2004, G2 has successfully installed a number of Myriad systems in public
and private organisations throughout the UK and Europe including Kelloggs,
Diageo and British Nuclear Group. In particular, this new product has received a
very positive reception in the catering and vending industry. With the launch of
further Myriad products and services in the first half of 2005, we anticipate
strong progress from G2 in 2005.
Outlook
As some of the negative factors that have impacted transaction volumes over
recent months start to fall away, we are confident that the business is now in
better shape to deliver profitable growth. While 2005 should deliver a
significantly improved result over 2004, it will to some extent be a year of
consolidation. The benefits of the actions already taken, and those being taken
during 2005, gives your Board confidence of a further strengthening of
performance in 2006.
Peter McNamara
Executive Chairman
17 March 2005
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2004
Year ended 31 December 2004 11 months ended 31 December 2003
Before Goodwill Total Before Goodwill Total
goodwill amortisation goodwill
amortisation and amortisation amortisation
and and
and exceptional
exceptional exceptional exceptional
items items items items
(Note 3)
Notes #'000 #'000 #'000 #'000 #'000 #'000
Turnover 2
Continuing operations 37,022 - 37,022 29,335 - 29,335
Acquisitions 5,840 - 5,840 - - -
42,862 - 42,862 29,335 - 29,335
Cost of sales (29,758) (2,250) (32,008) (24,170) - (24,170)
Gross profit 13,104 (2,250) 10,854 5,165 - 5,165
Administrative expenses
Goodwill amortisation - (1,198) (1,198) - - -
Exceptional items 3 - (2,078) (2,078) - - -
Other (11,146) - (11,146) (6,492) - (6,492)
Total administrative (11,146) (3,276) (14,422) (6,492) - (6,492)
expenses
Operating profit / (loss)
Continuing operations 1,305 (4,328) (3,023) (1,327) - (1,327)
Acquisitions 653 (1,198) (545) - - -
1,958 (5,526) (3,568) (1,327) - (1,327)
Net interest 151 - 151 44 - 44
Profit / (loss) on ordinary 2 2,109 (5,526) (3,417) (1,283) - (1,283)
activities before taxation
Tax on profit / (loss) on 335 - 335 900 - 900
ordinary activities
Profit / (loss) on ordinary 2,444 (5,526) (3,082) (383) - (383)
activities after taxation
Equity minority interests 248 35 283 552 - 552
Retained profit / (loss) 2,692 (5,491) (2,799) 169 - 169
for the financial period
Earnings / (loss) per 4
ordinary share
Basic 1.47p (2.99)p (1.52)p 0.13p - 0.13p
Diluted 1.43p (2.95)p (1.52)p 0.13p - 0.13p
CONSOLIDATED BALANCE SHEET
As at 31 December 2004
31 December 31 December
2004 2003
(as restated
note 1)
Notes #'000 #'000
Fixed assets
Goodwill 14,946 -
Negative goodwill (64) -
14,882 -
Other intangible assets 80 77
14,962 77
Tangible assets 20,050 5,372
35,012 5,449
Current assets
Stocks 4,283 215
Debtors: amounts falling due within one year
- Deferred tax asset 1,150 900
- Other 5,688 2,907
6,838 3,807
Debtors: amounts falling due after more than one year 1,000 -
Cash at bank and in hand 7 6,540 2,627
18,661 6,649
Creditors: amounts falling due within one year (14,331) (9,595)
Net current assets / (liabilities) 4,330 (2,946)
Total assets less current liabilities 39,342 2,503
Creditors: amounts falling due after more than one year (8,915) (1,562)
Net assets 2 30,427 941
Capital and reserves
Called up share capital 19,911 12,699
Share premium account 24,584 -
Merger reserve 8,459 8,459
Profit and loss account (23,085) (20,334)
Equity shareholders' funds 29,869 824
Equity minority interests 558 117
Total capital employed 30,427 941
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2004
Year ended 11 months
31 December ended 31
December 2003
2004
Notes #'000 #'000
Net cash (outflow) / inflow from operating activities 5 (1,051) 718
Returns on investments and servicing of finance 6 303 44
Taxation 6 (575) -
Capital expenditure and financial investment 6 (18,070) (1,520)
Acquisitions and disposals 6 (6,679) -
Net cash outflow before financing (26,072) (758)
Financing 6 29,984 517
Increase / (decrease) in cash in the period 3,912 (241)
Reconciliation of net cash flow to movement in net (debt) / funds
Increase / (decrease) in cash in the period 3,912 (241)
Cash inflow from increase in debt financing (10,000) -
Cash outflow from decrease in debt financing 220 110
Debt issue costs for new debt financing 144 -
Change in net funds resulting from cash flows (5,724) (131)
Increase in debt financing - (1,100)
Debt issue costs charged to interest in the period (9) -
Translation difference 1 12
Change in net funds resulting from non cash flows (8) (1,088)
Change in net funds (5,732) (1,219)
Net funds at start of period 1,637 2,856
Net (debt) / funds at end of period 7 (4,095) 1,637
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 31 December 2004
Year ended 11 months ended
31 December 2003
31 December
2004
#'000 #'000
Retained (loss) / profit for the financial period (2,799) 169
Translation differences on foreign currency net investments 48 (117)
Total recognised (losses) / gains for the financial period (2,751) 52
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
For the year ended 31 December 2004
Year ended 11 months ended
31 December 2003
31 December
2004
#'000 #'000
Retained (loss) / profit for the financial period (2,799) 169
Issue of share capital 33,909 -
Redemption of share capital (13) -
Share issue expenses (2,100) -
Translation differences on foreign currency net investments 48 (117)
Net increase in equity shareholders' funds 29,045 52
Opening equity shareholders' funds 824 772
Closing equity shareholders' funds 29,869 824
1. Financial information and basis of preparation
(a) Financial information
The financial information set out in this preliminary announcement does not
constitute the Company's statutory accounts for the year ended 31 December 2004
or for the period ended 31 December 2003. The financial information for the
year ended 31 December 2004 has been derived from the Company's statutory
accounts that will be delivered to the Registrar of Companies following the
Company's Annual General Meeting. The auditors' report was unqualified and did
not contain any statements under section 237(2) or (3) of the Companies Act
1985.
The financial information relating to the 11 months ended 31 December 2003 has
been extracted, as restated for the group reconstruction, from the consolidated
statutory accounts of Moneybox Corporation Limited which have been reported on
by the group's auditors and have been delivered to the Registrar of Companies.
The auditors' report was unqualified and did not contain any statements under
section 237(2) or (3) of the Companies Act 1985.
(b) Basis of preparation
The financial statements have been prepared under the historical cost convention
and in accordance with applicable accounting standards in the United Kingdom.
The principal accounting policies have been applied consistently throughout the
current year and the preceding period.
In March 2004, Moneybox plc acquired by way of a scheme of arrangement the
entire issued share capital of Moneybox Holdings Limited (formerly Ambient
Corporation Limited) and the remaining shareholdings in Moneybox Corporation
Limited not already held by Moneybox Holdings Limited in exchange for the issue
of ordinary shares in Moneybox plc. This group reconstruction has been
accounted for in accordance with the principles of merger accounting set out in
Financial Reporting Standard 6 - "Acquisitions and Mergers". The financial
information is therefore presented as if Moneybox Corporation Limited and its
subsidiaries had been owned and controlled by the Company throughout the periods
ended 31 December 2003 and 31 December 2004.
2. Segmental analysis
Year ended 31 December 2004 11 months ended December 2003
Market analysis Turnover Profit / Net Turnover Profit / Net
(loss) (loss)
before tax assets assets
before tax
#'000 #'000 #'000 #'000 #'000 #'000
ATM deployment and management - UK 32,778 3,449 8,118 27,584 1,996 477
ATM deployment and management - 4,705 (795) 5,079 1,751 (2,429) 464
Rest of Europe
Cashless payments and access 5,379 499 2,348 - - -
control
Central - (1,195) - - (894) -
42,862 1,958 15,545 29,335 (1,327) 941
Net interest 151 44
Profit / (loss) before amortisation 2,109 (1,283)
of goodwill, exceptional items and
taxation
Exceptional items - ATM deployment (4,328) -
and management
Goodwill amortisation (1,198) -
Loss before taxation (3,417) (1,283)
Goodwill 14,882 -
30,427 941
3. Exceptional items
Cost of Administrative Year ended 11 months
sales expenses 31 December ended
2004 31 December
2003
#'000 #'000 #'000 #'000
AIM flotation costs (i) - 897 897 -
Aborted acquisition and bid defence costs (ii) - 477 477 -
Reorganisation and restructuring costs (iii) 1,274 704 1,978 -
Loss on impairment of tangible fixed assets 976 - 976 -
(iv)
2,250 2,078 4,328 -
(i) Costs associated with the Company's flotation on the Alternative
Investment Market of the London Stock Exchange in March 2004 that were not
direct expenses of the share issue and were not capitalised on the acquisition
of G2 Limited.
(ii) Professional fees incurred in connection with due diligence on
potential acquisitions that did not proceed to completion and professional
advice on the merits of potential offers for the Company.
(iii) Costs associated with restructuring the ATM deployment and management
headcount and termination of supplier contracts.
(iv) Reflects the impairment of ATM installation and associated costs
previously capitalised at sites where the asset is not expected to generate
sufficient returns to recover its carrying amount.
4. Earnings / (loss) per share
The weighted average number of shares in the period was: Year ended 11 months ended 31
31 December 2004 December 2003
Ordinary shares - basic 183,735,828 126,986,360
Dilutive ordinary shares from share options (i) 4,717,236 2,155,820
Ordinary shares - diluted 188,453,064 129,142,180
(i) As the group made a retained loss for the year ended 31 December
2004 no share options outstanding were considered to be dilutive for this loss
per share calculation.
The earnings / (loss) per share has been calculated using Year ended 11 months ended 31
the following information: 31 December 2004 December 2003
#'000 #'000
Retained profit for the period before goodwill 2,692 169
amortisation and exceptional items
Goodwill amortisation (1,198) -
Exceptional items (net of minority share) (4,293) -
(Loss) / profit for the period as calculated under FRS 14 (2,799) 169
Earnings / (loss) per share is shown calculated by reference to profits /
(losses) both before and after goodwill amortisation and exceptional items since
the Directors consider that this gives a useful additional measure of underlying
performance.
5. Reconciliation of operating profit / (loss) to net cash inflow /
(outflow) from operating activities
Year ended 31 December 2004 11 months ended December 2003
Before Goodwill Total Before Goodwill Total
goodwill amortisation goodwill amortisation
amortisation and
and amortisation exceptional
and exceptional and
exceptional exceptional items
items items items
#'000 #'000 #'000 #'000 #'000 #'000
Operating profit / (loss) 1,958 (5,526) (3,568) (1,327) - (1,327)
Goodwill amortisation - 1,198 1,198 - - -
Amortisation of other 21 - 21 11 - 11
intangible assets
Depreciation of tangible 3,142 - 3,142 1,243 - 1,243
assets
Earnings before interest, 5,121 (4,328) 793 (73) - (73)
tax, depreciation and
amortisation
Loss on disposal of fixed 223 - 223 294 - 294
assets
Fixed asset impairment - 976 976 - - -
losses
(Increase) / decrease in (3,555) - (3,555) 321 - 321
stock
(Increase) in debtors (727) - (727) (619) - (619)
Increase in creditors 300 939 1,239 795 - 795
Net cash inflow / (outflow) 1,362 (2,413) (1,051) 718 - 718
from operating activities
6. Analysis of cash flows
Year ended 11 months
31 December ended 31
December 2003
2004
#'000 #'000
Returns on investment and servicing of finance
Interest received 352 44
Interest paid (49) -
Net cash inflow from returns on investments and servicing of finance 303 44
Taxation
UK corporation tax paid (575) -
Capital expenditure and financial investment
Purchase of intangible fixed assets (12) (1)
Purchase of tangible fixed assets (18,058) (1,744)
Proceeds from sale of fixed assets - 225
Net cash outflow from capital expenditure and financial investment (18,070) (1,520)
6. Analysis of cash flows (continued)
Year ended 11 months
31 December ended 31
December 2003
2004
#'000 #'000
Acquisitions and disposals
Acquisition of shares in subsidiaries (7,257) -
Acquisition costs (352) -
Net cash acquired with subsidiary (note 8) 930 -
Net cash outflow from acquisitions and disposals (6,679) -
Financing
Issue of share capital in the Company 21,862 -
Redemption of share capital (13) -
Share issue costs (2,100) -
Issue of share capital in subsidiary undertaking 599 627
New secured bank loan 10,000 -
Debt issue costs (144) -
Repayment of secured bank loan (220) (110)
Net cash inflow from financing 29,984 517
7. Analysis of net funds / (debt)
31 December Cash Other 31 December 2004
2003 flows movements
#'000 #'000 #'000 #'000
Cash at bank and in hand 2,627 3,912 1 6,540
Debt due within one year (220) (1,500) - (1,720)
Debt due after more than one year (770) (8,136) (9) (8,915)
Net funds / (debt) 1,637 (5,724) (8) (4,095)
As at 31 December 2004, included within cash at bank and in hand is an amount of
#430,000 (2003 - #807,000) held on trust on behalf of third parties.
8. Acquisitions
On 18 March 2004, the company acquired the entire issued share capital of G2
Limited for a consideration of #19,298,000 plus acquisition costs of #352,000
(total #19,650,000). The consideration was satisfied by a cash payment of
#7,251,000 and the issue of 25,632,490 ordinary shares at an issue price of 47p
each.
The book values and fair values of the net assets of G2 Limited immediately
prior to acquisition were as follows:
Book value Fair value Fair value
adjustments (i)
#'000 #'000 #'000
Intangible fixed assets - negative goodwill (97) - (97)
Intangible fixed assets - other 12 - 12
Tangible fixed assets 433 - 433
Stock 872 (359) 513
Trade debtors 5,043 - 5,043
Cash 930 - 930
Corporation tax (660) - (660)
Creditors due within one year (2,516) (54) (2,570)
Total net assets acquired 4,017 (413) 3,604
Minority interests (125)
Goodwill 16,171
Total consideration 19,650
Satisfied by: #'000
Cash 7,251
Issue of ordinary shares 12,047
Acquisition expenses 352
19,650
(i) The fair value adjustments reflect a #359,000 write down of parts stock
held on legacy cashless payment systems and the appropriate recognition of
#54,000 of deferred income.
The acquisition has been accounted for using the acquisition method of
accounting and the goodwill of #16,171,000 arising on consolidation has been
capitalised and is being amortised over a period of 10 years.
9. Copies of this preliminary announcement are available from the
Company's registered office at 5th Floor Caxton House, 2 Farringdon Road, London
EC1M 3HN. The Annual Report and Accounts for the year ended 31 December 2004
will be posted to shareholders on or about 31 March 2005.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR VQLFFEXBXBBB
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