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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Cartucho | LSE:CTGP | London | Ordinary Share | GB00B0R2GC21 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 3.75 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:9567G Cartucho Group Ltd 31 July 2006 Press Release 31 July 2006 Cartucho Group Ltd ("Cartucho" or "the Group") Interim results for the eight months ended 30 June 2006 Cartucho Group Ltd (AIM: CTGP), a growing developer and manufacturer of ink refill kiosks, today announces its maiden interim results for the eight months ended 30 June 2006. Highlights * Turnover #0.5 million * Cash balances of #2 million * 472 Kiosks manufactured * Increased European sales * Additional US trials underway * US service and support partnership contract signed * Strengthened Board and senior management Commenting on the 2006 interim results, Mike Willcocks, Chief Executive of Cartucho Group, said: "We are seeing continued significant interest from US retailers and are pleased with the dedication shown from our major customer. We have achieved our goal of filling positions in our senior management team which will continue to have a direct impact on the Group's future development." For further information, please contact: Cartucho Group Limited Mike Willcocks, Chief Executive Tel: +44 (0) 799 0505 999 mikewillcocks@cegmail.com Collins Stewart Limited Stephen Keys, Corporate Finance Tel: +44 (0) 20 7523 8312 skeys@collins-stewart.com www.collins-stewart.com Media enquiries: Abchurch Chris Lane / Franziska Bohnke Tel: +44 (0) 20 7398 7700 chris.lane@abchurch-group.com www.abchurch-group.com Chairman's statement I am pleased to report that revenues for the eight months to 30 June 2006 are #0.5million which is a significant achievement from a near-zero starting point. Revenues are substantially all from the revenue share deal with OfficeMax. The Group has reported an operating loss of #2.4million and a loss before tax of #2.3million for the eight month period. The consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as stated in note 1. Whilst AIM listed companies are not required to prepare accounts under IFRS until 2007 the Directors believe that, in keeping with its policy to adhere to best practice, an early adoption is in the best interests of the shareholders, so that a fairer comparison with other listed companies can be made. Under IFRS we have made provision during this period for #200,000 for share based payments in respect of the options granted at the time of admission and in respect of which details were included in the admission document. The Group has invested in the production of its ink refill kiosks to fulfil the OfficeMax revenue share contract, as detailed in the admission document and, as at 30 June 2006, had 254 kiosks fully deployed in stores and refilling cartridges. A further 218 kiosks were either en-route to, or were at the pre-installation/training stage for OfficeMax. The net increase in cash of #2.0million in the period reflects the fund raising through the share placement and the cost of investment in these assets, which are revenue generating, supplies of consumable items and inks required to service the kiosks and the step-up in production and operational capability of the Group. In relation to this the Group carried out an operational and process review of its production facility in Malaga, Spain. Following this, Chris Dietemann was appointed as Head of Supply Chain and Engineering to implement the changes identified under the review and to enable the company to further increase its production capacity and quality levels. I am pleased to report that substantial progress has been made in these areas and that this will continue to be a focus of the Group. In addition the Group has appointed Robert Clark to the position of Director of Field Engineering. Bob, operating from a newly established small office in Dallas, USA, is responsible for all service and support activities for the Group and manages both in-house and outsourced engineering resources. The Dallas office is also now the centre of operations for all North American logistics and kiosk training activities. In addition, the Group is investigating the prospect of contract manufacturing within the Texas region. Cartucho's business model remains one of a blend of kiosks sold outright to operators and retailers and kiosks under revenue share agreements, such as with OfficeMax. Under the latter category, whilst the Directors have been disappointed that average refill rates have been below expectations, as detailed in the announcement dated 20 July 2006, the manufacturing and service infrastructure are established, with the Group having proper structures in place and adequate cash resources. Further to the announcement of the re-scheduling of the deployment in kiosks to our largest US customer, I can confirm that the Group remains committed to the completion of the full roll-out of the balance of the kiosks under its revenue share agreement and is looking forward to recommencing higher levels of kiosk deployment and installation once the average refill rates of the installed kiosks reach an acceptable level over a reasonable period of time and will scale down its production to meet specific production requirements for existing and new customers. The ink refill kiosk continues to attract significant interest from retailers and the Group has recently completed initial deployments of 10 kiosks each in two major US chains in the drug store and supermarket/grocery sectors on a revenue share basis. There have also been sales in the period of four kiosks making a total of five deployed in a major U.K. supermarket chain, and two kiosks in a major French retailer. The Group is also addressing potential opportunities with resellers and distributors in the U.S. and other territories. Strategy As mentioned the Group has launched two new kiosk trials with US based retailers during the period as well as having its kiosk evaluated by other companies in the retail and ink sectors. The Board has developed a strategy for the installation of kiosks in three sectors: * Dedicated office supplies retailers * Convenience stores e.g. US drug stores, pharmacies, niche stores * High (consumer) footfall areas e.g. large supermarkets, shopping malls etc It is in each of these three areas that retailers can attract customers through three simple messages about the benefits of the ink refill kiosk, which are: * Price competitiveness * Quality * Convenience By limiting the size of trials in both kiosk numbers and geography, and working closely with retailers to ensure their operators are fully trained in kiosk operation and refill sales, the Group expects to guide retailers through evaluation to trial to initial deployment to full roll-out. Sales to European retailers have shown that the return of investment for purchasers of kiosks is rapid and that high refill volumes are achievable through a combination of location, promotion/advertising, dedicated and fully trained operators and competitive pricing. Similar levels of refill volumes equally make revenue share arrangements attractive for the Group. New Product Development As previously reported, the Group continues to explore areas of product development and this interim statement provides an ideal opportunity to inform shareholders of developments to date. On-line access to kiosks is now available, where stores are able to provide broadband/ASDL internet connectivity. Our new servers are able to download and track kiosk performance individually and across territories. A new version of the kiosks operating software was completed during the period and the latest software is being remotely uploaded into kiosks already deployed and has proved successful, where operational, in further driving the quality delivery of ink and the refill process in kiosks. Work continues on the deployment of voice over-IP (VoIP) communications between kiosk operators and our call centre as well as the call centre and our R&D facility in Spain. Development and additional engineering improvements continue in many areas of the kiosk design and performance. For example, earlier this year we swapped from a 10 pump delivery system to a 4 pump system by utilising 3 channel synchronised peristaltic pumps; not only does this enable accurate ink delivery for colour (3 ink) cartridges it also simplifies the engineering and reduces configuration/calibration and maintenance issues. Outlook Following the trading update issued on 20 July 2006 the Group is working very closely with and is delighted with the commitment being shown by our major US customer and I believe that the focus on existing kiosks will produce positive results and endorse the Group's business model. The expected increase in refill rates and opportunities that exist for the Group, mean that the board view the future with confidence. Ian Diery Chairman CONSOLIDATED INCOME STATEMENT for the eight months ended 30 June 2006 Notes 8 months ended 30 June 2006 Unaudited #'000 Revenue 1 539 Cost of sales (355) Gross profit 184 Administrative expenses 3 (2,547) Operating loss (2,363) Interest receivable 70 Loss before taxation (2,293) Income tax expense 4 - Loss after taxation (2,293) Basic loss per ordinary share - pence 5 2.55 Diluted loss per ordinary share - pence 5 2.55 CONSOLIDATED BALANCE SHEET as at 30 June 2006 Notes 30 June 31 October 2006 2005 Unaudited Unaudited #'000 #'000 Assets Non-current assets Intangible assets 6 163 - Property, plant and equipment 7 3,027 16 3,190 16 Current assets Inventories 1,102 322 Receivables and prepayments 582 113 Cash and cash equivalents 2,008 25 3,693 460 Total assets 6,882 476 Current liabilities Trade and other payables 464 785 Total liabilities 464 785 Capital and reserves Share capital 8 900 400 Share premium 8 8,050 - Retained earnings (2,637) (344) Merger reserve (365) (365) Share based payment reserve 3 470 - Total equity 6,418 (309) Total equity and liabilities 6,882 476 CONSOLIDATED CASH FLOW STATEMENT for the eight months ended 30 June 2006 8 months ended 30 June 2006 Unaudited #'000 Operating Activities Results for the period before tax (2,293) Depreciation 128 Amortisation 20 Share based payment provision 200 Interest received (70) Increase in inventories (780) Increase in receivables (469) Decrease in trade payables and other liabilities (321) Net cash from operating activities (3,585) Investing activities Additions to property, plant and equipment (3,139) Additions to intangible fixed assets (183) Interest received 70 Net cash from investing activities (3,252) Financing activities Proceeds from share issue 8,820 Net cash from financing activities 8,820 Cash and cash equivalents at the beginning of the period 25 Net increase in cash and cash equivalents 1,983 Cash and cash equivalents at the end of the period 2,008 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the eight months ended 30 JUNE 2006 Share Share Retained Share Merger Total capital premium Earnings based payment reserve equity reserve #'000 #'000 #'000 #'000 #'000 #'000 Balance at 31 October 2005 400 - (344) - (365) (309) Loss for the period - - (2,293) - - (2,293) Share based payment provision - - - 200 - 200 Shares issued 500 9,500 - - - 10,000 Share issue costs - (1,450) - 270 - (1,180) Balance at 30 June 2006 900 8,050 (2,637) 470 (365) 6,418 NOTES TO THE INTERIM FINANCIAL STATEMENTS for the eight months ended 30 June 2006 1 PRINCIPAL ACCOUNTING POLICIES Basis of preparation The financial information has been prepared in accordance with IAS 34 "Interim Financial Reporting". The financial information has been prepared on the historical cost basis. The principal accounting policies adopted are set out below. The reporting period in this statement is eight months to 30 June 2006 as the last reported figures were to 31 October 2005 which were detailed in the Company's admission document. No comparative results are presented as the Group had not traded in the comparative period. A comparative balance sheet at the previous period end is presented on page 10. Statement of compliance The consolidated interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting". The Group will prepare its first full set of IFRS financial statements for the period ending 31 December 2006. A summary of the accounting policies applied in the preparation of the financial statements is given below. These policies have been consistently applied to all the periods presented, unless otherwise stated. Basis of consolidation The Group financial statements consolidate the results of the Company and of its subsidiary undertakings drawn up to 30 June 2006. On 9 December 2005 Cartucho Group Limited assumed ownership of Cartucho Holdings Limited via a share for share exchange, there being no change in the ultimate ownership of that company. This transaction was therefore a group reorganisation and not a business combination. Accordingly, it has been accounted for using merger accounting giving rise to a merger reserve in the Group balance sheet. The Company's other subsidiary undertakings had not traded prior to this reorganisation. Income and expense recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: Sale of goods Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the amount of revenue can be measured reliably. Revenue Share Fee income arising on the installation of Ink Refilling kiosks into locations where the Group retains ownership of the kiosk, is accounted for as it is earned during the term of the customer contract. Property, plant and equipment Plant and equipment is stated at cost less accumulated depreciation and any recognised impairment loss. Kiosks which have been placed with customers are carried at manufacturing cost less subsequent depreciation and impairment losses. Depreciation is charged so as to write off the cost of assets less residual value over their estimated useful lives, using the straight line method at a rate of 33.3 per cent per annum for Ink Refilling kiosks and 25 per cent for all other assets. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income. Intangible assets Externally purchased intellectual property and similar intangible items are capitalised at historic cost, net of any provision for impairment and amortised on a straight line basis over their estimated useful economic lives of five years. Inventories Inventories comprise raw materials, supplies and purchased consumable goods valued at purchase cost. Financing costs are not taken into consideration. At the balance sheet date, inventories are carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less any applicable selling expenses. Taxation Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the balance sheet date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable result for the year. All changes to current tax assets or liabilities are recognised as a component of tax expense in the income statement. Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. In addition, tax losses available to be carried forward as well as other income tax credits to the group are assessed for recognition as deferred tax assets. Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be offset against future taxable income. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date. Most changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement. Only changes in deferred tax assets or liabilities that relate to a change in value of assets or liabilities that is charged directly to equity (such as the revaluation of land) are charged or credited directly to equity. Cash and cash equivalents Cash and cash equivalents include cash at bank and in hand as well as short term highly liquid investments such as money market instruments and bank deposits. Financial instruments Financial assets are recognised in the balance sheet initially at fair value net of transaction costs and subsequently at amortised cost. All financial assets fall within the category of loans, deposits and receivables. Provision is made for impairment where appropriate. Income and expenditure arising on financial instruments is recognised on the accruals basis under the effective interest method and credited or charged to the profit and loss account in the financial period to which it relates. Trade receivables are initially stated at fair value. They do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. Trade payables are not interest bearing and are initially stated at their nominal value and subsequently measured at amortised cost less settlement payments. Foreign currencies Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value is determined. Gains and losses arising on retranslation are included in net profit or loss for the year, except for exchange differences arising on non-monetary assets and liabilities where the changes in fair value are recognised directly in equity. Share based payment For all the share options granted an expense is recognised in the income statement with a corresponding credit to equity. The equity share based payment is measured at the fair value at the grant date. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Equity Share capital is determined using the nominal value of shares that have been issued. Additional paid-in capital includes any premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from additional paid-in capital, net of any related income tax benefits. Retained earnings include all current and prior period results as disclosed in the income statement. 2 SEGMENT ASSETS AND LIABILITIES The majority of the Group's operations to date are in respect of the revenue share agreement with a single customer in the US. The Board treats the Group as one unit for management purposes and hence no segmental reporting is considered applicable. 3 ADMINISTRATIVE EXPENSES Administrative expenses for the eight month period are broken down as follows: Administrative expenses for the eight months ended 30 June 2006 #'000 Transportation 451 Salaries and other fees 973 Office costs 316 Legal and professional 169 Travel and expenses 290 Depreciation and amortisation 148 Share based payments 200 Total 2,547 The provision for share based payments of #200,000 has been provided in accordance with IFRS2. 4 TAXATION There is no current tax charge in view of the losses incurred in the period. Tax losses have been carried forward to be off set against profits in future years. No deferred tax asset has been recognised in respect of these losses. 5 EARNINGS PER SHARE The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. Share options outstanding have no dilutive effect in view of the loss for the period. Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below: Basic Loss per Ordinary Share Diluted loss per Ordinary Share Loss for the period (#'000) (2,293) (2,293) Average Number of Ordinary Shares 90,000,200 90,000,200 Loss per Ordinary Share (pence) 2.55 2.55 6 INTANGIBLE ASSETS During the period the group acquired intellectual property assets for #183,000. Amortisation of #20,000 for the eight months has been charged. 7 PROPERTY, PLANT AND EQUIPMENT During the period the Group acquired property, plant and equipment with a cost of #3,155,000, substantially all representing revenue share kiosks. Depreciation of #128,000 has been charged. There have been no disposals. 8 EQUITY On December 9, 2005 the company issued 40,000,000 ordinary shares of 1p each at par in consideration for the acquisition of Cartucho Holdings Limited. On December 16, 2005 the company issued 50,000,000 ordinary shares of 1p each at a premium of 19p per share. These shares were issued on admission to AIM on December 16, 2005. 9 RELATED PARTY TRANSACTIONS Details of related party transactions and period end balances are as follows: Related party Transaction type Expensed/Loaned in the Balance as at period 30 June 2006 #'000 #'000 Chris Burton and Hamilton Marketing Inc a 206 - Cartuchos y Toners Reciclados Espana S.L b - 27 David Scanlan c 50 - Adrian Jones (BOP International Ltd) d 200 - Roger Pellew e 456 - North Essex Signs Ltd f 1,047 7 Transaction type a Chris Burton is a shareholder of Hamilton Marketing Inc and Hamilton Marketing Inc is a shareholder in the Company. During the period Chris Burton incurred expenses of #155,748 on behalf of the Group on which no interest was payable. Chris Burton was paid a fee for consultancy services and commissions payable under his sales and marketing agreement of #50,000. b Chris Burton is a shareholder of Cartuchos y Toners Reciclados Espana S.L. During the period the group sold kiosks to Cartuchos y Toners for #27,500 c David Scanlan is a shareholder in the Company. During the period David Scanlan was paid a fee for consultancy services and commissions payable under his sales and marketing agreement of #50,000. d Adrian Jones is a shareholder of BOP international Ltd and BOP International Ltd is a shareholder in the Company. During the period Adrian Jones provided the company an interest free loan of #200,000. e Roger Pellew is a shareholder and director of the Company. During the period Roger Pellew provided the company with an interest free loan of #456,280. f Anthony Irwin is both a shareholder in North Essex Signs Ltd and Cartucho Group Ltd. Certain materials used in the manufacture of the Ink Refilling Kiosks are purchased from North Essex Signs Ltd. North Essex Signs Ltd have also paid for certain expenses on behalf of the company. No interest is payable on the balance outstanding. 10 PREPARATION OF INTERIM STATEMENTS The interim statement is unaudited but has been reviewed by the auditors and their report is set out on pages 7 and 8. The financial information does not constitute statutory accounts within the meaning of section 240 of the Companies Act. 11 APPROVAL OF INTERIM STATEMENT The interim statement was approved by the Board of Directors on 28 July 2006. Copies of this statement will be available to members of the public, free of charge, from the Company at 47 Esplanade, St. Helier, Jersey JE1 0BD. - Ends - This information is provided by RNS The company news service from the London Stock Exchange END IR SDSSMFSMSEEW
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