29th Mar 2006 08:00
Cashbox PLC29 March 2006 Press Release 29 March 2006 Cashbox plc ("Cashbox" or "the Company") First day of dealings on the AIM market Cashbox plc ("Cashbox" or "the Company"), an independent ATM deployer andoperator, today announces the commencement of dealings of its Ordinary Shares onthe AIM market ("AIM") of the London Stock Exchange ("Admission"). SeymourPierce is acting as Nominated Adviser and as Broker to the Company. The stockmarket EPIC is CBOX.L Placing StatisticsPlacing Price of Ordinary Shares 20pNumber of existing Ordinary Shares prior to Admission 38,052,000Number of Ordinary Shares being placed by the Company 22,500,000Number of Ordinary Shares in issue following the Placing 60,927,000Market capitalisation at the Placing Price £12.2 millionPercentage of enlarged issued share capital subject to the Placing 36.9%Gross proceeds of the Placing to be received by the Company £4.50 millionNet proceeds of the Placing to be received by the Company £3.51 million Carl Thomas, Chief Executive of Cashbox plc, said: "We are delighted that theflotation of the Company has been completed successfully and that we are one ofonly three 'pure play' ATM companies on the AIM market. Our sector continues togrow apace and developments in the ATM industry make this an exciting anddynamic industry to be in. We have a large number of sites waiting to besupplied with ATMs and we look forward to installing these locations as quicklyas possible." For further information:Cashbox plcCarl Thomas, Chief Executive Tel: +44 (0) 870 126 [email protected] www.cashboxatm.co.uk Seymour Pierce LimitedJeremy Porter, Corporate Finance Tel: +44 (0) 20 7107 [email protected] www.seymourpierce.com Media enquiries:AbchurchHenry Harrison-Topham / Ariane Comstive Tel: +44 (0) 20 7398 [email protected] 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 Directorsanticipate that Cashbox will have further ATM installations, and the Directorsbelieve there is potential for further installations (where considered viableand subject to any landlord or other third-party consent), as shown in the tablebelow: ATMs installed at Anticipated Potential 31 December ATM further ATM installationsLINK designated category 2005 installations Convenience (includes off licenses, conveniencestores) 265 400 3,500Leisure (cinemas, bowling, holiday parks, race courses, amusement arcades etc) 20 3 357Motoring (petrol forecourts, motorway services,car park operators) 15 0 500Services (University Student Unions, Colleges) 9 0 0Social (pubs, bars, nightclubs) 433 85 1,153Supermarket 2 0 0Workplace (offices, canteens etc) 4 0 0Processing (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 potentialof each ATM site. The Directors intend that the Placement Model will becomeCashbox's main basis for deploying self-fill ATMs, whereby the ATM is placedwith and replenished by the Merchant, eliminating the need for third party cashhandling costs. 95 transacting Placement Models were in place at 31 December2005. The Directors believe that they have shown this model, using theirdetailed site surveys, will enable Cashbox to place ATMs profitably in lowerfootfall areas, which the Directors believe effectively expands the marketavailable to Cashbox. The Directors intend that for sites with higher footfall,the Fully Managed Model (whereby ATMs are replenished by third party cashhandling firms) will be used. Only sites where Cashbox's detailed survey shows an ATM is expected to generatea 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 foundingCashbox, Carl Thomas was in charge of corporate sales at Hanco. During Carl'stime at Hanco, Hanco increased the ATM installed base to over 3,600 ATMs as atthe end of June 2003, making Hanco the largest IAD in terms of numbers of ATMsin the UK at this time. Since 2003 Cashbox's ATM estate has grown from zero to 845 as at 31 December2005. It won its first contract with the drinks merchant Thresher Group, and inSeptember 2003, Cashbox installed its first ATM. Cashbox installed its 50th ATMduring October 2003 and its 100th ATM during November 2003. The followingmonth, Cashbox installed its first machine for the pub group Greene King. Cashbox was granted membership of LINK in March 2004, allowing Cashbox toincorporate its ATMs in the LINK network. Cashbox became the first IAD in the UKto become completely compliant with the Triple DES security standard in June2004. Cashbox installed its 500th ATM in October 2004. In January 2005, Cashbox introduced the Placement Model on a selected test basisand subsequently signed contracts with companies such as Scottish & NewcastlePub Enterprises and Nisa Today's which, when combined, offer a significantnumber of potential ATM sites. In addition, with regard to the Fully ManagedModel, Cashbox has negotiated agreement to proceed to trial installations withan operator with over 70 potential sites. The trial installation commenced inthe first quarter of 2006. Industry Overview Over the five years ended 31 December 2004, the number of ATMs in the UK hasnearly doubled, with 80% of the ATMs deployed during those years being installedin 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 2004were supplied by an IAD. Transaction volumes have grown in line with ATM deployment; 1.3 billiontransactions took place in 1994 growing to 2.5 billion in 2004. AverageConvenience Fees are currently around £1.50. The Directors believe ConvenienceFees will rise with some ATM sites already charging close to £2.00. Currently, 50% of cash in circulation is sourced in the UK from ATMs and APACSpredicts this will rise to 75% by 2011. The UK is the third largest ATM market in Western Europe, representing 16% ofinstallations and the eighth largest ATM market in the world. In 2004, the UKwas the fastest growing ATM market in Western Europe, largely driven by theincrease in remote locations due to IADs. The Directors believe there are many different opportunities for growth andadditional sources of revenue for the surcharging ATM sector, driven by a numberof 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 toinvestigate ATM Convenience Fees released its findings. A memorandum submittedby HM Treasury to the Select Committee stated that it "welcomes the changes (toaccess, pricing and transparency of charges in the ATM industry) because theyhave made the industry more competitive, with clear benefits for consumers".The memorandum also mentioned the liberalisation of LINK membership criteria ina positive light, attributing the increased competition in the market to theintroduction of independent ATM operators and noting that ATMs are now availablein locations such as pubs, shops and garages, thereby increasing consumerchoice. The memorandum acknowledged that "there are costs to supplying an ATM serviceand it would not be commercially viable for an ATM operator to offer the serviceif these costs could not be recovered". It goes on to state that "in themajority of cases, the surcharge would seem to be commercially justified". The memorandum also stated that "the Government believes that charges are acommercial matter for ATM operators", with specific warnings against theintroduction of direct regulation of retail prices. The main recommendation ofthe Select Committee was that ATM charges should be transparent. Competition The Directors believe that the competition can be broadly categorised asfollows: • 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, thatits ATMs have low cost and relatively high specification, that Cashbox focuseson customer service and that these factors, combined with management's knowledgeof the ATM market offer significant advantages in securing ATM estates. The Directors believe that the following factors represent deterrents to newentrants 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 ofeach ATM site. The Directors expect that the majority of new installations willuse a Placement Model whereby the ATM is placed with the Merchant andreplenished by the Merchant, eliminating the need for third party cash handlingcosts. The Directors believe this model, using their detailed site surveys,will enable Cashbox to place ATMs profitably in lower footfall areas whicheffectively expands the market available to Cashbox. For sites with higherfootfall, the Fully Managed Model (whereby ATMs are replenished by third partycash handling firms) will be used. The Directors believe that Cashbox's sales process, which includes Cashbox'sfully employed survey team undertaking detailed site analysis beforerecommending to the Merchant the appropriate deployment model (includingrejecting sites with poor prospects), provides a strong platform for growth. The Directors are confident of the organic growth potential of Cashbox's ATMbusiness. The Directors also believe that there are a number of currentopportunities in the sector which could result in the management of other ATMestates 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 sincehe was 17 years of age. He has owned and managed businesses in sectors asdiverse as pubs and electronic publishing, from the 1980s to the present day andin the UK and the United States. As part of a syndicate he has invested, at anearly stage, in companies such as lastminute.com and GoAmerica. Anthony lived in New York City for 10 years assisting in building a publishingbusiness (MAID) which was later floated on the London Stock Exchange with asecondary offering of ADRs on the NASDAQ. Latterly, he invested in and wasappointed Chairman of NMTV, also known as Silicon.com, which was sold to Cent in2002. Carl Thomas, aged 41 - Chief Executive and Founder Carl established Cashbox in 2003. Carl has many years' experience in the UK ATMsector 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 installedbased to over 3,600 machines as at the end of June 2003, making Hanco thelargest IAD in the UK. Carl's career has spanned a number of disciplinesbeginning with five years working in the retail sector. Carl moved into hisfirst sales role in the late 1980s working for Dairy Crest and ultimatelyassumed responsibility for sales training. He subsequently spent a number ofyears in consumer and brand marketing roles which led to his appointment as UKTrade Marketing Manager for The Prestige Group. Returning to the sales arena in the mid 1990s, Carl joined the Sony Corporationwhere he used his fast moving consumer group skills and experience to establishSony Media products within the multiple retail sector, a new sector for thecompany. Carl worked for Bristol Myers and Revlon International in the late 1990shandling their largest European accounts (Boots and Tesco), before joiningHutamaki Van Leer where he headed up the UK and European prepared food packagingdivision. His last role prior to joining the ATM industry was as European Sales Directorfor Datamonitor, a fast growing market analysis and research company and now apublicly quoted business. Darren Woolsgrove, aged 35 - Finance Director Prior to his involvement in Cashbox, Darren spent two years as an independentmanagement consultant advising companies on financial and strategic issues.During this time he spent 15 months as Acting Chief Executive of The Fresh OliveCompany of Provence Limited, a specialist food manufacturer, importer anddistributor. This role involved a full review of strategic direction and ananalysis and redesign of all internal systems and controls. Before this, Darren was a founder and Finance and Operations Director of anonline media company, Silicon Media Group Limited which published an online newsservice for IT professionals called silicon.com. Silicon was formed in 1998 andwent through a private funding and two VC funding rounds before beingsuccessfully sold to CNet Networks in Sept 2002. At its peak, the companyemployed 150 people in three locations and had group turnover equivalent to £10million per year. Darren led the fundraising processes and had fullresponsibility for all financial, legal and operational functions across thegroup, including HR. Prior to this, Darren spent 4 years at Ideal Hardware Plc, his final role beingthat of Group Financial Controller, a year as Accountant at Anglo Nordic BurnerProducts 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 Operationsand IT Director Matthew has been responsible for putting together theengineering and support teams across the Company and has developed andimplemented Cashbox's IT infrastructure. Prior to Cashbox, Matthew held a board position with Seetech Computing Ltd, anIT company specialising in leading edge network infrastructure and thin clienttechnology. Matthew focused on project management and successfully delivered anumber of large IT solutions to key accounts across the UK. Before Seetech, Matthew worked in the entertainment industry for Stage ElectricsLtd, a technical services Company to the entertainment industry. At the timeStage 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 companyto the largest such technical services company in Europe ultimately employingalmost 400 people with turnover of £22 million. During Matthew's 12 years withStage Electrics, he set up and managed the service operation across thecompany's six offices and managed the technical design commissioning andsoftware delivery of the company's projects, overseeing projects for customerssuch as The Millennium Stadium Cardiff, The Royal Court Theatre London, TheMillennium Dome and a large number of major West End shows and theatreinstallations across the country. Charles Hallett, aged 33 - Corporate Sales Director Charles began his career as a Recruitment Consultant with Reed Employment. Hesubsequently joined Rentokil Initial's Management Development Programme, gainingexperience across a number of divisions throughout the UK. Following his timeat Rentokil Initial, Charles set up a consultancy business where he advised arange of businesses from small enterprises to large corporations including FirstChoice Holidays, Business Post, Hyster and QS plc on growth strategies. Charles entered the ATM industry in March 2001 when he joined Hanco as CorporateSales Manager where he had responsibility for new business development and keyaccount management. Charles secured numerous important contracts, includingdeals 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 insecuritisation, capital markets and private equity for nearly 20 years. In2004, she launched a Private Equity boutique, Clearbrook Capital Partners LLP,with the support of high net worth investors and financial institutions acrossEurope and the US. Clearbrook Capital Partners has since completed nineacquisitions across three platform companies. Until 2004, she was Managing Director of the Principal Finance Group at WestLBAG. She has specialised in acquisition and securitisation financing of strongcashflow 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 andclients 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 bankingindustry. In 1983 he founded S.L. Brown & Company, a private investmentpartnership engaged in acquisition and merchant banking activities as principal.The firms primary investments included the acquisition of Excelsior TruckLeasing Company, Inc. a former subsidiary of Conrail, and the acquisition of acontrol position in Franklin Capital, an American Stock Exchange listedinvestment 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 NewYork, and serves on the board of directors of Copley Financial Services, advisorto the Copley Fund Inc., a publicly traded mutual fund as well as a director ofU.S. Energy Systems, a NASDAQ Small Cap listed independent producer ofalternative fuels. Mr. Brown is a graduate of New York University School ofLaw, LLB 1965, Brown University, BA 1961 and the Peddie School 1957, where hehas served as a Trustee since 1991. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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