Derek Pain: It will take time to unlock profits from Cashbox

No Pain, no gain

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.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
Arts and Entertainment
tvStrictly presenter returns to screens after Halloween accident
News
peopleFormer civil rights activist who was jailed for smoking crack cocaine has died aged 78
News
i100
News
Boxing promoter Kellie Maloney, formerly known as Frank Maloney, entered the 2014 Celebrity Big Brother house
people
Sport
Dwight Gayle (left) celebrates making it 1-1 with Crystal Palace captain Mile Jedinak
premier leagueReds falter to humbling defeat
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

    Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

    Reach Volunteering: Charity Treasurer

    Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

    SThree: Trainee Recruitment Consultant - Soho

    £20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

    Ampersand Consulting LLP: Markit EDM (CADIS) Developer

    £50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

    Day In a Page

    Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

    Kenyans still waiting for justice over Mau Mau uprising

    Thousands join class action over Britain's role in the emergency
    Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

    The last Christians in Iraq

    After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
    Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Britain braced for Black Friday
    Bill Cosby's persona goes from America's dad to date-rape drugs

    From America's dad to date-rape drugs

    Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
    Clare Balding: 'Women's sport is kicking off at last'

    Clare Balding: 'Women's sport is kicking off at last'

    As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
    Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

    Oh come, all ye multi-faithful

    The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
    Dr Charles Heatley: The GP off to do battle in the war against Ebola

    The GP off to do battle in the war against Ebola

    Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
    Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

    Flogging vlogging

    First video bloggers conquered YouTube. Now they want us to buy their books
    Saturday Night Live vs The Daily Show: US channels wage comedy star wars

    Saturday Night Live vs The Daily Show

    US channels wage comedy star wars
    When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

    When is a wine made in Piedmont not a Piemonte wine?

    When EU rules make Italian vineyards invisible
    Look what's mushrooming now! Meat-free recipes and food scandals help one growing sector

    Look what's mushrooming now!

    Meat-free recipes and food scandals help one growing sector
    Neil Findlay is more a pink shrimp than a red firebrand

    More a pink shrimp than a red firebrand

    The vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
    Bill Granger recipes: Tenderstem broccoli omelette; Fried eggs with Mexican-style tomato and chilli sauce; Pan-fried cavolo nero with soft-boiled egg

    Oeuf quake

    Bill Granger's cracking egg recipes
    Terry Venables: Wayne Rooney is roaring again and the world knows that England are back

    Terry Venables column

    Wayne Rooney is roaring again and the world knows that England are back
    Michael Calvin: Abject leadership is allowing football’s age-old sores to fester

    Abject leadership is allowing football’s age-old sores to fester

    Those at the top are allowing the same issues to go unchallenged, says Michael Calvin