STOCKHOLM, Sweden, Aug. 15, 2002 (PRIMEZONE) -- CashGuard:
-- The Group's operating revenues rose 34% to MSEK 65
(corresponding period in the preceding year: 48).
-- Operating profit amounted to MSEK 6.8 (4.6).
-- Cash flow remained stable despite a substantial build-up of
inventory and investments in the European market.
-- ICA increased its number of Cash-Guard installations by more
than 50%.
-- Test installations in France are developing favorably.
-- Cooperation initiated with SQS regarding new security products.
Operations
CashGuard's operations focus on sales of in-house-developed automatic cash-handling, cash-flow information and anti-robbery/theft systems. CashGuard focuses on customers who have cash-payment checkouts. CashGuard's unique solution replaces the traditional, manual handling of daily cash takings and provides unparalleled potential to conduct secure in-store bank activities.
Comments on the second quarter
During the second quarter, the Group had sales of MSEK 34.3 (28.0), up 22% compared with the year-earlier period. Operating profit amounted to MSEK 4.1 (2.3) and pretax profit to MSEK 4.1 (2.2), corresponding to increases of 78% and 87%, respectively.
Comments on the period
Sales rose by 34% compared with the year-earlier period. Operating profit amounted to MSEK 6.8 (4.6), after charges of MSEK 5.3 for the European establishment of CashGuard. Cash flow was stab-le, despite an MSEK 10 increase in inventories.
European expansion
During the spring, CashGuard's new product concept was launched at Euro- shop in Duesseldorf, one of the world's largest retail-trade fairs. CashGuard is currently involved in discussions with the major European retail chains with the
objective of initiating customer projects with a number of these during the year.
Live testing of a pre-production series of CashGuard's euro system has been under way for some time in France. The system has now become so stable that serially produced installations can be delivered during the autumn.
Jan-Jun 2002 Jan-Jun 2001 Change
Net sales MSEK 64.5 MSEK 48.1 +34.1 %
Operating profit MSEK 6.8 MSEK 4.6 +47.8 %
Profit before taxes MSEK 6.7 MSEK 4.6 +45.6 %
Operating margin 10.5 % 9.6 % -
Earnings per share
before taxes 19 Ore 13 Ore +46 %
Market position
More than 2,500 CashGuard system are in operation in the Swedish and Norwegian market. Growth potential in CashGuard's total domestic market, which is estimated to be worth SEK 13 billion, remains considerable. The Company's strongest customer segments at present consist of supermarkets and service stations, as well as sub post offices and bank counters in retail outlets. CashGuard's objective is to also establish positions in the specialist retail sector and in export markets. The Company currently has subsidiaries in France, Germany, Norway and Denmark.
Sales by geographic market Jan-Jun 2002 Jan-Jun 2001 Sweden MSEK 49.5 MSEK 32.0 Norway MSEK 13.0 MSEK 13.8 Germany MSEK 2.0 MSEK 2.3 Total MSEK 64.5 MSEK 48.1
Increased focus on key accounts
During the period, CashGuard further intensified its sales efforts aimed at major customers in the domestic market. The sales force has been reorganized and several Key Account salespeople have been recruited with the objective of increasing the proportion of total sales represented by key accounts. The main target groups comprise major players in the service station, supermarket, retail and fast-food segments. New orders include one from the OKQ8 service station chain for test installations.
Agreement with ICA
In November 2001, ICA and CashGuard concluded a cooperation agreement. Subsequently, ICA has launched ICA Bank, which further increases the company's need for safe and secure cash-handling solutions.
Since it has taken longer than expected to coordinate sales efforts within the framework of the agreement, orders from ICA have yet to reach the planned levels.
However, the new structure is now beginning to yield results and ICA accounted for most of CashGuard's sales during the first two quarters of 2002. The number of installations at ICA has increased from approximately 900 at year-end to 1,500 at the end of the period.
Cooperation regarding new security products
During the period, cooperation was initiated with SQS Security Qube System, a security equipment company based in Skelleftea, northern Sweden. The aim of this initiative is to integrate the two companies' complementary and unique systems for handling cash at checkouts and for the transport and overnight storage of cash.
Successful after-market campaign
During 2002, CashGuard has focused on concluding service contracts with existing customers. The result of this campaign to date is that more than 25% of customers are now covered by service contracts, compared with 14% at the beginning of the year. The objective is that the majority of customers will sign service contracts.
Operations in Norway
During the period, CashGuard received orders for the delivery of a further 170 new systems for Post i Butikk outlets. To date, a total of approximately 550 systems have been delivered to Post i Butikk outlets in Norway.
European operations
In June, access was gained to the new CashGuard offices in Paris, which now has four employees. A total of MSEK 5.3 was charged against earnings during the first half of the year to cover costs for European operations, of which direct costs for operations in Germany and France accounted for MSEK 2.2 and Parent Company costs for R&D, marketing, trade fair and sales activities for MSEK 3.1.
Recruitment is under way of sales, technical and training personnel for cultivating the European market.
Competitors
Systems for automated cash handling will probably also be presented by the companies Rosengrens and Axlon during the autumn. CashGuard takes a favorable view of the entrance of more players into this market segment because it will hasten the maturity process among customers and is expected to increase the rate of conversion from manual to automated cash-handling systems.
Parent Company earnings
During the period, Parent Company revenues amounted to MSEK 62.6 (45.8) and its profit after financial items to MSEK 8.9 (4.7). Cash flow was negative in an amount of MSEK 3.4 (neg: 10.1) and liquid assets amounted to MSEK 5.1 (2.3).
Investments during the period totaled MSEK 0.1 (1.8). The Company's performance is tracking the favorable trend of sharp sales growth combined with healthy profitability that has been noted since 1999.
The Group
In addition to the Parent Company CashGuard AB, the consolidated accounts include the wholly owned subsidiaries CashGuard GmbH, CashGuard International AB and C Guard SAS (whose names are being changed to CashGuard Sverige AB and CashGuard SAS, respectively). The Group also includes the dormant companies, CashGuard A/S in Denmark and CashGuard AS in Norway. The subsidiaries had a negative impact of MSEK 2.2 on consolidated pretax profit.
Investments
During the period, the Group invested MSEK 7.5 (1.8) in fixed assets. The largest individual investment pertained to the office property acquired in Paris, which was mainly financed through a loan of EUR 650,000.
Financing and liquidity
The Group's cash flow amounted to MSEK 0.0 (neg: 10.0). Liquid assets at period-end totaled MSEK 6.5 (2.4), compared with MSEK 6.5 on December 31, 2001.
Personnel
The number of employees on June 30 was 57 (38). The Company's sharp expansion is resulting in continuous needs to recruit new employees.
Accounting principles
This interim report has been prepared in accordance with the Financial Accounting Standards Council's Recommendation RR 20. In all other respects, the accounting and calculation principles applied in this report are identical to those used in the most recent annual report.
Financial information
Next date for publishing financial information: Interim Report, Jan - Sep: October 18, 2002
Taby, August 15, 2002
Leif Nordqvist, President
I have reviewed this interim report and in this connection have followed the Recommendation issued by the Swedish Institute of Authorized Public Accountants (FAR). A review is substantially more limited than an audit. Nothing has come to light that indicates that the interim report does not fulfill the requirements of the Exchange and Clearing Operations Act and the Annual Accounts Act.
Stockholm, August 15, 2002
Anders Roos Authorized Public Accountant
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