Derek Pain: It will take time to unlock profits from Cashbox
No Pain, no gain
Saturday 13 March 2010
The cash machine is a ubiquitous feature of our everyday life. All the bank branches I have seen offer a so-called hole-in-the wall, and a variety of outlets, including pubs and shops, are also happy to embrace them. Businesses still outside the loop face mounting pressure to join the cash-on-tap industry.
Even in these increasingly cashless days the number of machines continues to grow. The abolition of cheques, a proposal I do not support, is likely to further enhance their appeal. Barclays unveiled the first more than 40 years ago; now there are nearly 64,000 dotted around the land. Bank branches account for a large slice of the network but most of the recent growth has occurred elsewhere.
A good business, then, to be in. And, perhaps, a happy hunting ground for investors? Unfortunately "pure" cash machine companies are few and far between.
ATMs, as they are also known, represent a tiny slice of the huge banking turnover. Most of the other participants, ranging from the security giant G45 to the payments group Paypoint, have other substantial interests.
So the tiny Cashbox, capitalisation a mere £3.2m, represents the real cash machine investment. But the company has a poor record, and although chairman Ciaran Morton appears to be making all the right moves, he still has an uphill task ahead of him.
The shares, at 2.75p, indicate that the stock market is as yet unready to embrace the group. And with the stockbroker Seymour Pierce forecasting losses until 2012 – and then a profit of only £400,000 – there is unlikely to be any rush to buy.
The Seymour analysts Caroline de La Soujeole and Kevin Lapwood have a 5p target price. Such a level offers little encouragement to long-term shareholders who backed the 20p flotation four years ago and watched the shares subsequently hit 35p. They have since been tormented by boardroom upsets, litigation and losses approaching £11m.
The float raised £4.5m. Since then Cashbox has tapped investors for £5.3m and raised various loans. The debt pile stood at £9.9m at the end of last year, the company's interim reporting mark, when the half-time loss was £1.2m. Seymour points to continuing improvement by predicting a full-year's loss of £1.1m and looks for break-even next and then that modest profit.
Most of Cashbox's turnover stems from pay-to-use machines. But it is getting increasingly involved in ATMs where there is no charge to the consumer. Such operations can be profitable as Cashbox can extract a charge from the banks involved.
Currently no-charge machines account for only 7 per cent of the group's business. Still Mr Morton sees considerable growth on the free front. Such operations require a greater usage before matching the rewards of the pay-for-your-cash outlets. But they are usually sited in more accessible areas and, consequently, attract more users.
In the past year or so Mr Morton has signed up a number of pub estates, although the crash of the Threshers off-licence chain has obviously created problems. I am convinced that Cashbox is well on the road to recovery, but it is too early to recommend the shares on trading considerations.
As the Morton magic filters through the group could attract a predator as consolidation seems to be the name of the ATM game. But the shares are not just a takeover speculation. I intend to keep an eye on them and, if I am sufficiently encouraged by Cashbox's progress, I may well in time add them to the no pain, no gain portfolio.
From a possible recruit, to an established constituent. Whitbread, the portfolio's only Footsie stock, has issued an upbeat trading statement, with once again its Costa Coffee off-shoot the star performer, with a 35.8 per cent sales advance to £203m. Budget hotels and restaurants also contributed to the cheer.
Current stock market thinking is that the year's profits will emerge at around £235m, up from £229.9m. My guess is that expectations will be exceeded. Even if they are not, Whitbread's progress in a year of deep recession, when many thought it would suffer cruelly, has been remarkable.
Sam Hart, analyst at the stockbroker Charles Stanley, has an "accumulate" rating on the shares, which, at the time of writing, are nudging 1,500p against the 1,105p the portfolio paid in the summer of 2008.
Customers paying up to £250 more on energy bills than they should every year
Scottish Power hit with sales ban by regulator
10 tips for taking out a personal loan
There are 'dark corners' of the investment and pensions industry, says Pension Minister
Simon Read: You're guilty until proven innocent when HMRC sends in the tax credit detectives
Durham Free School: 'Creationism taught at' free school facing closure
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
End of the licence fee: BBC to back radical overhaul of how it is funded
Nigel Farage promises Ukip will not 'stigmatise' would-be migrants – and says he wants 'everyone to speak the same language'
Ex-head of MI6: 'We shouldn't kid ourselves that Russia is on a path to democracy'
Most people think legal tax avoidance is just as wrong as illegal tax evasion, poll suggests
iJobs Money & Business
£8 per hour: Recruitment Genius: This Pension Specialist was established early...
£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...
Day In a Page
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads