Cake Box Holdi. Regulatory News (CBOX)

31 Dec 2008 12:32



Press Release

31 December 2008

Cashbox Public Limited Company

("Cashbox" or "the Company")

Preliminary Results for the year ended 30 June 2008

Cashbox (AIM:CBOX), the independent Automated Teller Machine ("ATM") installer and operator, announces its preliminary results for the year ended 30 June 2008.

		Year ended 30 June 2008	Year ended 30 June 2007
Machines installed at period end		2,045	1,442
Turnover £000		4,675	4,380
Gross Profit £000		1,768	1,161
Gross Margin %		38	27
EBITDA *† £000		(2,000)	(3,510)
Loss on ordinary activities before exceptionals* £000		(3,003)	(4,056)
Loss on ordinary activities after exceptionals £000		(3,003)	(6,741)
Loss per share before exceptionals*(pence)		(3.4)	(6.3)
Loss per share after exceptionals (pence)		(3.4)	(10.5)
Net debt £000		5,016	2,204

* There were no exceptional items for the year ended 30 June 2008. Exceptional items for the year ended 30 June 2007 were £2,000,000 and £685,000 relating to litigation settlement costs and lease termination costs respectively.

† EBITDA is defined as Earnings before interest, tax, depreciation and amortisation, share based payments and exceptional items, (see note 11).

Highlights

•	Installed estate increased from 1,442 to 2,045 at 30 June 2008
•	Transaction revenues 12% higher
•	Gross profit up 52% from last year at £1.8m
•	Successfully completed two acquisitions in July and October 2008, adding 892 sites to the Cashbox estate
•	Raised £1.5m of new equity and £1.5m in a convertible loan post year end to provide further working capital, as well as funding for acquisition and integration purposes
•	Settlement reached with Royal Bank of Scotland relating to Hanco litigation and in September 2008, replacing the £1.8m debt with a convertible with five year term

  For further information:

Cashbox plc
David Auger, Chief Financial Officer	Tel: +44 (0) 1256 441000
dauger@cashboxplc.co.uk	www.cashboxplc.co.uk

Seymour Pierce Limited
Jonathan Wright	Tel: +44 (0) 20 7107 8000
	www.seymourpierce.com

Fairfax IS PLC
Ewan Leggat	Tel: +44 (0) 20 7460 4389
	www.fairfaxplc.com

Media enquiries:

Threadneedle Communications
Josh Royston / Graham Herring	Tel: +44 (0) 20 7653 9844
	www.threadneedlepr.co.uk

CHAIRMAN'S STATEMENT

Improved operational performance has been key in achieving the reported results. However the development of a coherent strategy is vital to ensure full realisation of shareholder value. Your Board, in its last report, conveyed its intention to pursue opportunities to grow the business by acquisition. To this end the Board has devoted time and effort to achieve a position of leadership in the consolidation that the industry is experiencing. Current market conditions have made the furthering of this objective even more appropriate. The identification of possible acquisitions, which occurred in the second half of the year have resulted in positive outcomes since the year end. The significant increase in ATM numbers achieved both by organic growth and acquisition have increased the estate size to 2,045 at 30 June 2008, with over 2,500 active sites at 30 November 2008. Your Board believes that the estate size is such that profitability will now be achieved within an acceptable time scale.

2008 results

Sales for the year ended 30 June 2008 were £4,675,000 (2007: £4,380,000) resulting in an operating loss of £2,484,000 (2007: £5,932,000) and a loss before tax of £3,003,000 (2007: £6,741,000). During the year, the business has continued to roll out ATMs into both independent and managed sites. The Cashbox team has also focused on streamlining the operational aspects of the business by putting in place the necessary systems to run and maintain a fast growing estate. A new distributor agreement was signed in February 2008 with Triton, one of the market leaders in off-site ATM provision. The agreement is in addition to the existing distribution agreements with NCR Easypoint (formerly Tidel). The placement merchant (self-filled) model continues to be the prime focus for Cashbox and has seen the total estate grow by 42%, and now accounts for more than half the ATMs deployed. The business has also begun identifying and rolling out a fully managed service to selected high transacting sites where it is financially viable to offer this service. This is an area that is likely to expand with increase in demand, and our ability to provide this service will put the business in a position to offer an enviable 'one-stop' ATM solution for a variety of merchant requirements. We are also now trialling free to use ATMs in a number of locations.

Funding

In December 2007 Cashbox secured £1 million in funding from MBC Investments Ltd. to be provided in two tranches. The first tranche was a convertible unsecured loan, for the sum of £583,788. The second was a non-convertible unsecured loan of £416,212 which was made available for draw down from 31 March 2008. Both tranches of the loan were due to mature on 31 March 2009. On 14 March 2008, the Company received notice from MBC Investments that the holder's intention was to convert the convertible loan note issued into shares under the terms of the loan at the first available occasion being 31 March 2008. The new loans were arranged in conjunction with a rescheduling of the Company's Bank of Scotland facility, whereby the initial £8m facility was reduced to £6m and the draw down period extended from March 2008 to December 2008. The debt repayment originally agreed to start March 2008 was rescheduled to commence December 2009.

Hanco litigation

In October 2007 we were able to agree a full and final settlement with Hanco in respect of the long standing litigation between the two companies. In the settlement it was agreed Cashbox ATM Systems Limited would pay an additional £1.8m, on top of the £200,000 already paid in July 2007. As previously announced to the market and shareholders, Cashbox ATM Systems Limited has the benefit of a joint and several indemnity from Carl Thomas and Anthony Sharp in connection with this litigation, which the Directors intend to enforce to recover the £2m. However both Mr Thomas and Mr Sharp have refused to contribute and Mr Sharp declared himself bankrupt on 14 May 2008. 

This brought to an end the litigation which has been a drain on management time and was continuing to incur substantial legal bills. The Board did not believe that continuing the litigation was in the best interests of shareholders. 

Post balance sheet events

During the period from the 7th July 2008 to 8th October 2008, the company was able to complete four transactions, effectively acquiring all of the sites and ATMs of MyATM, a non-Link member IAD, and Cash4All a Link member IAD. This added another 892 sites to the Cashbox estate. Although predominantly independent contracts, the acquisitions also included 144 sites within Mitchells & Butlers, one of the UK's largest managed pub estates. The company has successfully raised monies in this difficult market to provide further working capital, as well as funds for acquisition and integration costs. I was unable to participate in these placings, the company being in a closed period. However, I have been able to express my support for the business by funding a £100K loan to the business, which, subject to Board approval, I am willing to convert when legally allowed to do so.

2008/2009

It is my clear intention to ensure that your Board's priority is the creation of value for shareholders. The foundation for the achievement of this has now been laid. The optimisation of the benefits of the enlarged estate will be management's priority and I am confident of their ability to deliver this. 

With positive cash flow and profitability now realisable I believe that the disappointments of the past are now behind us. 

I wish to express my appreciation to all staff who have contributed during this period of change.

Robin Saunders

Chairman

31 December 2008

  CHIEF EXECUTIVE'S STATEMENT

In my last report, I commented upon the need to remain focused upon the cornerstones of our business, namely:

• The continuing acquisition of key client contracts with high volume estates

• The rapid conversion and installation of profitable sites within these estates

• The provision of outstanding service and support levels to drive transaction volumes; and

• The utilisation of a robust and flexible platform technology and reporting system to ensure the maximum level of uptime for all ATMs.

I am pleased to say that we have made considerable progress, with measurable successes, in every area of implementation. From 1st July 2007 to 30th June 2008, we successfully negotiated and signed up 871 sites which were suitable for installation. Two approaches were adopted to fulfil this opportunity, namely the purchase of new ATMs utilising the Bank of Scotland draw down and the redeployment of existing ATMs from low transacting locations. The former increased our overall estate size from 1,442 to 2,045 in the period, whilst the second increased our return on ATM investment. 

This has involved entering new markets such as transportation hubs and cinemas, as well as greater penetration in the leisure and convenience store sectors. Our relationships with communication partners, has culminated in a new direct agreement with BT, signed in April 2008. This enables us to reduce waiting times for telephone line installation which, coupled with improved ATM stock management and ordering, has enabled us to reduce average installation times [period from approved deal to installed ATM] from 51 days in Q1 to just 28 days in Q4. Although the estate has increased significantly in size, engineering headcount has remained constant throughout the period. 

We are rightly proud of the service we provide, planned and co-ordinated by our Account Management team, and this dedicated and professional approach has lead to our corporate clients collectively increasing their installed ATM base with Cashbox by 25% over the past twelve months. We have also experienced increased estates in 72% of our corporate clients, 6% of corporate clients declining by only one site each, and 22% of corporate clients remaining at a constant size. 

Further investment in training was undertaken, especially for field service engineers, relating to new ATM types, software and upgrade parts. This is a crucial element of our service offering - the ATM has to be working to meet the business and operational requirements of our clients. 

Over 90% of the new sites installed in the period were placement self-fill machines, where we retain a higher percentage of the convenience fee. This has enabled us to maintain the higher gross profit margins experienced last year, without having to resort to raising the convenience fee, which has been maintained at £1.75 across the majority of the estate. 

Transaction volumes continue to grow in a difficult economic environment. The re-deployment of ATMs from low transacting sites to new sites supports average transaction levels which are depressed by the addition of new sites throughout any given month. We will continue to re-deploy at the current rate, on a monthly basis throughout the coming year, to ensure that average transactions are maintained, with possible future growth. As we increase our installed base, a greater proportion of our efforts will shift from the acquisition and installation of net new sites to redeployment of existing ATMs to higher transacting sites. 

During the course of the past year, at the request of clients, we have extended our offering to include a fully managed service and free to use ATMs. Both of these offerings were successfully launched with a limited rollout, and are being closely monitored and refined, before we commit to a larger scale promotion and rollout. High volume sites have traditionally required a fully managed offering and the potential for this market is well recognised. However, we believe that the current economic climate is creating a new sector in the free to use market, where a free to use ATM is justified not solely by transaction volumes and location, but is greatly influenced by our clients seeking to support their value offering to their own customers. Initial reports are encouraging and we look forward to increasing our presence in these areas. Free to use ATMs still generate income for Cashbox via the interchange fee. This is where the customer's bank pays Cashbox a fee for allowing their customer to withdraw cash free of charge from an independently deployed ATM. Although the interchange fee is smaller than the convenience fee, the increased volume of transactions stimulated by no transaction fees means that this is still potentially profitable business for Cashbox. 

Bank of Scotland continues to be a very supportive financing partner in the rollout of ATMs. In an environment where many capital intensive businesses are feeling the effects of the high cost of borrowing, we are fortunate to have a partner who has not only supported the existing business model but also supported the acquisition of small existing estates, such as the July 2008 purchase of 144 ATMs situated within Mitchells & Butlers plc, one of the largest managed pub companies in the UK. The acquisition of already installed estates is intelligent business for Cashbox, as transaction volumes are of a known quantity, the ATMs have already ramped up performance, and we do not have to bear the cost of site acquisition, initial survey and installation. Our Engineers, Sales Support team and Technology group provided further proof of our outstanding levels of service by decommissioning and re-uploading these ATMs to the LINK network within the same month of signing, despite not being able to work within opening hours. 

The Board believe that there are more opportunities of this nature, and stand by their re-structuring of the Board in January 2008, which was enacted to increase our ability to react quickly and creatively to such market opportunities.

The Board and Executive Management are mindful that the business has not yet attained profitability and continually evolve roles, processes and operating systems, leveraging technology where possible, to ensure that operating costs are kept to a minimum. Significant cost savings have been made in the areas of administration costs, professional fees and occupancy costs, whilst being aware of our need to invest for growth. One example of this has been the increase in our headcount average from 44 in 2006 to 2007 to 50 in 2007 to 2008 at an increase of only 1% to total employee costs. 

Our goal has always been to create a stable platform, one which empowers the business to deliver sustainable, profitable growth. The changes to the structure of the organisation in 2006/2007 enabled that platform to be built in 2007/2008 and we go forward with a significantly larger estate which generates larger and growing revenues, with a stable and robust organisational structure and workforce, all of which operates on a substantially reduced cost base.

Looking forward to 2008/2009, we will continue to allow the outstanding quality of our service, the flexibility of our offerings, and the complete ownership of all aspects of our post-sales support to be the differentiators in driving our business success. We will continue to focus upon delivering organic growth, whilst remaining responsive to acquisition opportunities in a market with considerable consolidation potential. 

In conclusion, I am very encouraged by the mature, resilient and professional manner in which the Company and its staff have dealt with considerable re-structuring in a changing economic climate. I look forward to the next twelve months with confidence and optimism about returning real value to our shareholders.

Ciaran Morton 

Chief Executive Officer

31 December 2008

  CHIEF FINANCIAL OFFICER'S REVIEW

This is the first annual report of the Group produced in accordance with International Financial Reporting Standards ("IFRS"). The transition date for the adoption of IFRS is 1 July 2006. All comparative data in this report has been restated accordingly. This Review should be read in conjunction with the Consolidated Financial information starting on page 8.

Operationally the business has grown during the year utilising the Bank of Scotland debt facility to finance machine purchases and increase the deployment of ATMs. During the year the estate grew by 603 machines. The proportion of machines operating under the placement model, where Cashbox retains ownership of the machine, continued to increase and at 30 June 2008 was 51%, up from 34% at June 2007. Transaction volumes grew during the year with the second half higher than the first half, and both periods were up on the comparable and preceding periods for the year ended 30 June 2007.

Turnover for the year was £4.7m, 7% higher than last year, with transaction revenues 12% higher and lower sales of ATMs and sundry items. The increased number of placement machines where a greater portion of the transaction revenues are retained by Cashbox meant that gross margin continued to increase albeit more slowly in the second half. The Gross margin achieved in 2008 was 38%, 11 percentage points higher than 2007. With higher revenues and improving gross margins, gross profits for 2008 were up significantly on the prior year, at £1.8m compared to £1.2m, an increase of £0.6m or 52%. 

Management maintained the tight control on costs introduced after their appointment and administration expenses for the year were £4.3m, compared with £5.1m last year before exceptional items. The largest single item of expenditure was employee costs which were up only 1% despite an increase of 6 people in the average headcount from 44 to 50, as roles were redefined and the average salaries fell. Vehicle and fuel costs were 3% higher with fuel costs in particular rising. Depreciation was the only other cost to have increased, as would be anticipated with the increased number of owned machines in the estate. Excluding depreciation and share option costs (which are both non cash items) administration costs were £3.6m, £1.0m or 22% lower than prior year with occupancy costs, professional fees and other administration costs all falling despite pressure from suppliers trying to raise prices. 

Earnings before interest, tax, depreciation and amortisation, EBITDA, (as defined in note 15) was a loss of £1.8m, an improvement of £1.5m before exceptional items compared to the same period last year, with increased gross profits and reduced costs driving this encouraging result. 

The operating loss for the year was £2.5m, £1.4m better than last year excluding last years exceptional item and £3.4m better when including the settlement of the Hanco litigation. 

Finance income, principally interest on the Bank of England account, of £46,000 was slightly up on last year. Finance costs for the year amounted to £565,000, which included costs of the facility with Bank of Scotland of £469,000, reflecting the increased levels of borrowing during the year compared to £138,000 in 2007. This was mainly interest on the finance leases with GCVF which were terminated in June 2007 with additional costs of £685,000. 

The loss for the year attributable to the equity holders was £3.0m compared to a £4.1m loss last year before exceptional items, with the improvement due to reduced operating losses being partially offset by higher interest costs. After exceptional items, the loss for the year ended June 2008 was £3.7m better than the £6.7m loss in 2007 as the Hanco litigation settlement costs were recorded in the year ended 30 June 2007 as well as the costs of exiting the finance lease arrangements. The loss for the year of £3.0m gave rise to cash used in operations of £2.3m with non cash cost items and net interest costs reducing the loss by £1.2m and outflows in working capital of £0.5m. This is slightly lower than the cash used in operations last year when the higher losses were offset by the working capital movements, principally due to the Hanco liability of £2.0m recorded as a post balance sheet adjusting item at June 2007. 

Net cash used in investing activities was £1.6m compared to £0.7m as, having resolved the financing difficulties of last year, the Group was able to accelerate the purchase and deployment of ATMs into the estate. The purchasing of the ATMs was financed through the use of the banking facilities, and £2.4m was drawn down on the Bank of Scotland loan facility with a total of £4.7m drawn at 30 June 2008, leaving £1.3m undrawn. The total proceeds from borrowings was £3.4m with the balance of £1.0m being from MBC Investments, with £0.6m as a convertible loan note and £0.4m as a non convertible loan note issued in December 2007. The convertible loan note was converted at the end of March 2008 in accordance with the terms of the note while the non-convertible loan note is due for repayment in March 2009. In addition to the borrowings, the Company raised £0.5m in new equity in April 2008. Cash generated from financing activities for 2008 was £3.9m compared to £4.2m last year. At 30 June 2008 this additional funding amounts to £2.8m of new debt and new equity of £1.1m (being the placing and the conversion of the convertible loan note). 

Despite the improvements in the financial performance, Cashbox is still loss making and therefore requires further operating cash-flow. As part of the loan agreement with Bank of Scotland, financial covenants are in place to ensure that the banks position is protected if these losses continue. Consequently the Board regularly looks at the necessary steps to ensure these covenants are met and discuss the situation in good time with the Bank. Plans made during the second half of the financial year were well advanced and the Bank had indicated that as long as any shortfall was remedied within an agreed timeframe then no action would be taken. While finalising the annual report, the Company was technically in breach of the net worth covenant at 30 June 2008, and while Bank of Scotland had indicated no action was being taken because of the funds being raised from shareholders, that continued waiver of covenants was not unconditional and consequently under the specific guidance included in IFRS, all of the liabilities shown to Bank of Scotland are shown payable "within one year" despite this is not when amounts will actually be paid. 

The net decrease in cash for the year was £0.3m, compared to a net increase in cash of £0.9m in 2007 as 2008 was a year of investment following the changes in financial arrangements made at the end of June 2007. 

Post balance sheet events

In the period following the year end the investment in the business has continued. In July 2008, the Company acquired 144 machines already placed with Mitchells and Butlers' pubs as part of a transaction financed using the Bank of Scotland facility. At the Extraordinary General Meeting on 29 July 2008 shareholders approved the resolutions proposed to increase the authorised share capital and allow the issuing of up to a further 320,000,000 ordinary shares without further approval from shareholders to give the Board greater flexibility in raising funds and participating in further opportunities in the consolidating market. 

The Board utilised this facility and has raised a further £1,547,000 new equity with placings in July, September and October 2008 together with a £1,500,000 convertible in December 2008 to provide additional working capital. In a series of transactions, Cashbox acquired the majority of the owned and leased ATMs of Cash4All Limited together with the underlying site agreements for a total consideration of £1,672,340 being £872,340 cash payable to the four lease providers and £800,000 being £250,000 cash and £650,000 in equity to the mezzanine debt holders. 

As part of the additional financing raised by the Company, on 31 December 2008, agreement was reached with Bank of Scotland for certain covenants which were due to be tested for the first time for the year ended 30 June 2009 to be reset based on revised financial projections.

David Auger

Chief Financial Officer

31 December 2008

  CASHBOX PLC

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 30 JUNE 2008

			Notes	Year ended 30-6-08	Year ended 30-6-07
				£'000	£'000
Revenue			2	4,675	4,380
Cost of sales				(2,907)	(3,219)
Gross profit				1,768	1,161
Administrative expenses				(4,252)	(5,093)
Exceptional items:
	Litigation settlement costs		3	-	(2,000)
Total administrative expenses				(4,252)	(7,093)
Operating loss				(2,484)	(5,932)
Finance income				46	37
Finance costs			5	(565)	(161)
Exceptional finance charges			3	-	(685)
				(519)	(809)
Loss for the period attributable to the equity holders of the parent				(3,003)	(6,741)
Loss per ordinary share (pence)			6
	Basic			(3.4)	(10.5)
	Diluted			(3.4)	(10.5)
Loss for the year, excluding exceptional costs, attributable to the equity holders of the parent company				(3,003)	(4,056)
All amounts relate to continuing activities.

  CASHBOX PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2008

		Notes	Year ended  30-6-08	Year ended  30-6-07
			£'000	£'000
Opening shareholders' deficit			(3,520)	(180)
Loss for the financial period being total income and expenditure recognised in the period			(3,003)	(6,741)
Share based payments			133	138
Issue of shares for cash including premium net of costs			459	3,263
Issue of shares including premium on conversion of convertible loan stock			583	-
Movement in shareholders' funds			(1,828)	(3,340)
Closing shareholders' deficit		10	(5,348)	(3,520)

  CASHBOX PLC

CONSOLIDATED BALANCE SHEET

AS AT 30 JUNE 2008

			Notes	30-6-08	30-6-07
				£'000	£'000
ASSETS
Non current assets
	Intangible assets			53	13
	Property, plant and equipment			2,081	1,077
				2,134	1,090
Current assets
	Inventories			165	110
	Trade and other receivables		7	657	850
	Cash at bank and in hand			1,112	1,452
				1,934	2,412
TOTAL ASSETS				4,068	3,502
LIABILITIES AND EQUITY
Current liabilities
	Trade and other payables			4,159	4,715
	Borrowings		8	5,254	2
				9,413	4,717
Net current liabilities
	Borrowings		8	3	2,305
TOTAL LIABILITIES				9,416	7,022
Capital and reserves attributable to equity holders
	Share capital			1,044	832
	Share premium account			7,755	6,925
	Merger reserve			2,180	2,180
	Equity reserve			-	-
	Profit and loss account			(16,327)	(13,457)
SHAREHOLDERS' DEFICIT			10	(5,348)	(3,520)
TOTAL EQUITY AND LIABILITIES				4,068	3,502

  CASHBOX PLC

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 30 JUNE 2008

		Notes	Year ended  30-6-08	Year ended  30-6-07
			£'000	£'000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash used in operations		11	(2,302)	(2,440)
Interest paid			(350)	(150)
Net cash used in operating activities			(2,652)	(2,590)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property plant and equipment			(1,495)	(687)
Purchase of intangible fixed assets			(60)	(6)
Net cash used in investing activities			(1,555)	(693)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of issue of ordinary shares for cash			476	584
Proceeds from borrowings			3,393	5,600
Repayments of borrowings			-	(130)
Capital repayments on finance leases			(2)	(1,388)
Lease termination costs paid		3	-	(467)
Net cash generated from financing activities			3,867	4,199
Net (decrease) / increase in cash			(340)	916
Cash and cash equivalents at the beginning of the period			1,452	536
Cash and cash equivalents at the end of the period			1,112	1,452

  CASHBOX PLC

NOTES TO THE PRELIMINARY STATEMENT

FOR THE YEAR ENDED 30 JUNE 2008

1. Accounting policies and basis of presentation of financial information

Relationship to statutory accounts and audit status

The financial information included in this document does not comprise statutory accounts within the meaning of section 240 of the Companies Act 1985. 

The financial information for the year ended 30 June 2008 has been extracted from the audited statutory accounts which will be sent to shareholders and delivered to the Registrar of Companies after the forthcoming AGM. The Auditors' report on those accounts was unqualified but included an emphasis of matter statement regarding material uncertainties over going concern in the current economic environment. The auditors' report did not contain a statement under s237 (2) or (3) Companies Act 1985.

The comparative figures for the financial year ended 30 June 2007 are not the Group's statutory accounts for that financial year. Those accounts, which were prepared under UK Generally Accepted Accounting Practices, have been reported on by the Group's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain statements under section 237(2) or (3) of the Companies Act 1985.

Accounting convention

The consolidated financial statements of Cashbox PLC have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and IFRIC interpretations (collectively IFRS) as adopted by the European Union and the Companies Act 1985 applicable to Companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of land and buildings, available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through the income statement.

The accounting policies have changed from the previous year when the financial statements were prepared under applicable United Kingdom Generally Accepted Accounting Principles (UK GAAP). The comparative information has been restated in accordance with IFRS. The accounting policies that have been applied in the opening balance sheet have also been applied throughout all periods presented in these financial statements. These accounting policies comply with IFRSs that are mandatory for accounting periods ending on 30 June 2008.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed below.

Impact of conversion to IFRS:

In implementing the transition to IFRS, the Group has followed the requirements of IFRS 1 "First Time Adoption of International Financial Reporting Standards", which in general requires IFRS accounting policies to be applied fully retrospectively in deriving the opening balance sheet at the date of transition. In the Group's case, the date of transition is 1 July 2006 being the start of the previous period that has been presented as comparative information. IFRS 1 contains certain mandatory exceptions and some optional exemptions to this principle of retrospective application. When preparing the Group's IFRS balance sheet at 1st July 2006, the date of transition, the Group has taken the optional exemption in IFRS 1 to apply the provisions of IFRS 3: Business Combinations from 1 July 2006 and not applied the provisions of IFRS 3 to the acquisition of Cashbox ATM Systems Limited by Cashbox PLC on 23 March 2006 which has been accounted for under merger accounting rules as described below in 'basis of consolidation'.

The adoption of IFRS represents an accounting change only and does not affect the operations or cash flows of the Group.

The principal area of impact is that purchased computer software costs were previously recorded as property, plant and equipment as permitted by UK GAAP. In accordance with IAS 38, all purchased computer software is recorded as an intangible asset. The impact of this adjustment was to reduce the net book value of property, plant and equipment by £14,000 as at 1 July 2006 and £13,000 as at 30 June 2007 with a corresponding increase in intangible assets. There was no net impact on the income statement for the year ended 30 June 2007 or on shareholders' equity at 1 July 2006 or 30 June 2007. Consequently a reconciliation schedule is not required.

(a) Relevant standards, amendments and interpretations effective for the year ended 30 June 2008

IFRS 7, 'Financial instruments: Disclosures', and the complementary amendment to IAS 1, 'Presentation of financial statements - Capital disclosures', introduces new disclosures relating to financial instruments and does not have any impact on the classification and valuation of the Group or Company's financial instruments.

IFRIC 8, 'Scope of IFRS 2', requires consideration of transactions involving the issuance of equity instruments, where the identifiable consideration received is less than the fair value of the equity instruments issued in order to establish whether or not they fall within the scope of IFRS 2. This standard does not have any impact on the Group's financial statements. The Company already applies an accounting policy which complies with the requirements of IFRIC 8.

IFRIC 10, 'Interim financial reporting and impairment', prohibits the impairment losses recognised in an interim period on goodwill and investments in equity instruments and in financial assets carried at cost to be reversed at a subsequent balance sheet date. This standard does not have any impact on the Group's financial statements.

IFRIC 11, 'IFRS 2 - Group and treasury share transactions' provides guidance on whether share-based transactions involving treasury shares or involving group entities (for example, options over a parent's shares) should be accounted for as equity-settled or cash-settled share-based payment transactions in the stand-alone accounts of the parent and group companies. This interpretation has not had any impact on the Group's financial statements.

(b) Standards, amendments and interpretations effective for the year ended 30 June 2008 or are effective from 1 July 2008 but not relevant

The following standards, amendments and interpretations to published standards are mandatory for accounting periods beginning on or after 1 July 2007 but they are not relevant to the Group or Company's operations:

Revised guidance on implementing IFRS 4, 'Insurance contracts';

IFRIC 9, 'Re-assessment of embedded derivatives'.

Amendments to IAS 39 and IFRS 7, 'Reclassification of Financial Instruments'.

(c) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group

The following standards, amendments and interpretations to existing standards have been published and are mandatory for the group's accounting periods beginning on or after 1 July 2008 or later periods, but the Group has not early adopted them:

IAS 1 Presentation of Financial Statements revised. The standard replaces the previous IAS 1 revised for periods beginning on or after 1 January 2009 and with respect to the Group will be effective for the year ended 30 June 2010.

IAS 23 (Amendment), 'Borrowing costs' (effective from 1 January 2009). The amendment to the standard is still subject to endorsement by the European Union. It requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs will be removed. The group will apply IAS 23 (amended) from 1 January 2009, subject to endorsement by the EU but it is currently not applicable to the Group as there are no qualifying assets.

IFRS 1 First time adoption of International Financial Reporting Standards (revised) (effective from 1 January 2009). These revisions are still to be endorsed by the EU but are not expected to impact the Company Amendments to IAS 32 and IAS 1 Puttable Financial Instruments and obligations arising on liquidation (effective from 1 January 2009). These amendments are still to be endorsed by the EU but are not expected to impact the Company.

IFRS 2 Amendment to share based payments (effective from 1 January 2009). The amendment to the standard is still subject to endorsement by the European Union. The amendment concerns vesting conditions and cancellation. The group will apply IFRS 2 (amended) for the year ended 30 June 2010, subject to endorsement by the EU.

IFRS 8, 'Operating segments' (effective from 1 January 2009). The standard replaces IAS 14 and aligns segment reporting with the requirements of the US standard SFAS 131, 'Disclosures about segments of an enterprise and related information'. The new standard requires a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purposes. The Group will apply IFRS 8 from 1 July 2009. The expected impact is still being assessed in detail by management, but it appears unlikely that the number of reportable segments, as well as the manner in which the segments are reported, will change.

IFRS 3 Business combinations (revised). The standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with some contingent payments subsequently re-measured at fair value through income. Goodwill may be calculated based on the parent's share of net assets or it may include goodwill related to the minority interest. All transaction costs will be expensed. These changes will affect how the Group reports any subsequent acquisitions but will not be effective until such time as it makes any.

Amendments to IFRS 1 and IAS 27 Cost of an Investment in a Subsidiary, Jointly-Controlled Entity or Associate (effective for accounting periods beginning on or after 1 January 2009). These amendments are still to be endorsed by the EU. The amendments permits the entity at its date of transition to IFRSs in its separate financial statements to use a deemed cost to account for its investment in subsidiary, jointly controlled entity or associate. The deemed cost of such investment could be either the fair value of the investment at the date of transition, which would be determined in accordance with IAS 39 Financial instruments: Recognition and Measurement or; the carrying amount of the investment under previous GAAP at the date of transition. Management is currently assessing the impact of the Amendment on the accounts.

Improvements to IFRS (effective for accounting periods beginning on or after 1 July 2009). This improvements project is still to be endorsed by the EU. The amendments take various forms, including the clarification of the requirements of IFRS and the elimination of inconsistencies between Standards. Management is currently assessing the impact of the Amendment on the accounts.

(d) Interpretations to existing standards that are not yet effective and not relevant for the Group's operations

The following interpretations to existing standards have been published and are mandatory for the Group's accounting periods beginning on or after 1 April 2008 or later periods but are not relevant for the Group's operations:

IFRIC 12, 'Service concession arrangements'

IFRIC 13, 'Customer loyalty programmes'

IFRIC 14, 'IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction'

IFRIC 15, 'Agreements for the construction of real estate'.

IFRIC 16, 'Hedges of a net investment in a foreign operation'.

Going concern

The Directors have prepared projected cash flow information for a period including twelve months from the date of approval of these accounts. Key assumptions are the rate of installation of new machines, the number of transactions per ATM and the fee per transaction all of which the Directors believe are reasonable. The installation of new ATMs or redeployment of ATMs with low transaction volumes to new sites with higher sites is dependent on such sites continuing to be identifiable and available. These assumptions include an assessment of the impact of the current economic uncertainty on the company but does not include the potential impact of a significant worsening of the situation given the inherent uncertainty as to the extent of such worsening and that the impact would have a number of mixed effects on Cashbox's business. The projections include cashflows to Bank of Scotland being quarterly interest payments together with the repayment of principal commencing December 2009. A significant worsening of the economic situation may adversely impact upon the key assumptions within the projected cash flow information and result in insufficient cash being generated to meet the capital repayments to the bank which are due to start in twelve months time and may result in insufficient cash being generated to meet working capital requirements. In the event that the economy does significantly weaken, the Directors may seek additional funding to ensure all payments can be met. On the basis of this cash flow information, and discussions with and the continued support of the Group's bankers, the Directors are confident, based on current results, projections and the group's cash position at the date of the approval of these financial statements, that the group will be able to continue to trade for the foreseeable future. As a result of the above, the Directors consider it appropriate to prepare the financial statements on the going concern basis. Accordingly the financial statements do not reflect any adjustments that would be required in the event that the Group were unable to achieve its forecast cash flows.

Basis of consolidation

The consolidated financial statements comprise the Cashbox Public Limited Company together with Cashbox ATM Systems Limited ("principal operating company"), together with Cashbox No 1 Limited, Cashbox No 2 Limited and Cashbox Finance Limited, all wholly owned either directly or indirectly by Cashbox PLC, for the year to 30 June 2008 with comparative information for the year ended 30 June 2007. The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. All inter-company balances and transactions have been eliminated upon consolidation. The merger reserve arose on the combination of Cashbox ATM Systems Limited with Cashbox PLC on 23 March 2006 as the combining entities within the Group were controlled by the same parties both before and after the combination.

Principal accounting policies

The principal accounting policies of the Group, which are considered to be most appropriate to the Group's circumstances, are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Revenue

Revenue represents the value of goods sold and services provided during the year, stated exclusive of Value Added Tax. Transaction income is recognised in the period in which the transaction took place. Income from the sale of Automated Teller Machines (ATMs) is recognised when each ATM is installed in its first location. 

Segmental reporting

The Directors in considering the disclosure of business segments have considered the following definitions: A business segment is a distinguishable component of an enterprise that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business segments. A geographical segment is a distinguishable component of an enterprise that is engaged in providing products or services within a particular economic environment and that is subject to risks and returns that are different from those of components operating in other economic environments. On this basis, in the opinion of the Directors, the Group has only one Segment at present. This will be reviewed at least annually.

Foreign currency translation

The consolidated financial statements are presented in pounds sterling ('£'), which is the company's functional and presentational currency. Transactions in foreign currencies are translated at the exchange rate ruling at the date of transaction. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Exceptional items

Exceptional items are those significant items which are separately disclosed by virtue of their size or incidence to enable a full understanding of the Group's financial performance.

Website development costs

Expenditure incurred on maintaining websites and expenditure incurred on developing websites used only for advertising and promotional purposes are written off as incurred.

Intangible assets

Intangible assets comprise computer software licences acquired and are capitalised on the basis of separately identifiable costs incurred to acquire and bring into use specific software less accumulated amortisation and any impairment in value.

Amortisation on intangible assets

Amortisation is provided on intangible assets which have a finite useful economic life to write off the cost, less estimated residual values, evenly over their expected useful lives on a straight line basis. Lives used for this purpose are:

- Computer software 3 years

Property, plant and equipment

Property, plant and equipment are held at cost being the purchase price and other costs directly attributable to bringing the asset into use less accumulated depreciation and any impairment in value.

Depreciation on property, plant and equipment

Depreciation is provided on property, plant and equipment to write off the cost, less estimated residual values, evenly over their expected useful lives on a straight line basis. Lives used for this purpose are:

- Automated teller machines 5 years

- Furniture and fittings 3 years

- Office equipment 3 years

Leased assets

Assets that are financed by leasing agreements that give rights approximating to ownership (finance leases) are treated as if they had been purchased outright. The amount capitalised is the lower of the fair value of the leased property and the present value of the minimum lease payments payable over the term of the lease. The corresponding leasing commitments are shown as amounts payable to the lessor. Depreciation on the relevant assets is charged to the income statement over the shorter of estimated useful economic life and the period of the lease. Lease payments are analysed between capital and interest components so that the interest element of the payment is charged to the income statement over the period of the lease and is calculated so that it represents a constant proportion of the balance of capital repayments outstanding. The capital element of the payment reduces the amount payable to the lessor. All other leases are treated as operating leases. Their annual rentals are charged or credited to the income statement on a straight line basis over the term of the lease.

Sale and leaseback

Sale and leaseback arrangements, by means of a finance lease, are accounted for in the same manner as a standard finance lease agreement. It is not appropriate to regard an excess of sale proceeds over the carrying amount as income. Such excess is deferred and amortised over the lease term.

Onerous leases

Where the unavoidable costs of a lease exceed the economic benefit expected to be received from it, a provision is made for the present value of the obligations under the lease.

Impairment of non-current assets

Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-current assets other than goodwill that suffer an impairment are reviewed for possible reversal of the impairment at each reporting date.

Inventories

Inventories are valued at the lower of cost and net realisable value. Cost is based on the cost of purchase on a first in, first out basis. Net realisable value is based on the estimated selling price less additional costs to completion and disposal.

Financial assets

The Group has classified all its financial assets as loans and receivables. This is based on the classification of the financial assets at initial recognition by Management. These are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. The Group's loans and receivables comprise 'trade and other receivables' and 'cash and cash equivalents' in the balance sheet.

Trade receivables

Trade receivables are recognised initially at invoiced value, less provision for impairment, and if materially different adjusted to fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet. The Group has not classified any of its financial assets under the following headings:

- Assets held to maturity

- In money derivatives - held for trading

- Available for sale financial assets.

Financial liabilities

The Group classifies all its financial liabilities (other than those in a qualifying hedging relationship) as other financial liabilities and includes the following:

Trade payables

Trade payables are recognised at invoiced value and if materially different adjusted to fair value and subsequently measured at amortised cost using the effective interest method.

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

Share capital

Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial liability. The Group's ordinary shares are classified as equity instruments. 

Convertible debt

The proceeds received on issue of the Group's convertible debt are allocated into their liability and equity components. The amount initially attributed to the debt component equals the discounted cash flows using a market rate of interest that would be payable on a similar debt instrument that does not include an option to convert. Subsequently, the debt component is accounted for as a financial liability measured at amortised cost (see above). On conversion, the equity component in reserves is taken to the share premium account.

The Group has not classified any of its financial liabilities as liabilities under the following headings:

- Out of money derivatives - held for trading.

Derivative financial instruments and hedge accounting

The Group has considered the requirements of IFRS 7 and has adopted the following policies although no items were applicable in the current year.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. Derivatives may be designated as either:

(a) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); 

(b) hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge); or

(c) hedges of a net investment in a foreign operation (net investment hedge)

The group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

Hedge accounting is applied to financial assets and financial liabilities only where all of the following criteria are met:

- At the inception of the hedge there is formal designation and documentation of the hedging relationship and the group's risk management objective and strategy for undertaking the hedge.

- For cash flow hedges, the hedged item in a forecast transaction is highly probable and presents an exposure to variations in cash flows that could ultimately affect profit or loss.

- The cumulative change in the fair value of the hedging instrument is expected to be between 80-125% of the cumulative change in the fair value or cash flows of the hedged item attributable to the risk hedged (i.e. it is expected to be highly effective).

- The effectiveness of the hedge can be reliably measured.

- The hedge remains highly effective on each date it is tested. The Group has chosen to test the effectiveness of its hedges on a quarterly basis.

At the 30 June 2008 and in the financial year then ended, together with the preceding financial year, no asset or liability met the requirements for hedge accounting.

Finance costs

Finance costs are charged to the income statement over the term of the debt so that the amount charged is at a constant rate on the carrying amount. Finance costs include issue costs, which are initially recognised as a reduction in the proceeds of the associated capital instrument.

Current and deferred taxation

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred tax balances are not discounted.

Pension costs

Contributions to Cashbox ATM Systems Limited's defined contribution pension scheme are charged to the income statement in the year in which they become payable.

Reimbursements under indemnity agreements

Amounts recoverable under indemnity agreements are treated as reimbursements and, unless virtually certain, are only recognised on receipt.

Share-based employee remuneration

The Group has adopted IFRS 2 'Share based payments' which is obligatory for periods commencing on or after 1 January 2006. The Group issues equity settled share based payments including share options and warrants to certain Directors and employees. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. Equity-settled share based payments are measured at fair value at the date of grant using an appropriate option pricing model. The fair value determined at the date of grant is expensed to the income statement on a straight line basis over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.  At the balance sheet date the cumulative change in respect of each award is adjusted to reflect the actual levels of options vesting or expected to vest.

Critical accounting estimates and judgements

In preparing the consolidated financial statements, management has to make judgements on how to apply the group's accounting policies and make estimates about the future. The critical judgements that have been made in arriving at the amounts recognised in the consolidated financial statements and the key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying value of assets and liabilities in the next financial year, are discussed below.

Useful lives of intangible assets and property, plant and equipment

Intangible assets and property, plant and equipment are amortised or depreciated over their useful lives. Useful lives are based on the management's estimates of the period that the assets will generate revenue, which are periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the carrying value and amounts charged to the consolidated income statement in specific periods.

Fair value of financial assets and liabilities

The Group determines the fair value of financial instruments that are not quoted, using valuation techniques. Those techniques are significantly affected by the assumptions used, including discount rates and estimates of future cash flows. In that regard, the derived fair value estimates cannot always be substantiated by comparison with independent markets and, in many cases, may not be capable of being realised immediately.

Amounts recoverable under indemnities

As described in notes 13 and 25, the settlement costs of the Hanco litigation are recoverable from Anthony Sharp (previously Chairman and a significant shareholder) and Carl Thomas (previously Chief Executive Officer). In considering the likelihood of recovery under the indemnity, judgement has been used in forming the view that while receipt is eventually anticipated, it is not virtually certain.

Income taxes

In recognising income tax assets and liabilities, management makes estimates of the likely outcome of decisions by tax authorities on transactions and events whose treatment for tax purposes is uncertain. Where the final outcome of such matters is different, or expected to be different, from previous assessments made by management, a change to the carrying value of income tax assets and liabilities will be recorded in the period in which such a determination is made. The carrying values of income tax assets and liabilities are disclosed separately in the consolidated balance sheet.

Exceptional items

Exceptional items are those that, by virtue of their size or incidence, should be separately disclosed in the income statement. The determination of which items should be separately disclosed as operating exceptional items requires judgement. Exceptional items are described further in note 3.

Provisions

The Group continues to carry balance sheet provisions in a number of areas against exposures that arise in the normal course of trading. These provisions cover areas such as uninsured losses, termination and reorganisation activities and property dilapidation reserves. Judgement is involved in assessing the exposures in these areas and hence in setting the level of the required provision.

Share based payments

The Group operates an Employee Option Scheme. Employee services received, and the corresponding increase in equity, are measured by reference to the fair value of the equity instruments at the date of grant, excluding the impact of any non-market vesting conditions. The fair value of share options is estimated by using valuation models, such as Black-Scholes on the date of grant based on certain assumptions. Those assumptions include, among others, expected volatility, expected life of the options and number of options expected to vest.

Employer taxes on share options

To the extent that the share price at the balance sheet date is greater than the exercise price on options granted under unapproved schemes, provision for any National Insurance contributions has been made based on the prevailing rate of National Insurance unless the employee is liable under the terms of the option. The provision is accrued over the performance period attaching to the award. At the 30 June 2008, no provision was required.

  2. Turnover and Segmental Analysis

Turnover (all arising in the UK) is attributed to the Group's principal activity of the supply and maintenance of ATMs and the processing of transactions there from. Although the directors consider that there is only one business segment, the following analysis of turnover is provided:

		Year ended 30-6-08	Year ended 30-6-07
		£ 000	£ 000
ATM sales		93	373
Gross transaction revenue		4,486	4,003
Other		96	4
		4,675	4,380

3. Exceptional items

			Year ended  30-6-08	Year ended  30-6-07
			£'000	£'000
Charged at arriving at operating losses:
Litigation settlement costs			-	2,000
Charged within interest costs:
Lease termination costs			-	685

The litigation settlement costs in 2007 relate to the full and final settlement costs of £1,800,000 associated with the agreement reached with Hanco on 23 October 2007 together with the costs order of £199,760 paid on 24 July 2007 being recorded in the year ended 30 June 2007 as an adjusting subsequent event. The Company's subsidiary, Cashbox ATM Systems Limited, has a joint and several indemnity in connection with this litigation. In accordance with IAS 37, the amounts due under the indemnity have been treated as a reimbursement and the amount recoverable will not be recorded until receipt is virtually certain.

The £685,000 exceptional costs associated with terminating the lease arrangements with General Capital Venture Finance ("GCVF") included the effective cash payment of the interest element of future lease rentals £467,000 plus the non-cash costs related to the write off of arrangement fees, £189,000, together with write back of future warrant accretion costs £29,000. The agreement terminating the lease arrangements provided for full and final settlement of all outstanding obligations if the Group purchased the assets legally owned by GCVF and accordingly GCVF agreed to release the debenture held over the Group's assets.

4. Expenses by nature

					Year ended  30-6-08	Year ended   30-6-07
				£ 000			£ 000
Employee and associated staff costs				2,331			2,307
Depreciation of tangible fixed assets				491			277
Amortisation of intangible fixed assets				20			7
Occupancy costs				291			319
Vehicle costs				301			293
Professional fees				361			874
Other costs				457			1,014
Exchange differences				-			2
				4,252			5,093
Litigation settlement costs				-			2,000
				4,252			7,093

5. Finance costs

					Year ended  30-6-08	Year ended  30-6-07
				£ 000			£ 000
Loan interest				364			11
Accrued redemption fee on loan				105			-
Interest on finance leases				1			138
Interest on Hanco settlement				64			-
Other				31			12
				565			161

6. Loss per ordinary share

The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the financial year. The Group also presents an adjusted earnings per share based on earnings excluding exceptional items which the Directors believe aid the understanding of the Group's trading performance. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to reflect the impact of conversion of dilutive potential ordinary shares. The potential dilutive ordinary shares consist of the share options and warrants. However as the Group is currently loss making none of the potentially dilutive shares are currently dilutive. Adjusted earnings per share are calculated on the same basis excluding the impact of exceptional items.

7. Trade and other receivables

							30-6-08		30-6-07
						£ 000				£ 000
Trade receivables								143		11
Tax								37		500
Other receivables								92		85
Prepayments and accrued income								295		122
Impairment of receivables								(11)		(6)
								556		712
Prepayments greater than one year								101		138
Trade and other receivables								657		850

Not included in receivables is a principal amount of £2,101,554 (2007: £1,999,760) due joint and severally from Carl Thomas and Anthony Sharp under the terms of an indemnity in relation to the settlement of litigation with Hanco ATM Systems Limited as described in note 3. Under IFRS this has been treated as a reimbursement and will not be recognised until its receipt is virtually certain.

  8. Trade and other payables

							30-6-08		30-6-07
						£ 000				£ 000
Trade payables								721		731
Taxation and social security								76		262
Other payables								1,940		2,111
Accruals								1,061		1,611
Deferred income								361		-
								4,159		4,715

9. Borrowings

							30-6-08		30-6-07
						£ 000				£ 000
Current
Bank loans								4,805		-
Other loans								447		-
Amounts due under finance leases								2		2
								5,254		2
Non Current
Bank loans								-		2,300
Amounts due under finance leases								3		5
								3		2,305
								5,257		2,307

The Bank loans are amounts due under a term loan facility with Bank of Scotland, with £4,700,000 drawn and further draw downs principally for the purchase of ATMs allowed up to a maximum of £6,000,000. All draw downs must be completed prior to 31 December 2008 when any un-drawn element of the facility is cancelled and the amount drawn down is converted to a 4 year fixed rate term loan at the fixed rate at that time.

The loan agreement includes a financial covenant relating to "Net worth" being defined as the aggregate of the amount paid up on the issued share capital and the amount standing to the credit of its capital and revenue reserves (including any share premium account, capital redemption reserve and any amount of interest payable in respect of the Hanco Litigation Liability but excluding any revaluation reserve and the amount of the Hanco Litigation Liability (up to a maximum of £2,000,000) and deducting any amounts attributable to intangible assets including Goodwill. This covenant provides comfort to the Bank that any financial losses are covered by further investment into the Company. Other financial covenants relate to EBITDA and cash flow covers measured against the Company's financial projections.

During May and June 2008 the Company drew up plans to raise additional capital and on 4 July 2008 issued a notice of an Extraordinary General Meeting as part of the process to raise a significant amount of new equity. All resolutions were duly passed and £1,547,000 of new equity was raised in a series of placings between July and October 2008. As at the 30 June 2008, as shown by draft group statutory accounts, the Company was in breach of the net worth covenant and while agreement existed with the Bank that no action would be taken if the breach was rectified, the waiver was not unconditional (and the conditions had not been met since the breach was at the balance sheet date). Accordingly, under IAS 1 paragraph 65 all the bank borrowings are shown repayable in less than one year, despite events subsequent to the balance sheet when the breach was rectified and the Bank has confirmed that no action will be taken on the breach. Consequently while amounts due to the bank are shown as repayable in less than one year, the actual repayments are due not commence until December 2009 as per the original agreement.

In further discussions with the bank, it has been agreed that additional financial covenants including interest and cash flow covers which were due for test for the first time on 30 June 2009 have been reset based on revised financial projections and the Bank has agreed to take no action regarding any historic breach. 

Repayments under the loan agreement are calculated as percentages of the amounts drawn prior to 31 December 2008 being 20.8% during year ended June 2010; 29.2% during year ended June 2011 and the remaining 50.0% during the year ended 30 June 2012. 

Interest was payable at quarterly intervals at a floating rate of 3.0% over LIBOR plus mandatory costs up to 31 December 2008 when the rate was amended to 6.0% over LIBOR and will be fixed over the prevailing 4 year forward LIBOR rate plus mandatory costs for a period of not less than four years. Upon the final repayment of the principal, a further fee of £500,000 is payable, the cost of which is being accrued over the period of the loan with the amount at 30 June 2008 being £105,000 (2007: nil). In addition to the term loan facility, the Group has an overdraft facility of up to £750,000 with Bank of Scotland subject to an annual review, the first being in December 2008. This has been cancelled as part of the process resetting the covenants. The loan is secured by a fixed and floating charge over the Group's assets and various cross guarantees in the favour of Bank of Scotland are in place between the Company and its subsidiaries.

The Group has no commitment under finance leases at the balance sheet date which were due to commence thereafter.

Other loans are the balance due to MBC Investments Limited under a non-convertible loan note including interest being due for redemption on or before 31 March 2009. The loan note accrues interest on a stepped interest rate basis with the rate at 30 June 2008 being 13% increasing by 1.5% per month to a maximum of 20%. The loan note holders have confirmed to the Board that they are prepared to convert the loan to shares at a price of 5p per share. 

During the year the Company issued a Convertible loan note to MBC Investments which converted in accordance with its terms.

As described in Note 13, the Company reached agreement with Hanco on 19 September 2008 regarding the outstanding settlement of the litigation and issued a £1,800,000 5 year convertible loan note in settlement of the liability.

On 31 December 2008 the Company issued a £1,500,000 convertible loan note the terms of which are described in Note 13.

  10. Reconciliation of closing equity

The Group has capital and reserves as follows:

	Share capital	Share premium	Merger reserve	Equity reserves	Retained earnings	Total
	£ 000	£ 000	£ 000	£ 000	£ 000	£ 000
At 1 July 2006	614	3,880	2,180	37	(6,891)	(180)
Issue of shares May 2007 (net of costs)	218	3,045				3,263
Cancellation of GCVF Warrants				(37)	37	-
Loss for the year					(6,741)	(6,741)
Share based payments (IFRS 2)					138	138
At 30 June 2007	832	6,925	2,180	-	(13,457)	(3,520)
Issue of shares April 08	95	381				476
Less issue costs		(17)				(17)
Issue of Convertible loan note				38		38
Conversion of convertible loan note	117	466		(38)		545
Loss for the year					(3,003)	(3,003)
Share based payments (IFRS 2)					133	133
At 30 June 2008	1,044	7,755	2,180	-	(16,327)	(5,348)

11. Cash used in operations

						Year ended  30-6-08		Year ended  30-6-07
					£ 000				£ 000
Loss before taxation							(3,003)		(6,741)
Adjustments:
Net finance costs							519		809
Interest received							46		37
Depreciation of tangible fixed assets							491		278
Amortisation of intangible fixed assets							20		6
Accretion for warrants							-		27
Share based remuneration charge							126		138
Changes in working capital:
Decrease / (increase) in inventories							(56)		(88)
(Increase) / decrease in receivables							176		433
(Decrease) / increase in trade & other payables							(621)		2,661
Cash used in operations							(2,302)		(2,440)

  12. Dividend

The Directors are not able to declare a dividend.

13. Post balance sheet events

On the 7 July 2008 the Company completed an acquisition of 144 ATMs located within Mitchells and Butler and signed a new 5 year contract for their placement.

On 29 July 2009 at an Extraordinary General Meeting of the Company, the shareholders approved the increase of the authorised share capital by 850,000,000 1p ordinary shares to 1,000,000,000 1p ordinary shares.

On 31 July 2008 the Company raised £360,000 with the issue of 720,000 1p ordinary shares at a placing price of 5p together with 144,000 warrants to subscribe for further 144,000 1p ordinary shares at a price of 5p. The warrants will not be listed on AIM.

On 19 September the Company restructured the liability due under the Hanco settlement by agreeing to issue £1,800,000 convertible unsecured loan notes due 30 September 2013 to West Register (Investments) Limited at the direction of Hanco ATM Systems Limited ("Hanco") to satisfy the £1,800,000 liability to Hanco under the settlement agreement dated 17 October 2007. The notes accrue interest at a fixed rate of 5% per annum previously fixed at 20% per annum for 2008/09 in the original settlement and are now repayable by 30 September 2013 (the 'Redemption Date'), whereas the original agreement had been due for settlement by October 2009. Alongside the principal amount of the Loan Notes, any accrued interest is also convertible. Cashbox, at the discretion of the Board, is also able to repay the Loan Notes and any accrued interest in advance of the Redemption Date, in part or in full. Should a repayment not occur, the conversion price is the lesser of the prevailing market price and 5p. The Loan Notes cannot be converted prior to 30 September 2009 and a maximum of £900,000 of principal and accrued interest may be converted between 30 September 2009 and 30 September 2010. The remainder of the principal and interest may be converted on or after 30 September 2010 and before 30 September 2013. Interest due on the original settlement amount has been limited to £25,000 as part of the agreement and is due to be paid on the earlier of 30 April 2009 or the date a bonus is paid to any director.

On 25 September the Company raised £875,000 with the issue of 17,500,000 1p ordinary shares at a placing price of 5p together with 3,500,000 warrants to subscribe for further 3,500,000 1p ordinary shares at a price of 5p. The warrants will not be listed on AIM.

On 29 September 2008 the Company completed the acquisition of the ATMs leased by Cash4All Limited from the four leasing companies and on 8 October acquired the ATMs owned by Cash4All Limited together for cash consideration of £872,340 with all site agreements for a further £800,000 consideration made up of £250,000 cash and £550,000 Cashbox PLC ordinary shares at a price of 6p per share through the acquisition of the entire issued share capital of Ensco 694 Limited, a wholly owned subsidiary of Cash4All Limited.

On 3 October the Company raised £312,500 (£250,000 net of expenses) with the issue of 6,250,000 1p ordinary shares at a price of 5p.

On 31 December 2008, the Company raised a further £1,500,000 of working capital through the issue of a convertible loan note with an 8% coupon rising to 12% from 30 June 2009 in the event that the Loan Note Holder is unable to reach an agreement with Bank of Scotland relating to an intercreditor deed between the Company, the Loan Note holder and Bank of Scotland regarding secondary charges over the Group's assets within 6 months of the signing the Loan Note agreement. 

14. Contingencies

In July 2007 the Company's principle operating subsidiary, Cashbox ATM Systems Limited, ("the Company's subsidiary") was ordered to pay costs of £199,760 to Hanco ATM Systems Limited ("Hanco") as part of the litigation brought by Hanco against Cashbox ATM Systems Limited, claiming that Carl J Thomas and the Company's subsidiary had diverted a business opportunity from Hanco to Cashbox. A total payment of £200,526 was made on 24 July 2007 including interest of £766 in accordance with this order.

In October 2007 the Company's subsidiary reached full and final settlement with Hanco concluding the ongoing litigation against the Company's subsidiary, brought by Hanco. Under the terms of the Settlement, the Company's subsidiary was liable to pay a further £1.8 million with interest if payment is deferred to Hanco. The liability was settled by the issue of £1,800,000 convertible unsecured loan notes as described in note 13. 

The Company's subsidiary has a joint and several indemnity in connection with this litigation, from Carl J Thomas (previously Chief Executive Officer) and Anthony CJ Sharp (previously Chairman), together "the Indemnifiers", signed on 23 March 2006 prior to the listing of the Company on the AIM market of the London Stock Exchange in which the Indemnifiers jointly and severally agreed to keep the Company's subsidiary indemnified from and against all Hanco expenses including any settlement costs and against all legal and other costs, charges and expenses the Company and or its subsidiary may incur in enforcing, or attempting to enforce, their rights under the Indemnity. The Company and its subsidiary propose to enforce the indemnity.

On 17 July 2007, the Company's subsidiary wrote to the Indemnifiers under the terms of the deed of indemnity signed on 23 March 2006. The Company's subsidiary has received a reply from Anthony Sharp informing the Company that he does not consider the indemnity to be binding on him. The Directors do not accept Mr Sharp's position and having taken legal advice, believe the indemnity is enforceable. Discussions have taken place with the indemnifiers to resolve matters.

Cashbox has been notified by the Official Receiver that on 14 May 2008 a bankruptcy order was made against Anthony Sharp. The Company also believes that Carl Thomas, the other indemnifier, does not have any unencumbered assets of significant value. Therefore there is a significant risk that recovery under the indemnities will take a significant period of time. As a result of Mr Sharp's position disputing the indemnity and his seeking to have himself declared bankrupt together with concerns relating to Mr Thomas' ability to pay, the Directors, while believing the indemnity is enforceable, have treated the receivable as a reimbursement in accordance with IAS 37, and since receipt is not virtually certain, have not recorded the amount due of £1,999,760 plus interest and costs in the accounts.

Following the initial public offering of the Company it was expected that the above indemnity would be replaced by a further indemnity from KKR Investment management SA, ("KKR", a company in which A CJ Sharp was expected to be a minority shareholder), Annenberg Investment Management SA (a company controlled by ACJ Sharp) and CJ Thomas severally (the "Further Indemnity") with sole recourse (in the case of Annenberg and CJ Thomas) to their respective holdings of ordinary shares in the Company. The Further Indemnity was intended to come into effect only once KKR had unconditional finance in place, to the satisfaction of the Directors and Seymour Pierce Limited (the Company's Nominated Advisor and Broker) to cover its liabilities under the Further Indemnity. As part of this agreement, the Company agreed to pay a cash fee in the amount of £112,500 to KKR in respect of the provision of the Further Indemnity together with the issue of 187,500 new ordinary shares to KKR. These shares would only be issued once the Further Indemnity was unconditional. Pursuant to the deed, unconditional finance has not been put in place.

15. Non-GAAP terms

EBITDA is earnings before interest, tax, depreciation, amortisation, exceptional items, share based payments and minority interests and equals operating income / loss before exceptional items plus depreciation and amortisation. EBITDA, which we consider to be a meaningful measure of operating performance, particularly the ability to generate cash, does not have a standard meaning under IFRS and may not be comparable with similar measures used by others.
									Year ended  30-6-08			Year ended  30-6-07
								£ 000					£ 000
Operating loss										(2,484)			(5,932)
Add back
Depreciation and amortisation										511			284
Exceptional items (see note 3)										-			2,000
Share based payments										125			138
										(1,848)			(3,510)
Net debt includes the borrowings of the Group (including bank loans, other loans, finance leases and overdrafts) less cash and cash equivalents excluding balances held with the Bank of England for cash withdrawal settlement purposes.
									Year ended  30-6-08			Year ended  30-6-07
								£ 000					£ 000
Cash and cash equivalents											1,112			1,452
Less BOE cash balance											(871)			(1,349)
Cash excluding BOE balances											241			103
Current borrowings											5,254			2
Non current borrowings											3			2,305
											5,257			2,307
Net debt											5,016			2,204

Forward looking financial statements

This document contains statements concerning the Group's business, financial condition, results of operations and certain of the Group's plans, objectives, assumptions, projections, expectations or beliefs with respect to these items. The Company cautions that any forward-looking statements in this document may and often do vary from actual results and the differences between these statements and actual results can be material. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only at their respective dates. The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this document, including, without limitation, changes in the Group's business or acquisition or divestment strategy or planned capital expenditures, or to reflect the occurrence of unanticipated events. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, among other things: the impact of competitive pricing; changes in the price of ATMS and other key items; the occurrence of major operational problems; the loss of major customers; limitations imposed by the Group's indebtedness and leverage; contingent liabilities, risks associated with changes in technology requirements from LINK; risks of litigation; and other factors described in the Company's filings with the London Stock Exchange.

Annual Report and Accounts

The Annual Report and Accounts of the Company for the year ended 30 June 2008 are being posted to shareholders today and can be viewed on the Company's website at www.cashboxplc.co.uk

ENDFR ILFFFFALLVIT