Cashbox plc
AIM : CBOX

Cashbox plc

March 29, 2006 02:00 ET

Cashbox Plc-First Day of Dealings on the AIM Market

LONDON, UNITED KINGDOM--(CCNMatthews - March 29, 2006) - Cashbox plc ("Cashbox" or "the Company") (AIM:CBOX), an independent ATM deployer and operator, today announces the commencement of dealings of its Ordinary Shares on the AIM market ("AIM") of the London Stock Exchange ("Admission"). Seymour Pierce is acting as Nominated Adviser and as Broker to the Company. The stock market EPIC is CBOX.L



Placing Statistics

Placing Price of Ordinary Shares 20p
Number of existing Ordinary Shares prior to Admission 38,052,000
Number of Ordinary Shares being placed by the Company 22,500,000
Number of Ordinary Shares in issue following the Placing 60,927,000
Market capitalisation at the Placing Price Pounds Sterling
12.2 million
Percentage of enlarged issued share capital subject
to the Placing 36.9%
Gross proceeds of the Placing to be received by Pounds Sterling
the Company 4.50 million
Net proceeds of the Placing to be received by Pounds Sterling
the Company 3.51 million


Carl Thomas, Chief Executive of Cashbox plc, said: "We are delighted that the flotation of the Company has been completed successfully and that we are one of only three 'pure play' ATM companies on the AIM market. Our sector continues to grow apace and developments in the ATM industry make this an exciting and dynamic industry to be in. We have a large number of sites waiting to be supplied with ATMs and we look forward to installing these locations as quickly as possible."



For further information:

Cashbox plc
Carl Thomas, Chief Executive Tel: +44 (0) 870 126 2274
cthomas@cashboxatm.co.uk www.cashboxatm.co.uk

Seymour Pierce Limited
Jeremy Porter, Corporate Finance Tel: +44 (0) 20 7107 8000
jeremyporter@seymourpierce.com www.seymourpierce.com

Media enquiries:

Abchurch
Henry Harrison-Topham / Ariane Comstive Tel: +44 (0) 20 7398 7700
henry.ht@abchurch-group.com www.abchurch-group.com


Introduction

Cashbox began trading in September 2003 and, as at 31 December 2005, owned and/or operated an estate of 845 independent ATMs in the UK. The Directors anticipate that Cashbox will have further ATM installations, and the Directors believe there is potential for further installations (where considered viable and subject to any landlord or other third-party consent), as shown in the table below:



ATMs installed at Anticipated Potential
LINK designated category 31 December ATM further ATM
2005 installations installations

Convenience (includes
off licenses, convenience
stores) 265 400 3,500
Leisure (cinemas,
bowling, holiday parks,
race courses, amusement
arcades etc) 20 3 357
Motoring (petrol
forecourts, motorway
services, car park
operators) 15 0 500
Services (University
Student Unions, Colleges) 9 0 0
Social (pubs, bars,
nightclubs) 433 85 1,153
Supermarket 2 0 0
Workplace (offices,
canteens etc) 4 0 0
Processing (contracts
won for migration of
existing ATM estates
to Cashbox network) 97 108 0
--------- --------- ---------
845 596 5,510
--------- --------- ---------


Cashbox generates revenue in the following ways:

1. Transaction revenues

- Convenience Fees incurred by the cardholder at the time of withdrawing cash from an ATM; and

- Interchange Fees paid to Cashbox by the cardholder's bank or building society on ATM balance enquiries and rejected transactions and transactions where no Convenience Fee is charged.

2. Sales of ATMs

- ATM sales to Merchants under the Sale Model.

Cashbox's sales strategy is based on selecting amongst three models (Sale Model, Placement Model and Fully Managed Model) to aim to maximise the profit potential of each ATM site. The Directors intend that the Placement Model will become Cashbox's main basis for deploying self-fill ATMs, whereby the ATM is placed with and replenished by the Merchant, eliminating the need for third party cash handling costs. 95 transacting Placement Models were in place at 31 December 2005. The Directors believe that they have shown this model, using their detailed site surveys, will enable Cashbox to place ATMs profitably in lower footfall areas, which the Directors believe effectively expands the market available to Cashbox. The Directors intend that for sites with higher footfall, the Fully Managed Model (whereby ATMs are replenished by third party cash handling firms) will be used.

Only sites where Cashbox's detailed survey shows an ATM is expected to generate a gross profit contribution will be selected for ATM deployment.

History and Background of Cashbox

Cashbox was founded by Carl and Matthew Thomas in 2003. Prior to founding Cashbox, Carl Thomas was in charge of corporate sales at Hanco. During Carl's time at Hanco, Hanco increased the ATM installed base to over 3,600 ATMs as at the end of June 2003, making Hanco the largest IAD in terms of numbers of ATMs in the UK at this time.

Since 2003 Cashbox's ATM estate has grown from zero to 845 as at 31 December 2005. It won its first contract with the drinks merchant Thresher Group, and in September 2003, Cashbox installed its first ATM. Cashbox installed its 50th ATM during October 2003 and its 100th ATM during November 2003. The following month, Cashbox installed its first machine for the pub group Greene King.

Cashbox was granted membership of LINK in March 2004, allowing Cashbox to incorporate its ATMs in the LINK network. Cashbox became the first IAD in the UK to become completely compliant with the Triple DES security standard in June 2004. Cashbox installed its 500th ATM in October 2004.

In January 2005, Cashbox introduced the Placement Model on a selected test basis and subsequently signed contracts with companies such as Scottish & Newcastle Pub Enterprises and Nisa Today's which, when combined, offer a significant number of potential ATM sites. In addition, with regard to the Fully Managed Model, Cashbox has negotiated agreement to proceed to trial installations with an operator with over 70 potential sites. The trial installation commenced in the first quarter of 2006.

Industry Overview

Over the five years ended 31 December 2004, the number of ATMs in the UK has nearly doubled, with 80% of the ATMs deployed during those years being installed in locations other than banks and building societies. By the end of 2004, 54,412 ATMs were in operation. More than 90% of new ATMs deployed during 2004 were supplied by an IAD.

Transaction volumes have grown in line with ATM deployment; 1.3 billion transactions took place in 1994 growing to 2.5 billion in 2004. Average Convenience Fees are currently around Pounds Sterling 1.50. The Directors believe Convenience Fees will rise with some ATM sites already charging close to Pounds Sterling 2.00.

Currently, 50% of cash in circulation is sourced in the UK from ATMs and APACS predicts this will rise to 75% by 2011.

The UK is the third largest ATM market in Western Europe, representing 16% of installations and the eighth largest ATM market in the world. In 2004, the UK was the fastest growing ATM market in Western Europe, largely driven by the increase in remote locations due to IADs.

The Directors believe there are many different opportunities for growth and additional sources of revenue for the surcharging ATM sector, driven by a number of factors:

- demographic preference for younger customers to withdraw cash from ATMs;

- growth in non-bank ATM locations, resulting from the greater commercial viability of surcharging ATMs compared with non-charging ATMs in low footfall areas;

- the sale of ATM estates by financial institutions, which could in certain cases prove profitable if run by an IAD;

- trend for the payment of state benefits directly into bank accounts; and

- introduction of additional services provided by ATMs, including on-screen advertising, voucher and coupon dispensing, and mobile phone top-ups.

Treasury Select Committee Report

In March 2005, the Treasury Select Committee appointed by the UK Government to investigate ATM Convenience Fees released its findings. A memorandum submitted by HM Treasury to the Select Committee stated that it "welcomes the changes (to access, pricing and transparency of charges in the ATM industry) because they have made the industry more competitive, with clear benefits for consumers". The memorandum also mentioned the liberalisation of LINK membership criteria in a positive light, attributing the increased competition in the market to the introduction of independent ATM operators and noting that ATMs are now available in locations such as pubs, shops and garages, thereby increasing consumer choice.

The memorandum acknowledged that "there are costs to supplying an ATM service and it would not be commercially viable for an ATM operator to offer the service if these costs could not be recovered". It goes on to state that "in the majority of cases, the surcharge would seem to be commercially justified".

The memorandum also stated that "the Government believes that charges are a commercial matter for ATM operators", with specific warnings against the introduction of direct regulation of retail prices. The main recommendation of the Select Committee was that ATM charges should be transparent.

Competition

The Directors believe that the competition can be broadly categorised as follows:

- high street banks and building societies; and

- other IADs such as Hanco (now owned by Royal Bank of Scotland plc), Cardpoint plc (including Moneybox plc), TRM Corporation and Bank Machine Limited.

The Directors believe that the Cashbox ATM installation team is efficient, that its ATMs have low cost and relatively high specification, that Cashbox focuses on customer service and that these factors, combined with management's knowledge of the ATM market offer significant advantages in securing ATM estates.

The Directors believe that the following factors represent deterrents to new entrants to the market:

- membership of LINK is critical to any independent ATM operator. Requirements for membership include:

-- strict accreditation controls including conformity with LINK's technical and security standards;

-- the need to operate a dispute resolution service; and

-- the meeting of minimum performance standards.

- In the Directors' opinion it is not currently economically viable for either the ATM owner or the key ATM suppliers to service a small estate of ATMs. In particular, the requirement for initial capital, the initial cost of LINK membership and the ongoing fees are proportionally higher per ATM for operators with a small number of ATMs.

Strategy

Cashbox's sales strategy is based on selecting amongst three models (Sale Model, Placement Model and Fully Managed Model) to maximise the profit potential of each ATM site. The Directors expect that the majority of new installations will use a Placement Model whereby the ATM is placed with the Merchant and replenished by the Merchant, eliminating the need for third party cash handling costs. The Directors believe this model, using their detailed site surveys, will enable Cashbox to place ATMs profitably in lower footfall areas which effectively expands the market available to Cashbox. For sites with higher footfall, the Fully Managed Model (whereby ATMs are replenished by third party cash handling firms) will be used.

The Directors believe that Cashbox's sales process, which includes Cashbox's fully employed survey team undertaking detailed site analysis before recommending to the Merchant the appropriate deployment model (including rejecting sites with poor prospects), provides a strong platform for growth.

The Directors are confident of the organic growth potential of Cashbox's ATM business. The Directors also believe that there are a number of current opportunities in the sector which could result in the management of other ATM estates being outsourced or, in certain cases, ATM estates being sold.

Over the next 18 months, Cashbox intends:

- to market actively Cashbox's Placement and Fully Managed ATM deployment models;

- to expand significantly its ATM estate organically; and

- to explore opportunities to acquire or manage further ATM estates.

Directors

Brief biographies of the Directors are set out below.

Anthony Sharp, aged 43 - Non-Executive Chairman

Anthony has been involved in helping and investing in growing businesses since he was 17 years of age. He has owned and managed businesses in sectors as diverse as pubs and electronic publishing, from the 1980s to the present day and in the UK and the United States. As part of a syndicate he has invested, at an early stage, in companies such as lastminute.com and GoAmerica.

Anthony lived in New York City for 10 years assisting in building a publishing business (MAID) which was later floated on the London Stock Exchange with a secondary offering of ADRs on the NASDAQ. Latterly, he invested in and was appointed Chairman of NMTV, also known as Silicon.com, which was sold to Cent in 2002.

Carl Thomas, aged 41 - Chief Executive and Founder

Carl established Cashbox in 2003. Carl has many years' experience in the UK ATM sector having joined Hanco in 2001 to set up the Corporate Sales Department. Over the two years that Carl spent at Hanco, Hanco increased the ATM installed based to over 3,600 machines as at the end of June 2003, making Hanco the largest IAD in the UK. Carl's career has spanned a number of disciplines beginning with five years working in the retail sector. Carl moved into his first sales role in the late 1980s working for Dairy Crest and ultimately assumed responsibility for sales training. He subsequently spent a number of years in consumer and brand marketing roles which led to his appointment as UK Trade Marketing Manager for The Prestige Group.

Returning to the sales arena in the mid 1990s, Carl joined the Sony Corporation where he used his fast moving consumer group skills and experience to establish Sony Media products within the multiple retail sector, a new sector for the company.

Carl worked for Bristol Myers and Revlon International in the late 1990s handling their largest European accounts (Boots and Tesco), before joining Hutamaki Van Leer where he headed up the UK and European prepared food packaging division.

His last role prior to joining the ATM industry was as European Sales Director for Datamonitor, a fast growing market analysis and research company and now a publicly quoted business.

Darren Woolsgrove, aged 35 - Finance Director

Prior to his involvement in Cashbox, Darren spent two years as an independent management consultant advising companies on financial and strategic issues. During this time he spent 15 months as Acting Chief Executive of The Fresh Olive Company of Provence Limited, a specialist food manufacturer, importer and distributor. This role involved a full review of strategic direction and an analysis and redesign of all internal systems and controls.

Before this, Darren was a founder and Finance and Operations Director of an online media company, Silicon Media Group Limited which published an online news service for IT professionals called silicon.com. Silicon was formed in 1998 and went through a private funding and two VC funding rounds before being successfully sold to CNet Networks in Sept 2002. At its peak, the company employed 150 people in three locations and had group turnover equivalent to Pounds Sterling 10 million per year. Darren led the fundraising processes and had full responsibility for all financial, legal and operational functions across the group, including HR.

Prior to this, Darren spent 4 years at Ideal Hardware Plc, his final role being that of Group Financial Controller, a year as Accountant at Anglo Nordic Burner Products and four years as Trainee Accountant at Carton Garrigan.

Matthew Thomas, aged 34 - Operations Director

Matthew joined Cashbox in 2003 as one of the founding directors. As Operations and IT Director Matthew has been responsible for putting together the engineering and support teams across the Company and has developed and implemented Cashbox's IT infrastructure.

Prior to Cashbox, Matthew held a board position with Seetech Computing Ltd, an IT company specialising in leading edge network infrastructure and thin client technology. Matthew focused on project management and successfully delivered a number of large IT solutions to key accounts across the UK.

Before Seetech, Matthew worked in the entertainment industry for Stage Electrics Ltd, a technical services Company to the entertainment industry. At the time Stage Electrics employed 12 people and was run from its head office in Exeter. Matthew worked closely with the management team and helped to expand the company to the largest such technical services company in Europe ultimately employing almost 400 people with turnover of Pounds Sterling 22 million. During Matthew's 12 years with Stage Electrics, he set up and managed the service operation across the company's six offices and managed the technical design commissioning and software delivery of the company's projects, overseeing projects for customers such as The Millennium Stadium Cardiff, The Royal Court Theatre London, The Millennium Dome and a large number of major West End shows and theatre installations across the country.

Charles Hallett, aged 33 - Corporate Sales Director

Charles began his career as a Recruitment Consultant with Reed Employment. He subsequently joined Rentokil Initial's Management Development Programme, gaining experience across a number of divisions throughout the UK. Following his time at Rentokil Initial, Charles set up a consultancy business where he advised a range of businesses from small enterprises to large corporations including First Choice Holidays, Business Post, Hyster and QS plc on growth strategies.

Charles entered the ATM industry in March 2001 when he joined Hanco as Corporate Sales Manager where he had responsibility for new business development and key account management. Charles secured numerous important contracts, including deals with Thresher Group, Budgens, Unwins and Unique Pub Company.

Robin Saunders, aged 43 - Non-executive Director

Robin Saunders is a London based financier who has specialised in securitisation, capital markets and private equity for nearly 20 years. In 2004, she launched a Private Equity boutique, Clearbrook Capital Partners LLP, with the support of high net worth investors and financial institutions across Europe and the US. Clearbrook Capital Partners has since completed nine acquisitions across three platform companies.

Until 2004, she was Managing Director of the Principal Finance Group at WestLB AG. She has specialised in acquisition and securitisation financing of strong cashflow businesses in a variety of sectors: Broadcasting Rights, Real Estate, (pubs, cinemas, sports grounds), Utilities, (water, telecom, electricity), Consumer Services (environmental, food analysis), Intellectual Property, Mortgages, Leases, Banking Assets and others. Some of her investee companies and clients have included Odeon, Wembley National Football Stadium, Whyte & MacKay, Pubmaster, Formula 1, British Home Stores, and Telecom Italia and Olivetti Spa.

Robin has previously or currently serves on the boards of Formula One Holdings, Pubmaster, British Home Stores, Mid Kent Water, Whyte & MacKay, Odeon Limited, and The Office of the Rail Regulator.

Stephen Brown, aged 67 - Non-executive Director

Stephen Brown has over 30 years of experience in the investment banking industry. In 1983 he founded S.L. Brown & Company, a private investment partnership engaged in acquisition and merchant banking activities as principal. The firms primary investments included the acquisition of Excelsior Truck Leasing Company, Inc. a former subsidiary of Conrail, and the acquisition of a control position in Franklin Capital, an American Stock Exchange listed investment company where Mr. Brown served as Chairman and CEO from 1987 to 2004.

Mr. Brown presently is Chairman of Brimco LLC, a private investment firm in New York, and serves on the board of directors of Copley Financial Services, advisor to the Copley Fund Inc., a publicly traded mutual fund as well as a director of U.S. Energy Systems, a NASDAQ Small Cap listed independent producer of alternative fuels. Mr. Brown is a graduate of New York University School of Law, LLB 1965, Brown University, BA 1961 and the Peddie School 1957, where he has served as a Trustee since 1991.

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