RNS Number:5522A
Cashbox PLC
29 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 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 #12.2 million
Percentage of enlarged issued share capital subject to the Placing 36.9%
Gross proceeds of the Placing to be received by the Company #4.50 million
Net 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 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
31 December ATM further ATM
installations
LINK designated category 2005 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 #1.50. The Directors believe Convenience
Fees 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 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 #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 #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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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