Cake Box Holdi. Regulatory News (CBOX)

19 Oct 2009 07:00

Cashbox PLC

("Cashbox" or the "Company")

Trading Update

Ahead of the planned release in December of its final results, the Company is pleased to provide an update on Cashbox's progress in the year ended 30 June 2009 and the first quarter of the current year.

Financial highlights for year: 

• Q1 Trading for 2009/2010 financial year delivers breakeven EBITDA

• Core revenue for the period up 36% on 2007/8; 11% organic growth, the remaining 25% growth being delivered through acquisition.

• Two acquisitions within the period, both integrations completed on schedule within the year

• New revenue stream from Free to Use [FTU] ATMs builds from second quarter onwards

• Salary costs down 7% on last year, predominantly due to Q4 actions; current month down by over 20% on same month prior year

• Strategic partnership with BT Openzone will generate revenues in coming year from WiFi

Core trading

As at 30 June 2009, the installed base of transacting ATMs was 2,455 compared to 2,045 at 30 June 2008. This number reflects that in excess of 400 ATMs were uplifted during H2, some of which came from within ATM estates acquired during the year. This was a planned exercise to ensure that sufficient ATMs would be held in anticipation of fulfilling large contracts (already in discussion at that point), and in the knowledge that the last available drawdown of the HBoS capital funding to purchase new ATMs would be utilised in 2009.

This churning of sites has also had the effect of increasing average transactions per site, and reduced the reactive workload of the in-house Support Services team and Field Engineers; enabling them to focus upon ensuring the provision of outstanding service to the Company's most lucrative partners.

The challenging economic conditions have increased the demand from customers to roll out FTU ATMs, as part of their own value offering to their customers. Having a stock of ATMs with which to conduct trials enabled the Company to fully test this new sector. Every FTU trial to date has successfully evolved into a full rollout of the FTU offering. Over 7% of the Company's installed ATM base is now operating on a free to use basis.

A FTU ATM is free to use for the ATM customer. However, Cashbox collects a small charge per transaction, a Bank Interchange fee, from the ATM user's bank, and not the actual ATM user. Thus so long as transaction volumes are sufficiently high FTU machines are equally profitable to Cashbox as surcharging ATMs.

FTU ATMs tend to enjoy higher transaction volumes, as there is no disincentive in the form of the surcharge to use the ATM. This also benefits the merchants who have FTU machines on their premises, as they cycle through far greater volumes of withdrawn cash, money that would normally attract a "cash-handling fee" when deposited at a bank. Many of the contracts announced by Cashbox in the first quarter of this current year will stipulate the partial deployment of FTU ATMs and the management expects this trend to continue.

The partnership with BT Openzone, their only ATM initiative, enables Cashbox to offer its partners the chance to provide Broadband access at their sites, increasing the pull of the site as a destination, as well as potentially increasing customer time spent onsite. A number of cashbox clients are currently in discussions to trial this offering, which is part of a strategic drive to leverage the geographic presence of the ATMs. 

The Company will continue with its strategy of containing costs whilst seeking to churn existing sites to maximise ATM return. Due to the rapid fulfillment of the high site volume contracts won at the end of last financial year, the company has delivered breakeven EBITDA in the first quarter of the 2009/2010 financial year. With the number of other ATM and WiFi contracts under discussion, including trials currently running within two national high street brands, the Directors are confident that the significant improvements in financial performance will continue during the current year.

Ends -

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