Cardpoint PLC's stock plunged after it reported a wider annual loss and said there were delays in integrating Moneybox PLC, the rival it purchased in July to become the United Kingdom's No. 2 provider of automated teller machines.
The shares were down 43.1%, to $1.23, by Tuesday afternoon, a two-year low. Cardpoint said it had a net loss of $19.7 million for the year that ended Sept. 30; for the 12 months that ended Sept. 30, 2004, it reported a $5.2 million loss.
"The impact on 2006 forecasts looks fairly dramatic," said Mike Allen, an analyst at Numis Securities Ltd. "It will take longer than expected to gain the benefits of the integration, and we don't expect them to make a healthy return until 2007."
Cardpoint, of Lytham St. Annes, England, was founded six years ago by its chief executive, Mark Mills, to benefit from the growing demand for cash machines. It has been buying ATMs from banks such as HBOS PLC. The $102.5 million acquisition of Moneybox gave Cardpoint access to new markets, with its 570 machines in Germany and 170 in the Netherlands.
Moneybox was "an ideal transaction, which has proven to be worth it," Mr. Mills said in an interview. "The ATMs are being integrated as we speak."
Mr. Mills said he expects pretax profit before goodwill to be about $12 million for 2006, almost twice the $6.2 million forecast for this year. Mr. Allen had been expecting $32.6 million before Tuesday's results came out, he said.
The number of cash machines in the United Kingdom is increasing at about 11% a year, double the European Union's average of 6.2%, according to the Association for Payment Clearing Systems, a group representing banks on money transfers.
Mr. Mills also said that Cardpoint may make more acquisitions.
"It's hard to find markets as strong as Germany and the U.K.," he said. "We'll keep looking around to see if something comes up. We'll no doubt spread our wings further."
