CTGP Cartucho

RNS Number:8402C
Cartucho Group Ltd
11 May 2006


Press Release                                                        11 May 2006

                             Cartucho Group Limited

                          ("Cartucho" or "the Group")

                                 Trading Update


Cartucho announces the following trading update. In the five months since the
Company's Admission to AIM, significant progress has been made towards its
stated objectives and, as at 30 April, the Company had manufactured and
installed a total of 116 ink refill kiosks under its contract with its major
customer in the US. The latest installations in a variety of geographically
dispersed US states have gone smoothly and the Company has entered into a
contract with National In-Store, which is providing installation, training and
customer services to operators of Cartucho's kiosks.

The Company is pleased with the strength of its relationship with its major
customer and both parties continue to work closely in the planning and full
roll-out of their contract. The rate of deployment of kiosks is determined by a
combination of manufacturing capacity, availability of technical and training
personnel, and the absorption rate of the Company's major customer as it aligns
its marketing initiative across its regions and districts. The Company
experienced a delay in the commencement of the shipment of kiosks in the early
part of the year due to a delay in receiving components at its manufacturing
facility in Spain, a delay which the Directors expected to make up during the
year. The latest version of the roll-out plan being worked with the Company's
major customer sets out full details for the installation of kiosks in 820
stores by 30 October 2006 and, given that Cartucho is progressing towards its
deployment target of 50 kiosks per week, the Directors are confident that this
will be achieved. However, it has become apparent that the roll-out timetable
forecast by the Directors at the time of flotation will be behind the Directors'
expectations.

The Company is pleased to report that production costs are in line with
Directors' expectations and that shipping costs, which were temporarily higher
whilst attempts were made to reverse the initial shipment delay, have returned
to budgeted levels. Key appointments have been made in the manufacturing /
supply chain and field operations / field engineering areas of the business,
with positive results being seen across the business.

At the end of March 2006, the Company's major customer commenced its advertising
campaign for its installed kiosks and the Company experienced a significant
increase in refill rates as a result. However, refill rates have since fallen
back and, whilst the average refill numbers from the kiosks in some stores have
been outstanding, others have performed less well, resulting in the average
numbers across all installed stores currently being below the Directors'
expectations. This, combined with the revised roll-out timetable, means that the
Directors believe that the Company's results for this year will be significantly
below market expectations. The Company is working with its major customer to
devise ways of increasing kiosk utilisation and is initiating a customer support
programme which, the Directors believe, will increase the average number of
refills, particularly in some of the stores performing below the Directors'
expectations. The Directors expect the average rate of refill per kiosk to
improve following ongoing advertising campaigns and to continue to do so as the
public become more aware of the quality, convenience and cost of the Cartucho
refill kiosk.

Interest from the industry in the kiosk continues to be high and the Company is
in the process of deploying up to 20 kiosks in various US, UK and French
retailers within the drug, grocery and electrical retail sectors. The Directors
hope to announce a major contract with another customer later this year and
remain highly confident in the strength and quality of the Company's product and
service, its manufacturing and roll-out capability and the sector in which it
operates.

Mike Willcocks, Chief Executive Officer of Cartucho, commented: "Whilst the
delay in the roll-out, together with the refill numbers from kiosks in some
stores being lower than we expected, will have an adverse impact on our
financial results for this year, I believe that we have made very good progress
from a standing start at the time of the float and we expect to complete the
full roll-out for our major customer by the end of the year. Our manufacturing
facility is close to achieving maximum target deployment levels and measures are
being put in place, using the experience gained in our first five months of
trading, to maximise the marketing and advertising effort of our major customer.
Many kiosks have produced refill numbers well ahead of our expectations and we
intend to build upon the lessons learned from these stores to improve refill
rates in other stores. Good progress is being made on new contract leads and,
whilst we recognise the challenges that lie ahead, the Board remains comfortable
with market forecasts for 2007".


                                    - Ends -

For further information:
Cartucho Group Limited
Mike Willcocks, Chief Executive                     mikewillcocks@cartucho.com
                                               
Collins Stewart Limited
Stephen Keys, Corporate Finance                     Tel: +44 (0) 207523 8312
skeys@collins-stewart.com                           www.collins-stewart.com
                                                   
Media enquiries:
Abchurch
Heather Salmond / Franziska Bohnke                  Tel: +44 (0) 20 7398 7700
heather.salmond@abchurch-group.com                  www.abchurch-group.com




                      This information is provided by RNS
            The company news service from the London Stock Exchange

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